UK International trade secretary warns on ‘cascade effect’ of trade dispute

16 May 19

The ongoing US-China trade war will have an effect on the UK economy, the UK international trade secretary has warned.

Liam Fox told an event yesterday that ongoing tensions around tariffs between the US and China were likely to have a “cascade effect”, which could have an impact on UK finances.

Tensions between the US and China have escalated in recent weeks, with both countries increasing tariffs on imported goods.

Speaking at an Institute for Government event, Fox said: “Their trade dispute is already having an impact on the global economy and there will be implications for our economy.”

Trade disputes don’t always affect just those in the dispute – there’s often a cascade effect that can take some time to come through,” he warned.



Matthew Oxenford, research associate, global economy and finance, at the Chatham House think-tank, told PF that while the UK won’t be directly affected, it’s possible that trade disputes could reach Europe.

He noted that US president Donald Trump has mooted higher tariffs on car imports. This would affect Europe, as it is a prominent producer of cars. Yesterday, it was reported that Trump will delay implementing higher tariffs on car imports by up to six months.

“There’s many moving parts about how the UK will be impacted by this; it won’t be directly impacted but there is always a potential that Trump will widen the trade war to focus on European countries,” he told PF.

In his speech at the IfG, Fox lamented the escalation of the trade dispute and urged countries to settle disputes through the World Trade Organization.

“We think that all parties should address their grievances through an effective WTO system. WTO requires a lot of updating, and the UK is going into that position of taking our independence with a lot of ideas about how we can help that,” he said.

David Henig, director of the UK Trade Policy Project, part of the European Centre for International Political Economy, told PF that, although the short term economic impact of tariffs must be considered, the bigger concern is around the status of the World Trade Organization.

“The big issue is not the immediate economic damage – it’s whether the trade spat gets worse because the WTO was set up specifically so countries can’t just impose tariffs on each other,” he told PF.

He added: “It’s a flagrant breach of those rules that everyone relies on – if it continues we all stand to suffer.”

Read Victor Smart’s feature for PF on the motivation behind China’s aid strategy

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