28 May 2025
general
The introduction of heightened tariffs by the United States under the Trump administration has created ripples across the global economy.
With some tariffs reaching as high as 145% and a broad range of industries feeling the pinch, it’s natural to wonder what this could mean for your finances.
You might be asking how these tariffs could affect interest rates, mortgages, inflation, and the everyday cost of living here in the UK.
Let’s explore what these trade policies could mean for both the UK and your finances.
Increased tariffs could lead to higher everyday costs
When the US levies tariffs on products from other nations, the cost of these goods for American businesses or importers is likely to rise. In the same vein, if another nation imposes tariffs on US goods, costs are likely to rise for US consumers.
Businesses often pass tariff charges on to consumers, meaning that if you live in an affected country, you would likely see price increases on imported fruits and vegetables, certain clothing brands, or electronics.
Moreover, tariffs can trigger retaliatory measures. When one nation imposes tariffs, it’s often regarded as an unfair trade practice, prompting others to respond with tariffs in kind. We saw this recently when the US set duties on Chinese goods at 145%. In response, China raised its US tariffs to 125%.
The Guardian reports that this has since been lowered to 30% and 10%, respectively, albeit only for the 90 days following 9 April 2025. So, we may see a new resolution come mid-July, but this could still be subject to change.
This tit-for-tat approach can escalate into a trade war, further inflating prices. The UK recently went through a bout of high inflation, with the Office for National Statistics (ONS) reporting a high of 11.1% in October 2022. Since April 2024, inflation has remained at or below 3%, but that has since changed, with the most recent figures highlighting a 3.5% increase in inflation.
Higher bills for gas, electricity, water, and fuel have contributed to this increase.
Moreover, if import costs rise, you can expect to pay more for a wide range of goods and inflationary strain on your household budget will reduce your spending power over time.
Disrupted global supply chains can have a ripple effect on the economy
Reuters reported in April 2025 that the recent round of tariffs against Japan, Mexico, India, and more, have been disruptive, affecting the automotive and manufacturing industries’ ability to meet standard expectations of supply and demand.
This disruption stems from several factors:
Ultimately, these disruptions can mean that costs are likely to rise for consumers, contributing to inflation.
Tariffs can influence interest rates, which has a cascading effect on the cost of mortgages
If tariffs fuel inflation, central banks like the BoE may respond, as they have in the past, by raising the base interest rate to curb it.
They do this because higher interest rates make borrowing more expensive, which can cool down economic activity. This cooldown can help lower prices, since demand isn’t as high.
Most notably, higher interest rates can have a direct effect on mortgage rates, as it becomes more expensive for everyone to borrow money, including lenders.
Keep in mind that lenders typically borrow money from central banks, such as the BoE, and then lend that money to you. This is why any interest rates you receive from a lender are often at least somewhat higher than the base rate, which can make it more expensive to buy property or remortgage.
Navigating economic uncertainty alone can be overwhelming at times, particularly if you’re buying, selling, or remortgaging your property. Here, speaking with a mortgage adviser can help you navigate the housing landscape, which can be tricky when rates and property prices are high.
Advantage FS, our partner mortgage firm, are here to help find you a deal that works for your financial circumstances, ensuring your long-term affordability.
This means you can rest assured that, even in times of turbulence, your property plans are still on track.
Get in touch
While tariffs imposed by the Trump administration have the potential to significantly reshape the economic landscape, you can navigate these changes with confidence, knowing you have expert advisers by your side.
Email enquiries@jesellars.co.uk or call 01934 875 919 to find out more about how we can help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
