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The United Kingdom is edging closer to a potential recession, economists warn, as plans by U.S. President Donald Trump to raise import tariffs could significantly undermine British economic growth. According to an analysis by the World Bank, increasing tariffs to 25% could wipe as much as £22 billion (around $29.5 billion) off the UK economy.
The situation could deteriorate as early as June if Trump follows through on the proposed measures. The tariff threat is part of a broader escalation in tensions between the United States and Europe, now entangled with Trump’s controversial stance on Greenland and future transatlantic trade relations.

Tariffs as a Tool of Pressure on Europe
In recent statements, Trump openly warned eight European countries that they could face steep import tariffs unless they allow him to advance plans related to Greenland—the world’s largest island, an autonomous territory within the Kingdom of Denmark. The countries named were Denmark, Norway, Sweden, the United Kingdom, France, Germany, the Netherlands, and Finland.
Under Trump’s proposal, these nations would face a 10% tariff on all goods exported to the United States starting February 1. If they continue to oppose what he described as a plan for the “complete and total purchase of Greenland,” tariffs would rise to 25% from June 1. The rhetoric has fueled fears of a renewed and intensified trade conflict between the U.S. and Europe.

British Economy Under Growing Strain
UK economists have described the outlook as increasingly serious. The United States is one of Britain’s most important trading partners, meaning any disruption to bilateral trade would have immediate and far-reaching consequences for economic growth.
Analysts at Capital Economics estimate that the UK’s gross domestic product could fall by roughly 0.3% to 0.75% if additional tariffs are imposed on top of the existing 10% levy. For an economy already hovering near stagnation, such a shock would be substantial.
Paul Dales, chief UK economist at Capital Economics, warned that the country’s economy is currently expanding by only about 0.2–0.3% per quarter. “If this negative impact were to materialize all at once, it could easily push the UK into recession,” he said.

Markets React with Sharp Sell-Offs
Financial markets responded swiftly to the announcement. Following Trump’s comments, stock markets across Europe fell sharply, affecting not only the UK but all seven other countries targeted by the tariff threat.
European equities were hit hardest in the automotive sector. Shares of BMW dropped by as much as 7%, while Germany’s DAX fell around 1.5%. In France, the CAC 40 slid up to 1.8%.
The UK’s FTSE 100 declined by roughly 0.4%. The impact was less severe than on continental markets, partly because investors rotated into major UK defense firms amid rising geopolitical tensions.

Gold Rallies as Europe Pushes Back
A notable contrast emerged in the mining sector. While several industrial companies struggled, London-listed mining firms posted strong gains as precious metal prices—particularly gold—climbed to record highs. Investors increasingly view gold as a hedge against geopolitical and economic uncertainty.
Politically, criticism of Trump’s approach has intensified across Europe. According to sources close to the discussions, several European governments have condemned the tariff threats linked to Greenland, describing them as economic coercion. France and others have reportedly floated the idea of responding with unconventional and as-yet untested countermeasures.

London Chooses Restraint
Amid the escalating tensions, UK Prime Minister Keir Starmer welcomed U.S. House Speaker Mike Johnson to Downing Street on Tuesday, January 20, shortly before delivering a parliamentary address marking 250 years of relations with the United States.
Following the meeting, Starmer said the UK would not pursue retaliatory measures, emphasizing that the United States remains Britain’s key trading partner despite the mounting pressure created by Trump’s trade policy.

Whether this restrained approach will shield the UK economy from recession remains uncertain. If tariffs are ultimately raised to 25%, Britain could be facing one of its most severe economic shocks in years.

#UK , #TRUMP , #TrumpTariffs , #TradeWar , #Geopolitics

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