As President Trump promotes his approach to trade, economists from JPMorgan reflect on the U.K.’s post-Brexit experience. They suggest that the journey reveals potential pitfalls as the U.S. contemplates its tariff policy.

The Temporary Brexit Bounce

Initial post-referendum growth masked underlying challenges:

• U.K. exports increased by 5% due to maintained trade terms.
• Economic indicators saw a slight rebound.

Long-Term Structural Issues

1. Trade Intensity Decline: U.K. goods trade fell 15% below pre-Brexit levels.
2. Labor Shortages: Immigration from the EU dropped significantly, resulting in wage inflation.
3. Investment Drop: Business capital expenditure lagged, leading to productivity slowdowns.

U.S. Policy Implications

Recent cuts to tariffs could provide temporary relief, but the U.S. must tread carefully to avoid long-term economic consequences.

Conclusion

The UK’s experience serves as a cautionary tale for the U.S., as it must balance short-term tariff cuts with potential long-term economic health.