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The United Kingdom faces a growing recession risk if US President Donald Trump proceeds with plans to raise import tariffs to 25% in June. A World Bank report warns the move could cut up to £22 billion from UK economic growth. The warning follows Trump’s threat to impose steep trade penalties on eight European countries over Greenland.
The affected countries include Denmark, Norway, Sweden, the UK, France, Germany, the Netherlands, and Finland. Trump said the nations will face a 10% tariff from February unless they approve his plan to acquire Greenland. He added that the rate would rise to 25% from June 1 if they refuse.
Analysts in Britain described the risk as severe due to the UK’s reliance on US trade.
They warned that rapid tariff implementation could hit growth while momentum already remains weak. This raises fears of an abrupt downturn if trade costs rise sharply.
Trump framed the tariff threat as leverage to secure control of Greenland, the world’s largest island. Greenland operates as an autonomous territory within the Kingdom of Denmark.
The proposal triggered alarm across Europe due to its direct link between trade and territorial demands.
During the weekend, Trump confirmed the initial 10% tariff would begin on February 1.
He said the higher 25% levy would follow in June if negotiations fail. Markets reacted quickly as traders assessed the risk of a broader US-Europe trade conflict.
Several European governments condemned the strategy and described it as economic coercion. France suggested the bloc could explore untested countermeasures. Tensions rose as leaders weighed diplomatic responses against economic stability.
Economists at Capital Economics warned that UK GDP could shrink between 0.3% and 0.75%. That outcome reflects tariffs layered onto the existing 10% import tax on UK goods. The loss could equal roughly £21.6 billion if higher rates arrive quickly.
Paul Dales, chief UK economist at Capital Economics, said the timing matters. He noted the UK economy grows only 0.2% to 0.3% per quarter. If the shock lands at once, recession risks rise sharply.
Stock markets fell after the tariff announcement, reflecting investor concern across Europe. At the same time, London-listed mining firms reported strong profits. Gold prices reached record highs as investors sought safety.
UK Prime Minister Keir Starmer said Britain will not retaliate against the US. He argued the United States remains a key trade partner despite rising pressure. His remarks aimed to calm markets amid uncertainty.
Starmer welcomed US House Speaker Mike Johnson to Downing Street on January 20. Johnson later addressed Parliament to mark 250 years since independence from London. The meeting occurred as trade tensions dominated headlines.
With growth fragile and trade risks rising, the situation leaves one pressing question: can the UK avoid recession if US tariffs rise sharply this summer?
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The UK faces rising economic risk as proposed Trump tariffs tied to Greenland plans threaten trade flows. A World Bank report and UK economists warn of GDP losses and recession risk if levies rise to 25%. Markets reacted as the government ruled out retaliation while monitoring developments.
