On 2 April 2025, US President Donald Trump unveiled his ‘Liberation Day’ tariffs, a sweeping set of import taxes aimed at reshaping global trade and boosting American manufacturing.

The UK has been hit with a blanket 10% tariff on all imports to the US, with varying tariffs on particular industries such as automotive and pharmaceuticals – both significant exports for the UK economy.

Other countries and regions have been slapped with much higher rates, such as 20% on the EU and 34% on China. Considering the heavily interwoven nature of the global economy and supply chains, this could have significant effects on the UK regardless.

Here’s how it could impact your wallet, from the global economy to your investments and everyday costs.

The global economy

Trump’s tariffs signal a retreat from decades of globalisation, targeting countries with trade surpluses and imposing costs on imports.

Economists warn this could slow global trade volumes, a key driver of economic growth. For the UK, an open economy reliant on international trade, this isn’t just a distant concern.

If major trading partners such as the US, EU, or China stumble into recessions – or retaliate with their own tariffs – demand for British exports could weaken, indirectly hitting jobs and growth here.

Much also depends on how the UK Government responds to the tariffs. If it chooses not to retaliate it could dampen the overall impact. Tariffs affect the buyer country – this means US consumers will end up footing the bill for their imports. UK consumers will only be hit upfront if the UK Government chooses to impose retaliatory tariffs.

If the UK maintains a low-tariff environment on its imports it could also prove a favourable alternative market for countries such as China, which could have a positive impact on prices as surplus goods come here instead.

Further, with the EU – a closely associated economic bloc – could see some companies look to base in the UK due to its more favourable tariff levels with the US. This could be good for UK growth and employment.

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Investments: uncertainty hits the markets

If you’ve got money in stocks or pensions, brace for turbulence.

Global markets shuddered after Trump’s announcement, with US stock futures dropping sharply and European indices like the FTSE 100 feeling the strain.

This is down to a mixture of effects. Tariffs could dent corporate profits, especially for firms reliant on international supply chains- think carmakers or manufacturers.

However, there’s a silver lining: if the UK dodges the worst of Trump’s wrath, some investors might see Britain as a relative safe haven, potentially boosting demand for UK assets.

Still, higher borrowing costs and trade war fears could weigh on your portfolio’s value in the short term. As ever, diversification is important, as is not panicking in the face of short-term turmoil.

Inflation and interest rates: a global price push

Across the Atlantic, Trump’s tariffs are set to hike prices for American consumers as importers pass on costs.

This matters for Brits because global inflation tends to spill over. If US interest rates stay high to combat this – thanks to the Federal Reserve’s mission to fight inflation – global borrowing costs could rise too.

Higher US rates often push up yields on UK Government bonds (gilts), increasing the cost of everything from mortgages to Government debt.

For Brits, this could mean pricier loans or credit card bills if the Bank of England is forced to follow suit.

UK economy, inflation, and interest rates: a mixed bag

The UK’s direct hit is a 10% tariff on exports to the US, our largest single-country market for goods such as cars. This could cost jobs and slow growth in these major sectors and lead to higher inflation levels thanks to a strong dollar.

Yet, there’s a twist: if US tariffs divert cheap goods (such as Chinese steel) to the UK, prices for some items could fall, easing inflation in some areas.

The picture here is very murky, which is why investment markets are responding very nervously. We won’t know the full effect of the Trump tariffs on the UK economy for some time.

It is clear though that the UK is facing major challenges already – this clearly isn’t going to help.

What can you do?

Trump’s tariffs are a gamble with global stakes, and our personal finances aren’t immune.

Keep an eye on your investments – ensure your risk is spread carefully across sectors or regions less exposed to trade wars.

If inflation creeps up, locking in fixed-rate deals on loans or savings could shield you from rising costs. And while the UK Government negotiates to soften the blow, staying informed will help you navigate the uncertainty.

Liberation Day may be Trump’s vision, but its fallout is everyone’s reality. Keep a cool head in the meantime.

This article is for informational purposes only and should not be considered financial advice. If in doubt, seek professional advice.

Photo credits: Pexels

The post What Trump’s ‘Liberation Day’ tariffs mean for your finances appeared first on Mouthy Money.

As of 13 March 2025, Donald Trump’s administration has reignited global trade tensions with sweeping tariff proposals, leaving investors nervous about falling markets and considering ‘safe haven’ alternatives.

During the presidential election campaign, Trump pledged 10-20% tariff on all imports to the US, with a staggering 60% levy targeting Chinese goods. Now in office, he’s confirmed 25% tariffs on steel and aluminium imports, and a range of other tariff threats still abound.

As a result, investment markets – both in the US and globally – have take fright. Laith Khalaf, head of investment analysis at AJ Bell, explains: “The mighty S&P 500 has taken a tumble and it’s the actions of the US president which look like the main cause. The US index dipped briefly into correction territory this week, defined as a 10% fall from a previous peak.

“Markets have taken fright at the global trade war which seems to be erupting, because that can be expected to dampen global growth while pushing up inflation. US stocks already looked vulnerable to correction unless everything turned out peachy, and the market is now looking at US trade policy and thinking peaches may turn out to be quite thin on the ground.”

The UK faces uncertainty as Trump hints at more tariffs to come, though he’s suggested a deal could spare Britain. The US accepts more than £60 billion of UK exports annually, from pharmaceuticals to cars according to 2023 Office for National Statistics (ONS) data.

But inflation and trade risks aside – UK investors will possibly be looking at their portfolios with concern as markets whipsaw and send numbers down. This could lead many to consider selling assets and looking for so-called ‘safe haven’ alternatives.

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Safe haven risks

For UK investors and pension holders, Trump’s tariffs spell volatility. Self-invested personal pensions (SIPPs) and global funds, often with high levels of US exposure, could see short-term dips as Wall Street reacts. This is evidenced by recent S&P500 index declines.

Long-term, a trade war could stunt global growth, hitting emerging markets and UK exporters. Yet Khalaf explains that while fleeing to ‘safe haven’ investments might seem like a good idea in choppy market conditions, the long-term effect of running to safety might not be that helpful.

“In the current market environment investors may well be wondering if it’s time to turn to safe havens to add some ballast to their portfolios,” he says.

“We ran some numbers to see how five key safe havens available to UK investors had performed over the last 10 years, though of course, that doesn’t guarantee the same returns will be delivered going forward.

“As the tables below show, there’s been a wide dispersion of returns and protection provided by safe haven investments over the last decade.”

Khalaf continues: “These assets are used by investors seeking a more cautious approach to investing and are usually paired with an equity portfolio to provide some ballast.

“You would normally expect the equity component of a portfolio to perform better over the long term, and true to form, the global stock market has left most safe havens for dust in the last 10 years. A global index tracker has returned 225.1%, compared with the average Cash ISA which has delivered 14.2%, or the typical gilt fund which has produced a return of -5.0%.

“It has been a terrific decade to be invested in the global stock market, in large part thanks to the meteoric rise of the titans of the US technology sector. It’s entirely possible that the next 10 years won’t be as kind to stock market investors, though history still suggests that returns will be superior to less risky asset classes. Looking at 10-year periods going back to 1899, Barclays reckons the UK stock market has beaten cash over 90% of the time.

“While seeking out safe havens in times of turmoil is perfectly reasonable, it’s important not to throw the baby out with the bathwater and jettison the stock market altogether. Indeed, as the figures below show, even safe havens come with risks attached, and it’s actually by diversifying across asset classes that you can take some of the rough edges off each of them.”

Photo credits: Unsplash

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