Interview: UK trade expert warns of fallout from U.S.-EU tariff dispute

The Star

27-05-2025

LONDON, May 27 (Xinhua) -- A full-scale trade dispute between the United States and the European Union (EU) would pose serious risks to the global economy and is likely to affect the United Kingdom (UK) as well, a senior British trade expert has warned.
In an interview with Xinhua, William Bain, head of trade policy at the British Chambers of Commerce, said Britain's existing trade arrangements would provide only limited protection from the consequences of rising tensions between Washington and Brussels.
"An escalation of the trade dispute between the U.S. and EU would damage the global economy," Bain said. "The effects will be felt in the UK too, notwithstanding our own agreement with the U.S. on tariff reductions in key sectors."
Bain's warning comes amid heightened concern in Europe following U.S. President Donald Trump's threat to impose 50-percent tariffs on EU imports starting June 1 -- a major escalation in already strained transatlantic trade relations. Following a call with European Commission President Ursula von der Leyen, Trump agreed to postpone the tariff hike until July 9 to allow for further negotiations.
Despite the temporary reprieve, Bain cautioned that the underlying disagreements remain unresolved. Many British firms that distribute EU-manufactured goods to the United States or rely on EU components in their supply chains now face mounting uncertainty.
In Northern Ireland, where businesses operate under post-Brexit rules aligned with certain EU standards, the impact could be more direct, Bain said. He added that the effectiveness of contingency measures such as the Duty Reimbursement Scheme remains unclear.
Bain attributed the deadlock in talks to U.S. efforts to narrow its trade deficit with the EU, and its concerns over digital services taxes and pharmaceutical pricing in several EU member states.
The EU may look to respond by offering tariff concessions on industrial goods and increasing imports of U.S. products such as fuels and automobiles, he noted. However, he said the bloc is unlikely to change its regulatory stance -- leaving sectors like automotive and pharmaceuticals particularly exposed.
European leaders, including Italian Prime Minister Giorgia Meloni and French President Emmanuel Macron, have called for de-escalation. Von der Leyen's engagement helped delay the tariffs, and both sides have pledged to intensify dialogue ahead of the new deadline.
Although not directly involved in the dispute, Britain faces its own trade headwinds. A recent report by the Centre for European Reform found that UK trade grew just 0.3 percent annually between 2019 and 2024, with real exports of goods falling 20 percent over the same period.
While London has signed trade deals with the United States, India, and the EU, analysts have downplayed their impact. One recent analysis described the U.S. deal as merely a tool to "limit the damage" from broader trade frictions.
"Despite the UK's bilateral agreements, the reverberations of a broader U.S.-EU trade conflict will still have negative economic consequences here," Bain said. "Hopefully, a deal can be reached to prevent further tariff walls."
With the July 9 deadline looming, pressure is building on both sides of the Atlantic to reach an agreement and avert a confrontation that could ripple far beyond Europe and North America.