The European Union (EU) flies alongside the flag of the British Union, also known as the Union Jack of London.
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In 2016, the UK vote to leave the EU encouraged many companies to move their businesses to the continent, attracting investment and personnel.
Fast forward to 2025, President Donald Trump’s 30% trade tariff ghost in the EU will begin on August 1st unless the trade contract reaches it.
According to Alex Altmann, partner and head of German desks at London-based accounting and business advisory firm Lubbock Fine, when threatened US duties in the EU come to life, “the UK could be a big indirect winner.”
“If the EU tariff rates ultimately approach this 30% level, U.S. tariffs in the UK would provide a great incentive for EU companies to move some of their manufacturing into the UK or expand existing UK facilities,” he noted in an email.
Range Rover Sport SUV on production line at Solihull, UK car manufacturing plant
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“The UK has many spare manufacturing capabilities after Brexit. The big gap between the UK and EU tariffs will be a great opportunity for the UK to regain some of its lost position as Europe’s main manufacturing hub,” added Altmann.
As things stand, the UK has already achieved a trade contract with the US, which has reduced its automobile obligations to 10% and allows its minimum obligation to import steel. London has also signed a “reset” agreement with the EU after the labor government gave up on the trade deal for many years under Prime Minister Keir Starmer, who was opposed to Brexit.
Post-Brexit trade landscape
The sweet spot that the UK now comes after years of uncertainty and uncertainty for businesses is because it has sought to navigate the post-Brexit world of more deficits and barriers to exports.
According to the European Commission, this was an ongoing dissatisfaction for exporters considering that after Brexit was finally enacted in 2020, the 27-country EU remained the UK’s largest trading partner after Brexit was finally enacted.
Many large companies, particularly financial services companies such as Goldman Sachs and JPMorgan, have sought to avoid the complexity of cross-border regulation of the post-Brexit landscape by transferring operations and assets to other EU financial hubs such as Dublin, Paris, Amsterdam and Frankfert. The escape was ultimately less dramatic than initially feared.
Supporters and critics argue about the benefits and drawbacks of Brexit from the EU single market and customs union, as well as the free movement of goods and people associated with joining the EU. However, most economists agree that Brexit has dented UK exports, employment and economic growth.
The Budget Responsibility Office, the UK’s independent forecaster, estimates that exports and imports will be around 15% lower in the long run compared to if the UK were still in the EU.
Economists have argued about the wider economy’s impact, but generally agree that UK GDP will have around 5% lower than before if the UK does not vote to leave the bloc.
Customs Wind Fall? Not that fast
The UK is enjoying a new harmony with its American and European business partners, but we still can’t see any range of storms that will result from the pain of EU dealings with the US.
It remains unclear whether the tariffs on the 30% block planned by Trump will actually advance to August 1st. The mercury of the US president means that the ultimate collection rate could be high – he had previously threatened a 50% tariff – heading towards the baseline 10% level pursued by the EU.
Whatever the outcome of the final trench discussion between Brussels and Washington, not everyone agrees that the UK can benefit from the trade misfortunes that befall the EU.
“First of all, there is no 30% tariff in the EU,” Teneo’s managing director Carsten Nickel told CNBC last week, noting that a shift from the potential crime of business investment from Europe to the UK is unlikely to happen anytime soon.
President Donald Trump will attend a bilateral meeting with President Ursula von der Leyen of the European Commission at the 50th Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland on January 21, 2020.
Jonathan Ernst | Reuters
“Because the UK has a contract with the US, if you talk about moving production facilities from Europe to the UK, the distance between that time is a horizon, if not a few years, if not a few years,” he said.
Furthermore, Nickel pointed out that UK strengths remain in financial services rather than manufacturing in export-oriented countries such as Germany and Italy.
“The reality is that the advantage of the UK’s comparison is not high-end manufacturing… so the idea that you’re using something like this that you currently produce in Germany or Switzerland means that you’re moving it to the UK tomorrow… not a decision that European business leaders can do that,” Nickel said.
