The imposition of new tariffs by former US President Donald Trump on imported goods is expected to affect prices for various items in the UK. With the introduction of a 10% import tax on British goods, consumers may face higher costs on everyday products.
These changes are likely to have a ripple effect on the economy, influencing both consumers and industries. Manchester Evening News reports that this development could lead to price hikes in multiple sectors.
Below, we explore some of the key products that could be impacted by this trade shift, starting with a look at cars and household essentials.
Cars: A Rising Cost for Premium Models
The new 25% tariff on automobiles and vehicle parts, which came into effect on April 3, is expected to affect the cost of cars in the UK. Manufacturers, particularly European brands like Mercedes-Benz and BMW, heavily rely on the US market.
As a result, they may raise prices in the UK to offset the losses suffered due to the tariffs. This shift could cause a substantial price increase for premium vehicles in the UK, with companies like Jaguar Land Rover and Mini particularly vulnerable to the impact.
The Institute for Public Policy Research (IPPR) warns that these tariffs could destabilize the UK automotive sector, urging the government to incentivize the purchase of domestic electric vehicles.
Mortgages: The Hidden Financial Burden
The tariff-driven inflationary effects could also influence mortgage rates in the UK. As the global economy experiences pressure from rising costs, central banks may feel compelled to tighten monetary policy, which could increase borrowing costs.
Myron Jobson, Senior Personal Finance Analyst at Interactive Investor, commented:
“If tariffs contribute to higher inflation, central banks may be forced to tighten monetary policy, which can weigh on bonds and borrowing costs. This could impact everything from mortgage rates to corporate investment, potentially slowing economic growth.“
This tightening of monetary policy could lead to higher mortgage payments for British homeowners. Analysts also note that investors with exposure to US equities, whether directly or through pension funds and ISAs, may experience market turbulence. Jobson added :
“For investors with exposure to US equities – either directly or through pension funds and ISAs – this could translate into market turbulence. “
“Any sell-off in US stocks could drag down the performance of funds with heavy US exposure – not least global funds as they typically have a substantial weighting to US equities.“
Kitchen Foil and Drinks Cans: Aluminium Costs Rising
Products that rely on aluminium, such as kitchen foil and drinks cans, are likely to be hit by Trump’s new tariffs on aluminium imports to the US. As the US imposes a higher export cost, manufacturers may pass on the increased costs to consumers in the UK.
This could lead to price increases on these everyday products, affecting not just household goods but also industries like construction that heavily rely on aluminium.
The UK’s dependence on imported goods, particularly food and plastic products, is another area poised for price increases. With 48% of food consumed in the UK being imported, and a significant portion of that coming from the EU, the new 20% tariffs on EU exports to the US will likely result in higher costs for these products.
On top of this, goods from China, including plastic products, will be subject to higher tariffs, further inflating prices on everyday items found in supermarkets.
