Donald Trump has announced massive tariffs on all goods entering the US, and British consumers could feel the pinch with price hikes on daily essentials. On Wednesday, the former US president unveiled a sweeping tax on imports from around the globe, effective immediately as part of his “Liberation Day.” The tax also slapped a fresh 10% levy on British exports.

Downing Street has yet to retaliate with similar measures on American products. Prime Minister Keir Starmer assured Parliament that his cabinet would maintain a “calm, pragmatic approach” and remain “keeping our feet on the ground”. Stateside shoppers have been cautioned about imminent price surges due to increased import costs, reports the Mirror.

Items likely to face price hikes:

Cars:

The imminent 25% tariff on all automobiles and vehicle parts set by Trump, effective April 3, could unexpectedly hit British consumers’ wallets. This is because many leading car manufacturers, especially high-end European brands such as Mercedes Benz and BMW, are deeply entrenched in the US market.

To recoup potential losses from the tariffs, these brands might hike their prices in the UK, potentially driving up the cost of luxury vehicles for Brits.

The ripple effects of Trump’s tariffs are also poised to shake the foundations of the British car industry, given that the US is a significant export destination—with 16.9% of UK car exports heading there last year. The Institute For Public Policy Research (IPPR) sounded the alarm yesterday, cautioning that the car tariffs could “completely destabilise” the industry, with companies like Jaguar Land Rover and Mini facing the greatest threat.

To counteract this, the think tank has urged the Government to incentivise British drivers to purchase locally produced electric cars, thereby compensating for the anticipated downturn in exports. Among the proposed measures are cutting VAT on public charging points and offering grants to low-income households.

Mortgages:

Moreover, global economic inflation could directly influence UK interest rates, impacting mortgage payments. With the Bank of England at the helm of setting these rates, a cut next month seems less likely amid turmoil in the global financial markets.

Myron Jobson, Senior Personal Finance Analyst at Interactive Investor, has clarified the potential knock-on effects of tariffs on inflation and monetary policy: “If tariffs contribute to higher inflation, central banks may be forced to tighten monetary policy, which can weigh on bonds and borrowing costs. This could impact everything from mortgage rates to corporate investment, potentially slowing economic growth.”

He added: “For investors with exposure to US equities – either directly or through pension funds and ISAs – this could translate into market turbulence. Any sell-off in US stocks could drag down the performance of funds with heavy US exposure – not least global funds as they typically have a substantial weighting to US equities.”

Foil and kitchenware:

UK consumers could face price hikes in foil, kitchenware, and drinks cans due to Trump’s previously announced tariffs on aluminium imports to the US, which took effect last month.

Manufacturers who produce aluminium-based products for international trade may pass on increased export costs to UK consumers and businesses, leading to rising prices. Conversely, industries like construction that depend on aluminium-intensive goods could also feel the strain.

Food and everyday items:

Due to the UK’s heavy reliance on imported goods, a wide array of items available in British supermarkets could see a price hike. For instance, it is estimated that 48% of all food consumed in the UK is imported, with a significant portion coming from the EU, which has recently been slapped with a 20% tariff on all exports to the US.

China, a major manufacturer of many plastic goods used in Britain, will face an even steeper rate of 34%.