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US President Donald Trump has announced fresh import taxes on goods being imported to America in the latest escalation of the global trade war.
The UK has been hit with a 10% tariff on all of its goods being brought into the US, which Trump says is a retaliation to UK tariffs on American goods, but uncertainty remains over the potential impact on British consumers.
Here’s how you and your money could be affected.
1. Prices could go up, but could also go down
The tariffs Trump has just announced will be paid for by the businesses which import goods into the US. Clarissa Hahn, economist at Oxford Economics, says this means that the initial impact of price rises will be on US consumers, as American firms are likely to pass on the extra costs to their customers. However, she adds people in the UK could subsequently be affected by the measures, which come into effect on 5 April.
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8. Interest rates may stay higher for longer
UK interest rates dictate the costs households have to pay to borrow money for things such as mortgages, credit cards and loans. Higher rates also boost returns for savers. They are currently at 4.5%, but economists are predicting two more rate cuts by the end of the year. However, the Bank of England highlighted US tariffs as a reason why it avoided cutting rates further last month, saying economic and global trade uncertainty had “intensified”. If prices are pushed up for long enough to affect the rate of inflation – this could mean interest rates stay higher for longer. Andrew Bailey, the Bank of England governor, said it was Bank’s job “to make sure that inflation stays low and stable” and that would be “looking very closely” at the impact of tariffs.
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