The UK is watching President Trump’s tariffs with a mix of shock, enchanting and creepy perceptions. After all, the country embarked on a similar experiment in economic isolationism when it voted to leave the European Union in 2016. Almost nine years after the Brexit referendum, it still takes into account the costs.
The lessons from that experience are suddenly re-connected once again as Trump uses a similar playbook to set up walls around the US. Critics once described Brexit as the greatest act of economic self-harm by Western countries after World War II. Now they may be running for money throughout the Atlantic.
Even some sudden reversals of his tariffs last week reminded me of Britain, when short-lived prime minister Liz Truss was forced to retreat from the radical tax cuts that scared the market in the face of a bond market uprising. Her false experiment was the culmination of an extreme policy cycle caused by the UK’s decision to abandon the world’s largest trade bloc.
“In a way, some of Brexit’s worst legacies are still far away,” said British diplomat Mark Mallock Brown, who served as deputy director of the United Nations. He said the UK is now facing a difficult choice between restructuring its trade ties with Europe or saving with Trump’s America.
“The fundamental issue remains a violation with our biggest trading partner,” Mallock Brown said.
Trump was the 2016 Brexit full-choking champion, portraying explicit similarities between it and the political movement he was marshaling. He initially imposed lower tariffs than the European Union and the UK.
The drag on the UK economy of Brexit is no longer discussed, but its impacts have been difficult to relieve from the subsequent shocks brought on by the coronavirus pandemic, the Ukrainian war and now the Trump tariffs.
The government’s Budget Responsibility Office estimates that the UK’s overall trade volume is about 15% lower than it would have been in the European Union. Long-term productivity is 4% lower than it was caused by trade barriers with Europe.
Productivity was slow even before Brexit, but the rupture with Europe exacerbated the problem by sowing uncertainty that cooled private investment. The year between the end of 2020 referendum and the formal UK departure was paralyzed by debates over the terms of exit conditions.
By mid-2022, investment in the UK was 11% lower than Brexit hadn’t, and was using a basket of comparable economies to stand up against the non-Brexit UK based on John Springford’s model. Commodity trade was 7% lower and gross domestic product was 5.5% lower, according to Springford, a fellow at the Centre for European Reform, a London think tank.
Trump has launched more volatility by imposing various tariffs, doubling them, and then pausing them. Of course, his actions have affected dozens of countries, and most dramatically influenced the US and China. Already there are new matches of recession forecasts and inflation.
Brexit and its aftermath had multiple economic and political secondary effects. Truss’s plan for debt-financed tax cuts, driven by a desire to jump over the UK’s Torpido economy, instead led to the sale of British government bonds as investors reacted to her proposal.
A similar sale of American bonds began last week, with widespread impacts on the US. The rise in bonds puts pressure on the government as it means they have to pay more to borrow money. The sale is also unstable. Because they signal deeper uncertainty about the country’s credibility.
In the UK, fear of a credit crisis forced Truss to shelve the tax cuts, and she quickly lost her job. It calmed the market, but it left a remainder of doubt among investors regarding the UK. Mortgage fees remained rising for months, reflecting what one analyst unkindly labelled “Baron Premium.”
This slipperyness among investors has constrained UK Secretary of State, Prime Minister Rachel Reeves, from taking bold steps to recharge the economy. Last week, Kiel Prime Minister Stage ruled out easing the government’s voluntary financial constraints, citing Ms. Truss’ blow to free market experiments.
“I argue that the reason we have such a small, conservative prime minister is because of our experience with the truss,” Mallock Brown said. “It has directly to the fact that we don’t want to encourage the truss effect again.”
Unlike the UK, the US still has the world’s default currency in dollars. Until last week, the Ministry of Finance remained a shelter for investors. But economists predict that both will be subject to greater pressure under Trump.
Richard Port, professor of economics at London Business School, said: “People are now much more sensitive to policy contradictions and policy irresponsibility.”
Brexit also reduced the UK’s impact on the diplomatic stage. This is only beginning to recover along with Hoshi’s efforts to act as a bridge between Europe and the United States.
Trump’s retreat from America’s role as NATO’s security umbrella brought Britain closer to Europe. However, the British are still struggling with the legacy of Brexit. For example, the defence agreement with the European Union is being curtailed by the French demand that the UK concessions on its fishing rights.
Analysts say Brexit’s longest influence may have been in politics. The long-standing debate split and radicalized the Conservative Party, which was ruled from 2010 to 2024. This was dominated by a patchwork of immigration and trade policies that reflected the cumbersome coalition behind Brexit.
Some Brexiteers have promoted the UK vision in their catchphrase as a low tax, lightly regulated, free nation in Singapore, Singapore-on-Thames. Others wanted a stronger state role in the economy to protect left-handed hinterland workers from open boundaries and devastation of the global economy.
These contradictions have led to policies that often seem to be at odds with the Brexit message. For example, the UK experienced a record surge in net mobility a few years after leaving the European Union. The difference was that many of these immigrants were from South Asia and Africa, and from Central and Southern Europe.
Brexit supporters have sold the project as a magic bullet that solves the problems caused by the globalized economy. This is not different to Trump’s claim that tariffs are a boon for public wallets and a relief for global trade inequality. In both cases, experts said such panacea existed.
“The truth is, Brexit didn’t fix the problems caused by industrialization,” said Tony Travers, a political professor at the London School of Economics. “If anything, Brexit made them worse.”
Frustration over the economy and immigration was part of the reason voters ran through the Conservatives last year to wipe out conservatives. However, his government continues to tackle these issues and the hurtful aftermath of the UK-Europe divorce.
Trump’s Magazine Coalition has some of the same ideological fault lines as the Brexiater. It takes economic nationalists like Stephen K. Bannon against globalists like Elon Musk. This has led analysts to wonder whether US post-Trump politics is very similar to UK post-Brexit politics.
“Brexit caused serious damage to the Conservatives,” Professor Travers said. “It’s being taken away by factions, making it impossible to vote. Will the Republicans be similarly sectarian after Trump?”
