As if there wasn’t enough to worry about in the UK economy now businesses await a fresh threat from tariffs on trade being proposed by US President Donald Trump.
The exact rate has not yet been announced but is expected to be around 20%.
In the UK there have been some small glimmers of hope with interest rates on a downward trajectory, but global and domestic economic uncertainty could see an increase in inflation which would likely slow further rate cuts.
Chancellor Rachel Reeves has warned that Donald Trump’s impending tariffs will “have an impact” on the UK’s economy. Business Secretary Jonathan Reynolds described the situation as a “very serious and significant moment.”
The true impact of April’s UK cost increases for UK businesses will most likely not be felt until the autumn, but retail and hospitality will be hardest hit given their high levels of low skilled workers.
The latest S&P Global UK Purchasing Managers’ Index (PMI) indicates a significant downturn in the manufacturing sector, with the index dropping to 44.9, slightly above the predicted 44.6. This marks the lowest reading in 17 months, well below the average of 51.7 from 2008 to 2025.
However, Sir Keir Starmer and Donald Trump spoke over the phone and agreed to work “at pace” on an economic deal which the UK hopes will exempt it from US tariffs.
The relative warmth Trump showed Keir Starmer in the Oval Office last month is unlikely to protect the UK, with tariffs expected on “all countries”. However, the UK has been racing to agree a deal, with the business secretary, Jonathan Reynolds, suggesting that if any country can secure a carve-out, Britain could.
Starmer says Number 10 will be “calm and pragmatic” and keep in mind the concerns of workers and businesses in Northern Ireland. “Northern Ireland will be at the forefront of all our decisions.”
More nail-biting is coming – if you have any nails left, that is.