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The UK’s defence budget could face billions of pounds worth of cuts if Donald Trump imposes tariffs on the UK, a new forecast has warned.
Mr Trump, who was sworn in as president on Monday, sparked fears of a global trade war after threatening to impose sweeping tariffs of as much as 20 per cent on all goods coming into the country – a figure that rises to 60 per cent for those from China.
Independent forecasts, included in new research from the House of Commons library commissioned by business and trade committee chair Liam Byrne, suggest that tariffs from the US could cause the UK’s GDP to decline by as much as 0.9 per cent.
The research, first reported in The Times, predicts that such a shift could lead to defence spending being reduced by £1.82bn by 2029-30.
“In the worst case scenario, tariffs could knock nearly £2 billion off defence by 2030,” Mr Byrne told The Times. “Higher duties mean weaker defence.
“Britain needs to explain in really simple terms that we want to raise our defence spending, but that the amount is going to be smaller if growth is less because of American tariffs.”
It comes amid mounting pressure from Mr Trump on the UK and its European allies to boost defence spending and stark warnings about Britain’s defence capabilities.
On Saturday, a former security adviser to Gordon Brown warned that the UK’s military is “grotesquely underfunded” after Sir Keir indicated that Britain could send peacekeeping troops to Ukraine.
Lord West of Spithead, a retired admiral of the Royal Navy and Mr Brown’s former adviser, said such a move would be “highly risky”, arguing the “hollowed out” armed forces do not have the resources to do so.
There is also growing concern about the strength of Ms Trump’s commitment to Nato, following repeated threats to pull out of the alliance if member states do not spend more.
The government is attempting to persuade Mr Trump to spare the UK from sweeping tariffs, with Sir Keir set to hold talks with Mr Trump in Washington within weeks of him entering the White House.
It comes as the US president-elect weighs up whether to approve the appointment of Lord Mandelson as the UK’s new ambassador in Washington and the fate of the Chagos Islands deal, as well as considering the extent to which tariffs will hit Britain.
On Monday, Foreign secretary David Lammy said the prime minister would seek early talks with the president on a range of issues including trade, the war in Ukraine and the fragile ceasefire in the Middle East.
He told the BBC: “I think that when you look at past prime ministers, it’s taken between a week or up to a month to come to Washington. The importance is the strength of the relationship and the serious discussions that we have.
“In the end, we have war in Europe, we have a ceasefire in the Middle East, but it’s incredibly fragile, and there are important malign actors like Iran that we’ve got to discuss with the United States and, of course, our growing trade relations with the United States.
“So, lots to discuss, and I’m very confident that Keir Starmer will be discussing this with Donald Trump within the next few weeks.”
A government spokesperson said: “We forward to working with President-elect Trump in office, including on his policy priorities and to improve UK-US trading relations to support businesses on both sides of the Atlantic.
“National security is the foundation of this government’s Plan for Change, which is why we have backed the Ministry of Defence with an extra £2.9billion and have a cast iron commitment to increase defence spending to 2.5 per cent of GDP.
“We will always do what is in our national interest for our economy, businesses and the British people, including free and open trade.”
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