Professor David Miles from the Office for Budget Responsibility discussed the impact of a potential tariff war, particularly regarding U.S. tariffs affecting British steel and cars. While he suggested that a limited tariff war could lead to some trade diversion to the UK and make certain goods cheaper, he cautioned that most scenarios involving UK tariffs would be detrimental. His analysis indicates that high tariffs on the UK could severely limit government financial flexibility and economic growth potential.
"Let's suppose there's a very limited tariff war. So it's China, Mexico, Canada, countries that are already, it's pretty clear what Trump is going to do, and that's it, and the UK stays out of it, so does most of the rest of the world."
"So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they're negative to very different extents."
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