Prime Minister Sir Keir Starmer has declared the UK will hold firm on its objection to ambitions from the US president to seize Greenland, a move which could prompt economic retaliation from Britain’s formerly closest ally.
President Donald Trump has said 10% tariffs will be imposed on European nations that defend the position of Greenland’s owner Denmark, rising to 25% later in the year.
As one of the UK’s largest trading partners and a popular destination for international expansion among British tech businesses, these threats carry concerning implications for companies on both sides of the Atlantic.
There are plenty of developments that could drastically alter the course of events before the initial tariffs are set to start in February, but as it stands, what can UK firms expect?
A sales bump ahead of June
Assuming both waves of tariffs come into effect, US customers will naturally end up facing higher prices for British products and services, which will likely cause a slump in sales.
Before this, however, Susannah Streeter, chief investment strategist at Wealth Club, predicts a brief bump in sales to occur.
As importers gear up for higher costs, Streeter said there will likely be many international sales in the works that will be brought up ahead of June, when the second rise is expected, to avoid the 25% tariff, which will “provide an initial bump” that will then sharply drop off as buyers forced to “look elsewhere for a longer-term cheaper supplier”.
Income streams must diversify
The US has already become a chaotic trading partner during the second Trump administration, with previous rounds of tariffs shaking up business confidence.
These additional waves could prove too much for many to take on, leading to firms with international ambitions to seek opportunities elsewhere.
The British government in the past year has been negotiating numerous trade deals with global partners. While the landmark UK-US tech agreement was among the standouts, similar discussions have taken place with the likes of India, Canada, China and EU nations.
With a lack of a guarantee of US customers, it is natural that British businesses will seek closer ties with countries like these.
“It is a strategy China has been pursuing, and its exports rose more than expected last year as new trading relationships were forged,” noted Streeter.
“It’s likely to heighten calls for the UK to forge closer trade ties with the EU to offset the damage wreaked by US tariffs.”
