Rachel Reeves has pleaded with Donald Trump not to impose trade tariffs amid fears of them negatively affecting UK growth.
Donald Trump's proposed trade tariffs could cost the UK economy £21.5billion next year, according to new analysis from the National Institute of Economic and Social Research.
The president-elect's pledge to impose 10 per cent tariffs on all global imports, rising to 60 per cent for China, threatens to deliver a significant blow to Britain's economic growth.
Economists calculate the impact would amount to a 0.8 per cent drop in UK GDP growth in 2024.
Chancellor Rachel Reeves has pledged to make "strong representations" to the president-elect about the damage a protectionist regime would inflict
PA
The US represents Britain's largest trading partner, with the UK exporting £60bn worth of goods across the Atlantic last year - all of which would be hit by the new levies.
The aggressive approach has sparked concerns of a looming trade war that could damage economic growth and push up inflation globally.
Goldman Sachs has already cut its UK growth forecast from 1.6 per cent to 1.4 per cent for next year in response to Trump's victory, citing the negative impacts of proposed tariffs.
The impact would extend beyond trade figures, with economists predicting the tariffs would fuel inflation, pushing up prices by between two and three percentage points.
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Donald Trump's proposed trade tariffs could cost the UK economy £21.5billion next year
Reuters
The Bank of England could be forced to maintain higher interest rates, subsequently increasing government borrowing costs and hampering both public and private sector investment.
Chancellor Rachel Reeves has pledged to make "strong representations" to the president-elect about the damage a protectionist regime would inflict.
Speaking to the Treasury Committee, Reeves said: "We're not just a passive actor in this.
"It's a trade relationship with the United States and we will make strong representations about the importance of free and open trade."
Trump won the US election following a tight battle with Kamala Harris for the PresidencyREUTERSThe Chancellor emphasised the mutual benefits of maintaining open trade relations, stating: "The US also benefit from those that access to free and open trade with us and other countries around the world, and it's what makes us richer as societies."
Despite the concerns, Reeves maintained optimism about Britain's influence, telling MPs: "I am optimistic about our ability to shape the global economic agenda, as we have under successive governments."
She noted there were "another couple of months before the inauguration" to begin crucial trade discussions.
