Modelling the long-run economic impacts of a stylised US tariff increase: technical paper

Conclusion

We find a 10% US tariff increase on UK goods exports leads to a reduction in Scotland’s long-run economic output. The impact is concentrated in sectors with high exposure to US trade, but broader effects emerge through reduced consumption, investment, and government spending. Retaliatory tariffs significantly deepen the economic cost as higher import prices raise production costs and suppress household demand. The modelling also highlights the role of interregional spillovers, with around a third of Scotland’s GDP loss driven by spillover effects from the shock to the rUK economy.

The results are sensitive to trade elasticity assumptions, but are broadly similar to modelling by the Northern Irish Government for Northern Ireland and OBR for the UK. While stylised, the analysis offers a useful lens for assessing Scotland’s sensitivity to a US tariff increase.