What Trump’s ‘Liberation Day’ tariffs mean for your finances

Trump tariffs are sweeping global markets. But how is it going to affect UK personal finances and the economy?

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.

More from Edmund Greaves

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