What lies ahead for the US economy? Brexit offers clues

Subscribe to enjoy similar stories. The stock market has its worst day in years. Ominously, the currency also falls.

America 2025? No, Britain 2016—the day after U.K. voters chose to quit the European Union. President Trump’s decision to impose wide-scale tariffs raises a question: What happens when a developed economy throws up barriers with its biggest trade partners? Brexit offers a few clues.

Britain’s decision to detach from the EU trading bloc was an unusual experiment in deglobalization. In hindsight, it foreshadowed Trump’s first election victory and was a leading indicator that not everyone was happy about decades of freer trade that led to a broad rise in global prosperity but also created losers in industrialized nations. Although the effects are still playing out, Brexit has widely come to be seen as an act of economic self-harm.

The U.K. economy is likely weaker than it otherwise would have been. Politicians have spent more money and attention on parts of the country that were hardest hit by deindustrialization, but they have struggled to turn things around.

The instant view of financial markets, it turns out, was broadly right. One thing is certain, and could indicate what is in store for the U.S.: The uncertainty surrounding Brexit damaged business investment, the lifeblood of an economy. While it is impossible to know for sure, several economic models estimate that Britain’s economy would be trading about 15% more with the rest of the world and be 2% to 5% bigger had it never left the bloc, much of that due to weaker investment.