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The International Monetary Fund (IMF) has issued a stark warning about the economic consequences of renewed U.S. tariffs on British goods, forecasting significant hits to GDP and trade if the measures are fully implemented.

According to a newly released IMF report, tariffs proposed by the Trump administration could cost the UK economy £8.5 billion (approximately $10.7 billion USD) by 2026. The tariffs, part of a broader effort to renegotiate trade agreements under the Trump administration’s “America First” policy, are expected to reduce UK GDP by at least 0.3% over the next two years.

Despite the looming threat, the IMF has slightly upgraded the UK’s economic growth forecast, citing factors such as monetary easing, robust consumer spending, and increased public investment. The UK is now projected to grow by 1.2% in 2025 and 1.4% in 2026. However, analysts caution that these gains could be offset if trade tensions with the U.S. escalate further.

British Chancellor Rachel Reeves has responded cautiously, urging Washington to reconsider the tariffs in the spirit of the “special relationship” between the two allies. Reeves emphasized that punishing tariffs would not only strain bilateral ties but also hurt both economies at a time when global cooperation is essential.

The new round of tariffs is reportedly targeting UK exports such as steel, automotive parts, and food products, sectors already vulnerable due to post-Brexit trade uncertainties and global supply chain pressures. British business leaders and trade unions have expressed concern, warning of job losses and higher consumer prices if the tariffs are enacted.

Meanwhile, political analysts suggest that the Trump administration’s aggressive trade posture may be aimed at shoring up domestic manufacturing support ahead of the 2024 presidential election. Critics argue that such moves risk alienating key allies and disrupting international trade norms.

As both governments navigate this economic flashpoint, economists stress the importance of diplomacy, mutual interest, and a renewed commitment to free and fair trade practices to avoid a potential trade war.