Chancellor Rachel Reeves blames the waves created by Trump tariffs for the .3 per cent shrink in GDP
Chancellor Rachel Reeves has blamed US President Donald Trump’s sweeping tariff regime for Britain’s latest economic contraction, as the country’s GDP shrank by 0.3 per cent in the first quarter of 2025, raising new concerns about the fragility of the post-pandemic recovery.
Reeves made the comments on Wednesday morning, shortly after the Office for National Statistics (ONS) released the disappointing growth figures. The Chancellor pointed to what she described as “turbulence in global markets triggered by American protectionism,” referencing Trump’s decision, earlier this year, to reintroduce high tariffs on key imports, including steel, cars, and electronics from the UK and European Union.
“The British economy is resilient,” said Reeves, “but no economy is an island. We are feeling the ripple effects of renewed trade hostilities, especially those stemming from the United States’ tariff hikes. The Trump tariffs are not just an American problem — they are now a global headache.”
The UK economy shrank by 0.3% in April, the latest data from the Office for National Statistics shows. Services shrank by 0.4% and production by 0.6%, but construction moved in the opposite direction, growing by 0.9%.
Economists had expected a 0.1% contraction in April after growth of 0.2% in March. The slowdown has been blamed on the financial uncertainty caused by steep tariffs imposed by Donald Trump.
“After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs,” Liz McKeown, director of economic statistics at the ONS, said. The data shows US exports fell by £2bn.
April also saw a number of bill rises for businesses and households. There was a hike in national insurance contributions and the minimum wage, as well as a rise in council tax, car tax, energy, water and broadband bills.
The UK, which exports around £47 billion in goods to the US annually, has been directly hit by the return of Trump-era trade policies. These include a 35 per cent tariff on British electric vehicles, which Reeves said has had a “chilling effect” on UK manufacturers. Car exports fell by over 8 per cent in the first quarter, according to data released alongside the GDP report.
Similarly, British steel and aluminium producers, particularly in the Midlands and Wales, have reported mounting inventories and thinning margins since the tariffs were reinstated in February. Industry groups warned of possible job losses if retaliatory measures are not negotiated quickly.
The GDP contraction, though modest, is a setback for Reeves, who has staked much of her early tenure on economic stability and long-term growth. Only last month, she unveiled a £60 billion green infrastructure package designed to stimulate job creation and productivity. Wednesday’s figures risk undermining her pitch to both businesses and voters that “Labour is the party of economic competence.”
Trade relations between London and Washington have cooled since Trump returned to the political stage. Talks on a UK-US free trade agreement, once a centrepiece of post-Brexit diplomacy, have stalled. Reeves acknowledged that dialogue with the US Treasury and Trade Representative’s office has been “constructive but slow.”
Analysts say the UK’s leverage is limited, especially in a US election year. Trump, who is again the Republican nominee, has framed his tariffs as essential for “American reindustrialisation.” His policies enjoy strong support among US industrial workers and nationalist business lobbies.
Reeves insisted the government remains committed to its fiscal roadmap, rejecting calls to delay planned tax rises or spending adjustments. She said the Treasury would monitor inflation and employment trends closely but expressed confidence that the economy would rebound in the second half of the year.
However, concerns persist that ongoing trade frictions, combined with stagnant productivity and high interest rates, could blunt the UK’s recovery well into 2026.
As the political and economic fallout from Trump’s protectionist pivot unfolds, the Chancellor’s challenge will be to shield Britain from the storm without drifting into isolation herself.
