DONALD Trump has announced tariffs on all goods imported to the US, which could see the price of some everyday items rise in the UK.
The US president confirmed all goods imported from the UK will be subject to a new 10% tariff.
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He also announced tariffs on imports to the US from every country in the world as part of his Liberation Day speech on Wednesday.
Tariffs are taxes that are added to goods imported into a country.
When they are in place it is the importer that has to pay.
This means that US citizens will need to pay the tariffs Donald Trump has announced.
Tariffs are designed to protect manufacturing at home, boost jobs and encourage consumers to buy local products.
To combat the extra costs tariffs cause, businesses often increase their prices.
Usually these additional costs fall on the consumer.
This could mean the cost of everyday items including cars, food and technology could increase in the US.
The tariffs could also have a huge impact in Britain and damage the economy.
This is because as UK products become more expensive for US consumers the amount they buy falls.
Meanwhile, the tariffs may increase inflation in the US, which could have a knock-on effect on other parts of the world.
This could push up prices in the UK too.
Read on to find out how the tariffs could impact you.
Mortgages
If inflation increases in the US and in other countries around the world then this could also increase the rate of inflation at home.
What else was announced?
Donald Trump announced a raft of tariffs in his speech on Wednesday. Among them were:
- The president said he would slap levies on major trade partners with universal 10% ‘baseline’
- Specific rates will apply to ‘worst offenders’
- The UK faces the minimum tariff rate at 10%
- The EU, meanwhile, faces a 20 per cent hit on border tax
- 25 per cent tariffs will be slapped on all foreign-made automobiles from midnight ET
As a result, the Bank of England may be forced to hold its base rate when it meets next month.
The base rate is a tool that the Bank of England can use to keep inflation close to its target, which is 2%.
It controls the rate that banks pay to borrow money from the Bank of England.
If the base rate rises then it means that the cost of borrowing becomes more expensive, which can affect how much you pay for your mortgage.
Meanwhile, if it falls then it becomes cheaper to borrow money, which can reduce the interest rate on your home loan.
If there is a lot of instability in global financial markets then it makes it less likely that the Bank of England will cut the base rate when it meets on May 8.
Although this could be good news for savers as the higher the base rate the better the interest rate they earn on their nest egg.
Cars
Donald Trump confirmed that a 25% global car and truck tariff will come into force on April 3.
There will also be a duty on automotive parts imports which will be launched on May 3.
These taxes could have an unexpected impact on motorists looking to buy a new car in the UK.
This is because big car companies including Mercedes Benz and BMW rely heavily on US sales.
If they make less money in the US then they may have to increase prices in the UK to compensate.
As a result, premium cars could become more expensive for UK buyers.
The tariffs will also have a huge impact on the British car industry as the US is one of its biggest export markets.
Although the EU is the top market for British-made cars, the US is the second most important one.
Just under a fifth of all cars made in the UK were exported there last year.
Tariff hit causing mixed feelings in government
By Jack Elsom, Chief Political Correspondent
BRITAIN’S 10 per cent tariff hit is causing mixed feelings in the upper echelons of government today.
Yes, it was the lowest levy doled out by Donald Trump and far below that imposed on many other countries.
But it will still hurt the UK economy, whack our exporters and likely cost scores of jobs.
And what of this charm offensive Sir Keir Starmer has attempted to get in the US President’s good books?
Downing Street was quick to trumpet this approach – and the refusal to retaliate – as “vindication” we have escaped lightly from the tariff blizzard.
Yet many other countries have also been given the 10 per cent levy, including Brazil which has put in far less legwork with the White House than our government.
Ministers will be desperate now to sign this fabled economic deal in the hope it will do away with tariffs entirely.
One thing is undeniable: being outside the European Union has spared us being doubly worse off.
The 20 per cent tariff slung around the Brussels bloc would have been our fate should Brexit had not happened.
EU chief Ursula Von der Leyen has vowed to retaliate – which would have dragged us into a trade war with our closest ally if we were still a member.
It’s not a pretty situation, but it could be a whole lot worse…
A new report from the Institute for Public Policy Research (IPPR) said the imposition of tariffs will put huge pressure on the UK car manufacturing industry.
Pranesh Narayanan, research fellow at IPPR, said: “Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government’s growth plans at jeopardy.”
More than 25,000 direct jobs in the car manufacturing industry could be at risk as exports to the US are predicted to fall.
The IPPR warned that employees at Jaguar Land Rover and the Cowley Mini factory are some of the most exposed.
Household products
Kitchenware, foil and drinks sold in the UK could become more expensive as a result of Trump’s tariffs.
The US president announced 25% tariffs on aluminium and steel imports to the US, which came into force last month.
Companies who manufacture aluminium-based goods and ship them to the US could be forced to pass on the increased costs to customers in the UK.
This could lead to higher prices at home.
Meanwhile, other sectors such as construction could also be heavily impacted by the increased tariffs.
The US is the steel industry’s second largest export market behind the European Union.
Gareth Stace, the director-general of trade association UK Steel, said Trump’s tariffs are “hugely disappointing”.
He said: “These tariffs couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home, against an oversupplied and increasingly protectionist global landscape.”
Pensions
As the new tariffs cause market volatility it could impact the value of your pension.
But do not panic, warns Tom Selby, director of public policy at AJ Bell.
He said: “For pension savers focused on the long-term, there is no need to panic – short-term volatility is part-and-parcel of long-term investing.
“The key thing is to ensure you are comfortable with the risks you are taking, have a range of investments so all your eggs aren’t in one basket and keep making regular contributions if you can afford to.”
If you are nearing retirement then keep an eye on your pension.
If you withdraw money when the market is down then it could deplete the value of your pot much faster.
Speak to a pensions advisor or call your pension provider if you are concerned.
Medicines
The UK pharmaceutical industry is very dependent on trade with the US.
Among the two biggest pharmaceutical companies are AstraZeneca and GSK, which are both headquartered in the UK.
Although their headquarters are here, both companies have manufacturing facilities in the US.
This means that the ingredients in life-saving medicines and vaccines travel frequently between the UK, EU and US.
Under the new tariffs these firms could be hit with multiple tax charges as they send medicines across the borders during their development.
This could increase the price of certain products.
You should not be affected if you get free NHS prescriptions.
It is not yet clear how the tariffs will work in conjunction with pricing caps that the NHS and other healthcare providers have for buying drugs in bulk.
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