The ink was barely dry on Rachel Reeves' Spring Statement before her plans to balance the nation's books were effectively blown out of the water.
Trump's tariffs, particularly on foreign-made cars, fuel fears of a global trade war that could eliminate the UK Chancellor's financial headroom, impacting growth, jobs, and potentially leading to tax increases. Experts warn tariffs cause inflation and harm British exports, with a US trade deal unlikely. Historically, tariffs have worsened economic downturns, although during Trump's first term, inflation didn't spike as companies absorbed costs. While some believe tariffs will raise revenues, corporate profits will likely suffer, and markets are reacting negatively. The long-term impact is considered a "lose-lose" situation, potentially leading to rising prices, stalled growth, and higher borrowing costs. Oil prices could fall, but it is unlikely to offset the effects of tariffs and existing inflation.
