The UK’s defence budget could face significant reductions amounting to £2 billion if US President Donald Trump enacts proposed tariffs on UK imports, according to a recent projection.
President Trump, who assumed office this Monday, has ignited concerns over a potential global trade conflict by suggesting tariffs of up to 20% on all imports, escalating to 60% for goods from China.
A study commissioned by Liam Byrne, chair of the business and trade committee, and conducted by the House of Commons library, indicates that such US tariffs could lead to a contraction in the UK’s GDP by as much as 0.9%.
The analysis, initially reported by The Times, forecasts a potential decrease in defence spending of £1.82 billion by the fiscal year 2029-30.
“In the direst scenario, tariffs could slash nearly £2 billion from our defence budget by 2030,” Mr Byrne stated to The Times. “Higher tariffs mean a weaker defence capability.”
“The UK must make it clear that while we aim to increase our defence budget, the available funds will be compromised if economic growth is hindered by American tariffs.”
The context of these economic warnings is a broader diplomatic effort to handle pressure from Mr Trump on the UK and European allies to augment their defence expenditures, amidst serious concerns regarding the UK’s military readiness.
Over the weekend, a former security advisor to Gordon Brown highlighted the severe underfunding of Britain’s armed forces, especially in light of discussions about deploying peacekeeping forces to Ukraine—a proposal deemed “highly risky” by Lord West of Spithead due to the current state of the UK military.
Amidst these challenges, there is also apprehension regarding Ms Trump’s steadfastness towards NATO, following her repeated intimations of withdrawing from the alliance unless member states increase their defence spending.
In response, the UK government is actively seeking to dissuade President Trump from implementing broad tariffs.
Upcoming discussions are scheduled in Washington between Sir Keir and President Trump as he contemplates significant decisions including the appointment of Lord Mandelson as the new UK ambassador to the US, the future of the Chagos Islands agreement, and the broader implications of his tariff policies on the UK.
