Trump's 10% tariff

You could have woken up this morning to headlines about Donald Trump’s new tariffs and wondered what they mean for you.

While tariffs might seem like a problem for politicians and businesses, they could also have an impact on your wallet.

Here’s how what’s happening across the pond could affect us here in the UK.

What are tariffs?

A tariff is a tax on imported goods. Governments use tariffs to make foreign products more expensive, encouraging people to buy domestic alternatives. This helps protect local industries.

Why did Trump introduce these tariffs?

Donald Trump believes that other countries have taken advantage of the United States in trade. By adding tariffs, he hopes to protect American businesses by making foreign goods more expensive.

How does this affect our money in the UK?

• Higher prices on some goods – UK businesses that export to the US may lose customers. This could lead to job cuts and price increases to cover losses. Industries like car manufacturing, especially brands like Jaguar and Mini, could be significantly impacted.
• Job losses – If UK companies see less demand from the US, they may cut jobs.
• Weaker economy – Lower exports can slow economic growth.

Could it affect inflation and interest rates?

If UK businesses raise prices to offset losses from the US tariffs, inflation could rise. Higher inflation puts pressure on the Bank of England to increase interest rates to control price rises. This could mean borrowing becomes more expensive. And interest might remain high at 4.5% for longer than anticipated. Two further rate cuts were predicted this year, but a rise in inflation could make that less likely to happen. 

Could anything become cheaper?

It’s unlikely in the short term that anything could become cheaper. However, if the UK finds new trade partners or negotiates better deals, prices could balance out over time.