Tariffs and Triumph: The UK’s Edge in a Fractured World

A team from Aston University’s Centre for Business Prosperity analyse the effect of Trump's 2025 tariffs on the UK.

The report reveals a $1.4 trillion global welfare loss under full retaliation.

The study highlights the imperative of balancing bilateral opportunism with cooperative frameworks, positioning the UK as a stabilising bridge in an increasingly fractured global economy.

Report overview

This report provides a comprehensive analysis of the impact of Donald Trump’s 2025 tariff policies on global trade, with a focus on the UK’s position in an increasingly fractured global economy.

Using a structural gravity model, the authors simulate six scenarios ranging from targeted U.S. tariffs to full global retaliation. The results show that full-scale trade conflict could result in a $1.4 trillion global welfare loss. While the UK faces vulnerabilities due to disrupted supply chains, it may also benefit from trade rerouting opportunities, such as increased exports to the U.S.

The study finds that tariff escalation leads to higher prices, reduced competitiveness, and fragmented supply chains—mirroring effects seen during the 2018 U.S.-China trade war. While the UK could see short-term gains in exports to the U.S. (up 17.5% in one scenario), these are offset by deeper structural risks, including a 43.6% fall in UK exports to the U.S. under full retaliation. Imports also shrink across the board, threatening input supplies for sectors like aerospace and technology.

The authors recommend three strategic areas for UK policymakers: (1) adapting global value chains by diversifying suppliers, (2) pursuing trade diversification via CPTPP and India, and (3) maintaining agility in trade policy while strengthening multilateral cooperation. The UK is urged to balance bilateral gains with efforts to stabilise relationships with the EU, to avoid further fragmentation.

Policy interventions include negotiating sector-specific deals, reducing non-tariff barriers, streamlining customs with digital technologies, aligning UK-EU regulatory standards, and investing in trade infrastructure.

In summary, the UK can use its post-Brexit flexibility to mitigate risks and leverage new trade routes, but sustained gains depend on rebuilding EU ties and supporting a rules-based international trade order.

Jun Du

Jun Du is Professor of Economics at Aston Business School, Aston University, and Founding Director of Centre for Business Prosperity. Jun also leads research on Internationalisation in Enterprise Research Centre. She is an expert on internationalization, innovation and productivity and serves on the Economic and Social Research Council Grant Assessment Panel for Economics and Management and is a member of the Council of Experts for the Innovation and Research Caucus. Jun is on the advisory board of British Chamber of Commerce Global Britain Challenge Group, Business Commission West Midlands Advisory Panel and WMGC internationalisation Strategy steering group, and the Midlands Engine Observatory Program Board.

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Oleksandr Shepotylo

Oleksandr Shepotylo is an Associate Professor at Aston Business School. He received his PhD in Economics from the University of Maryland, College Park, his Master in Economics from New Economic School. He previously worked at the World Bank, DEC RG Trade group, Kyiv School of Economics, Higher School of Economics, and the University of Bradford.

Oleksandr’s main research interests are in international trade, trade policy, and globalization. He has worked in a variety of topics such as the impact of trade liberalization on exports and productivity and the use of the structural gravity model to evaluate the gains from trade. He has extensive experience measuring and quantifying non-tariff measures and analysing trade policy impacts, advising governments about the effects of trade policy decisions in developing economies; more than 15 years of professional experience in statistical analysis of trade, both of WTO accession and regional trade agreements.

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