Has Brexit shielded UK from Trump's tariff salvos?

US President Donald Trump has spared the United Kingdom from the worst of his tariff war. Some in the UK credit Brexit for it.

Trump on Wednesday slapped the European Union (EU) with 20 per cent tariffs, but imposed just 10 per cent tariffs on the UK.

In 2016, the UK voted in a referendum to leave the EU in what has been called Brexit — a portmanteau of ‘Britain’ and ’exit’. The UK finally left the EU in January 2020.

Supporters of Brexit have now said that it has finally started paying dividend. They have said that the promise of Brexit bringing economic prosperity in the long run is now being fulfilled. However, critics have said that any apparent benefit is just incidental and the adverse effects of the exit far outweigh any incidental benefits.

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To be sure, Trump has not completely spared the UK from the worst of tariffs. The UK still faces 25 per cent tariffs on automobiles, steel, and aluminium, which is the same that the EU faces in these sectors.

Brexit saved UK from trade war, say supporters

Conservative Party MP Andrew Griffith, who currently serves as the Shadow Trade Secretary, said that the lower-than-EU tariff rate imposed on the UK was an example of “a Brexit dividend that will have protected thousands of British jobs and businesses”.

In an article for The Daily Telegraph, Matthew Lynn notes that it is becaue of the Brexit that the UK now has the ability to negotiate a better deal with Trump and avoid a trade war that the EU is almost certain to get into.

In recent weeks, Trump has been particularly vitriolic about the EU, saying the bloc was formed with the sole intention to “screw” the United States.

In response to previous rounds of tariffs, the EU has already slapped counter-tariffs and is understood to be in the process to slap another round in retaliation to the tariffs announced on Wednesday.

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EU members cannot make bilateral trade agreements with any nations as trade-related decisions for members are taken collectively at the EU-level. Member-states may only make narrower, sectoral deals with nationsoutside the bloc.

Moreover, Lynn said that the British industry now has an edge over the rest of Europe when it comes to exports as it faces fewer tariffs than the EU.

“For Americans, a Scotch will be cheaper than Cognac, and Burberry cheaper than Hermes, but still with a luxury feel. Even better, there will now be a powerful incentive for EU manufacturers to ramp up production in the UK when they are selling products into the US. They will face lower tariffs while still manufacturing in Europe. A few may even move completely,” noted Lynn.

But has Brexit really saved UK?

Not everyone agrees with Conservative MP Griffith or columnist Lynn about Brexit saving the UK from Trump’s tariffs.

Critics of the line of thought maintain that the fact that Trump, who was the biggest champion of Brexit outside of the UK, imposed any tariffs on UK despite the nation having exited the EU as he had wanted suggests that Brexit has not worked. They also say that adverse effects of Brexit far outweigh any incidental benefits.

Last year, a study by Cambridge Econometrics found that the British economy was £140 billion smaller as a result of Brexit.

The study further found that the average Briton was nearly £2,000 worse off and London alone had 300,000 fewer jobs as a result of Brexit

The study concluded that the “UK business investment could have been about 12.4 per cent higher in 2023 if Brexit did not happen”.

The Independent’s David Maddox noted two promises of the Brexit, a trade deal with the United States and check on immigration, have not been met in the nine years since the Brexit was approved and five years since the UK’s exit from the EU.

Even as Prime Minister Sir Keir Starmer is in the process of negotiating a trade deal with the United States, Maddox has said that “it is likely to be highly focussed on specific areas and may not avoid tariffs altogether” and “far from the trade deal that Brexiteers promised”.

As for the immigration, Maddox noted that 3.6 million people have entered the UK legally since the Brexit, which is higher than when UK was part of the EU.