Donald Trump’s latest plan to slap tariffs on US imports based on sales taxes in their country of origin could shave £16 billion ($20 billion) off UK economic output over the next two years, in what would be a blow to Prime Minister Keir Starmer’s promise to fire up growth.

The surprise inclusion of VAT to calculate tariffs prompts questions over the possible impact on British businesses.

Donald Trump’s latest tariff proposal could see UK exports hit with higher trade taxes, as VAT is included in tariff calculations. Analysts warn of potential 20% levies on British goods, impacting key sectors like cars,