Donald Trump tariffs could 'LOWER price' of some items for UK shoppers

Donald Trump has unveiled a wave of sweeping global tariffs, including a going into the US, starting April 5. The US President also announced a 20% tariff on EU goods, in what he dubbed as “Liberation Day” for Americans.

Some countries were hit with even steeper import taxes, including Cambodia which has been slapped with 49% tariffs, Laos with 48%, Vietnam with 46% and with 44%. The new measures come on top of a previously announced 25% tariff on all cars imported to the US, as well as import taxes on steel and aluminium.

Prime Minister has acknowledged there will be an economic hit to the UK, and has indicated that Downing Street will continue to fight for a trade deal with the US. The PM said: “Clearly, there will be an economic impact from the decisions the US has taken both here and globally.”

The FTSE 100 Index dropped sharply on opening, falling 122.4 points or 1.4% in the first few minutes of trading. The Dax in Germany and the Cac 40 in France were both down more than 2%, while markets across Asia slumped overnight, with the Nikkei in Japan down nearly 3% and China’s Hang Seng 1.5% lower.

When tariffs are introduced, the importers of the goods are the ones who pay extra - so in this case, American companies. argues that this will encourage US citizens to buy more American-made goods, which he claims will help boost the US economy and create more jobs.

But economists argue that tariffs mean companies will put up prices in return to mitigate the extra costs - so customers ultimately end up paying more. If prices go up, analysts say this could push up global inflation, which is the measure of how quickly or slowly prices are rising.

Economists say car prices may rise following the new 25% tariffs on motor imports, as UK manufacturers rely heavily on sales in the US market - so they may look to mitigate these costs with price increases in the UK. The Institute for Public Policy Research think tank predicts more than 25,000 jobs in the UK car manufacturing industry could also be at risk, with one in eight UK-built cars exported to the US.

Kitchenware, foil and drinks sold in the UK could also become more expensive, as a result of the tariffs on aluminium and steel imports, while the UK pharmaceutical industry is also very dependent on trade with the US. But analysts say some prices in the UK may actually come down.

Amy Knight, personal finance expert at NerdWallet UK, said countries that have been slapped with far higher tariffs than the UK, such as China and Vietnam, may look to diversify their trade strategies and send more products to the UK. She said: "If goods they would have sold to the US are diverted to the UK instead, supply here will increase, pushing prices down for some items."

One industry that could get cheaper is clothing and textile, according to David Kindness, tax expert and personal finance writer at Best Money. He said: "Let’s say US tariffs hit Chinese exports hard. That would open the door for UK clothing and textile manufacturers to fill the gap in the American market.

"If they get a boost in exports, production might scale up, and with higher volumes often come lower costs. Some of that savings could trickle back into the domestic market, especially through surplus goods or off-season items. It wouldn’t be a massive drop in price, but it could show up in specific segments."

Oliver Chapman, Group CEO of OCI, a global supply chain procurement company, said electronics, computers, home appliances, entertainment systems, consoles, and other produced sourced from Asia, could also become cheaper. He said: “Global supply chains will certainly be disrupted as a consequence of the US imposing tariffs on imports from China, in one form or another.

“Products which would normally be sold in the US may find a greater presence - or even be entirely redirected - to the UK and European markets to avoid higher cost of goods sold and, potentially, decreased demand in the States. This would result in increased supply and, consequently, lower prices for UK consumers. Top of mind are most electronics, computers, home appliances, entertainment systems, gaming consoles and other produced sourced from Asia.

“There could be price adjustments for luxury goods such as bags, high-end apparel, perfume, and jewellery if there is a shift to avoid US tariffs, too. UK retailers would access these goods at lower prices from their EU counterparts if the American market shifts for them substantially.“

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