Who is running Britain’s economy – Rachel Reeves or Donald Trump?

John Springford, associate fellow at the Centre for European Reform, said the economic dangers cannot be overestimated. “If Trump imposes a 25% tariff on cars and car parts on the UK, it will reduce exports to the US – but only £7bn of exports would be affected, out of total exports of £800bn. The far bigger costs would arise from an escalating global trade war, even if the UK does not retaliate. The impact of a global trade war would be stagflationary for the UK. US inflation would rise and the Federal Reserve would cut interest rates more slowly, which would tend to keep UK interest rates up. Higher trade barriers would hurt demand in the EU and the US, with knock-on effects for British exports.”