What's Next for the US Economy? What can Brexit Teach us?
On June 23, 2016, following a referendum, the United Kingdom voted to leave the European Union. The immediate market reaction was severe: the pound sterling plunged, the British stock market plummeted, and economic forecasts turned bleak (Brexit: did the UK commit ‘economic suicide’ in 2016?).
Nearly a decade later, one thing is clear: without Brexit, the UK economy would most likely have been stronger. Trade has declined, investment has stagnated for years, and public opinion has deteriorated. According to the Wall Street Journal, only 30% of Britons now think Brexit was a good idea.
Why revisit this topic now?
Because the US may be embarking on its own version of deglobalization, and Brexit offers an important - if imperfect - analogy for what could follow.
With the return of sweeping tariffs under the current administration, the U.S. is testing a similar hypothesis: the idea that global integration has gone too far, and that pulling back would serve national interests.
However, history suggests that the consequences of economic detachment are rarely cost-free - and seldom felt immediately.
A common thread: uncertainty undermines investment
One of the clearest economic signals from Brexit was not just the decline in trade, but the damage caused by uncertainty.
From the 2016 referendum through roughly 2022, in a context partly influenced by Covid, UK business investment stalled. Companies paused or canceled plans, wary of unclear trade rules, shifting regulatory environments, and political instability. The result? Less investment in sectors like manufacturing and technology, which are key drivers of productivity and long-term growth.
The U.S. faces a similar risk. While the economy is larger and less reliant on exports, the logic still applies. If companies don’t know how long tariffs will last - or if the rules of the game might change with the next tweet - they are less likely to invest. This is especially true in industries with long time horizons, like advanced manufacturing or energy.
Unlike the U.K., where uncertainty was an unintended side effect of political division, in the U.S. uncertainty may be used as a strategic tool. The current administration doesn’t just tolerate ambiguity - it thrives on it. “With Brexit, uncertainty was collateral damage. But Trump likes to keep everybody guessing,” said trade economist Alan Winters.
That distinction matters. Uncertainty, when prolonged, doesn’t just delay decisions - it drives capital elsewhere.
What we stand to lose (and gain)
Depending on the economic models used, Brexit has reduced the UK's potential GDP growth by between 2% and 5%, mainly due to lost international trade and underinvestment, according to the Wall Street Journal. On average, every Briton is now thought to be about $1,100 worse off per year as a result. While the U.S. impact from tariffs is expected to be smaller (between 0.4% and 1.5% of GDP depending on the model), it remains significant in a tight economic context.
Tariffs might also undermine the very goals they are intended to achieve. If a company builds a factory in Mississippi to avoid tariffs, but those tariffs are later rolled back, that investment may no longer be viable. The result? Greater volatility, fewer long-term bets, and more caution at a time when economic vitality is sorely needed.
Yet there is a path forward - if we learn from the past rather than repeat it.
A crucial difference - and an opportunity
The United States still has tools that Britain lacked. A massive domestic market, strong innovation ecosystems, and deep capital reserves mean America can absorb short-term shocks better than most. If used wisely, tariffs could accelerate the reshoring of critical industries, enhance supply chain resilience, and rebalance trade.
But that requires predictability, policy clarity, and long-term strategy - not improvisation and provocation.
Brexit teaches us that economic disruption doesn’t always feel dramatic right away. It sets in gradually, through missed opportunities, declining productivity, and stagnant wages. And once these effects settle in, they are difficult to reverse.
The opportunity for the U.S. lies not in reversing globalization, but in creating a new version of it - one that protects national interests without isolating the country from global opportunities.
Final thoughts
Brexit is a warning. But it also teaches us a lesson: the real cost of economic nationalism goes far beyond tariffs or trade deals. What's really at stake here is how uncertainty is stifling the future.
If we are to avoid a similar fate, it will take more than bravado. It will require a clear strategic vision, stable institutions, and a serious national conversation about the direction we want to take and the risks we are willing to take to get there.
