UK families may feel the pinch as new US tariffs ripple through global economy
Households across the UK may soon feel financial aftershocks following Donald Trump’s announcement that the United States will impose 10% import taxes on a wide range of goods. The move, framed by the former president as a measure to protect American industry, has ignited widespread concern on both sides of the Atlantic.
Foreign Secretary David Lammy has weighed in on the issue, stating that many Britons are “very concerned” about how the tariffs could affect their day-to-day costs and long-term financial wellbeing.
What might happen to prices in shops?
The immediate question for most consumers is whether prices on everyday goods will rise. Sarah Coles, head of personal finance at Hargreaves Lansdown, noted the situation is far from clear-cut.
“There are a number of forces that could keep a lid on inflation,” she said. “Concerns over global growth may prompt central banks to maintain lower interest rates for longer, which could act as a counterbalance.”
However, fluctuating exchange rates — particularly the strength of sterling against the dollar and euro — will play a pivotal role in determining whether imported goods become more expensive.
Ms Coles added that diverted goods previously destined for the US could lead to surpluses in other markets, potentially leading to bargains for UK consumers. “Some companies may even keep prices down deliberately to remain competitive,” she said. However, she warned that “there’s still the risk of inflation” as companies could pass on the extra cost of tariffs to consumers worldwide.
Impact on jobs and the broader economy
The implications extend beyond the shop floor. British exporters that rely heavily on the US market — including the automotive and alcohol sectors — could suffer from reduced demand, leading to potential job cuts or restructuring.
The US is the second-largest export market for UK-made cars after the EU, and American consumers are significant buyers of Scotch whisky and other British spirits, particularly from Scotland.
With reduced export volumes and a dampened global trade outlook, economists warn that overall UK economic growth could slow, triggering a knock-on effect across industries and employment.
What about the housing market?
The property sector is closely tied to broader economic confidence. Richard Donnell, executive director at Zoopla, believes the impact of the tariffs could compound existing challenges in the housing market.
“The housing market has largely adjusted to higher borrowing costs and weaker economic growth,” he said. “However, if the tariffs further suppress UK economic growth and keep inflation elevated, it may limit the Bank of England’s capacity to cut interest rates.”
Zoopla’s current outlook assumes mortgage rates will average around 4.5% in 2025. While home sales are still expected to rise modestly, price growth may be more subdued than previously anticipated, especially with buyers becoming increasingly cautious.
Effects on investments and pensions
Financial markets have already responded nervously to the news, with the UK’s top stock indices dipping amid fears of escalating global trade tensions. For households with pensions or other investments, volatility can be unsettling.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, advises against reactive decision-making. “Pensions are long-term investments. Sharp reactions such as cutting contributions or switching strategy can lock in losses, making it harder for your retirement fund to recover.”
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Potential for future cuts or tax rises?
The Office for Budget Responsibility (OBR) has warned that tariffs could reduce the fiscal headroom available to Chancellor Rachel Reeves, putting her debt reduction targets under pressure. Should this materialise, households could face a return to austerity-era spending cuts or new tax rises unless fiscal rules are revised.
Travel and Easter holidays abroad
For families planning Easter getaways, the tariffs may influence foreign exchange rates. Ms Coles highlighted that the pound has rebounded slightly since early in the year, offering some relief to travellers — particularly those heading to the US or other dollar-linked destinations.
However, she cautioned that travellers to Europe might find their spending power a little weaker. Her advice? “Use a fee-free card or secure your travel money in advance to avoid airport rates or hidden charges.”
As the full consequences of Trump’s tariff plan begin to unfold, UK households are being urged to monitor developments closely and prepare for potential financial turbulence in the months ahead.
