Economists warn that President Donald Trump’s proposed new tariffs could push the UK economy into recession. The US president has threatened to impose an additional 10% tariff on imports from the UK and major European countries if no agreement is reached over Greenland.
According to Capital Economics, the tariffs could reduce UK GDP by up to 0.75%, equivalent to around £22 billion. With the UK economy currently growing at only 0.2–0.3% per quarter, such a shock could trigger a recession if the impact is felt quickly, although it may be spread over several quarters.
In the short term, exports could temporarily rise as companies rush to ship goods ahead of the 1 February deadline, similar to previous tariff-driven export surges.
However, significant uncertainty remains. It is unclear whether the new tariffs would be added on top of existing ones, which products would be affected, and how the measures might disrupt the US–UK trade agreement. The legality of the tariffs also depends on a pending US Supreme Court ruling.
Geopolitically, any US move to seize Greenland could severely strain transatlantic relations and NATO, potentially pushing the UK closer to the European Union and further away from the US. Prime Minister Keir Starmer has called for calm discussions, warning that the risks for the UK are now more immediate than ever.
For investors, the issue goes beyond Greenland. Analysts say rising geopolitical risk and policy uncertainty could dampen investment and affect currencies, equities, and cross-border capital flows.
