How Trump NEW Tariffs Could Affect UK Cost Of Living Especially Interest Rates

13th July 2025

United Kingdom
Economic strain:

Industrial production hit: Goldman Sachs forecasts a 3% drop, one of the sharpest among major economies.

Copper and pharma sectors vulnerable: Trump's proposed 50% copper tariff and potential 200% pharma tariff could disrupt UK exports.

Financial sector risk: The Bank of England warns that the UK’s large financial sector makes it especially sensitive to global shocks.

Government response:

UK diplomats are being deployed to boost exports and forge new trade links to offset losses.

The Bank of England expects 3.6 million households to face higher mortgage costs due to broader economic uncertainty.

United States
Mixed economic impact:

Higher consumer prices: Yale’s Budget Lab estimates households could pay $2,400 more per year due to price hikes on imported goods like clothing, electronics, and copper.

GDP decline: Projected to shrink by 0.7% in 2025, with long-term losses of up to $110 billion annually if tariffs persist.

Unemployment uptick: Expected to rise by 0.4%, especially in sectors reliant on imports.

Manufacturing boost: Domestic production may increase by 2%, especially in protected industries.

Political fallout:

Polls show growing economic uncertainty among Americans, with many cutting back on purchases due to tariff-related inflation.

European Union
Trade disruption:

30% blanket tariff on EU goods starting August 1 could severely impact exports in automotive, machinery, agriculture, and pharmaceuticals.

Germany is particularly exposed due to its export-heavy economy.

Retaliation brewing:

EU leaders, including Ursula von der Leyen and Emmanuel Macron, have warned of proportional countermeasures8.

Trade ministers are meeting to decide whether to impose tariffs on €21 billion of US imports.

Economic outlook:

Analysts expect a 0.3% GDP decline across the EU, with Germany potentially seeing a 0.4% drop.

Some sectors may benefit from diverted demand away from China, but overall growth is expected to slow