Table of Contents
What is a rate?
A rate is effectively a tax on goods that enter a country from abroad. They are paid by the company that imports the items.
This normally has the effect of making the goods more expensive for consumers, because companies pass on the costs of the rate.
Because they increase the costs of the input, rates are used to give an advantage of their own industries compared to foreign competitors.
The US president has announced that all imports in the US will be subjected a minimum rate of 10 percent from tomorrow.
But some countries that export many goods to the US, such as China, will be hit with higher levies from 9 April.
The Chinese export was beaten with a 'mutual' rate of 34 percent, while the EU had a 20 percent levy compared to the US.
The levies mean that the effective rate percentage for all American imports has risen to 22 percent of only 2.5 percent last year, levels that have not been seen since 1910.
Donald Trump announced that all imports in the US will be a minimum rate of 10 percent
Displayed: a breakdown of the business links of Great Britain with America per region. Medicinal and pharmaceutical and road vehicles formed some of the best British exports to the US in 2023
What is Mr. Trump's strategy?
Mr. Trump said that other countries have been 'torn out' for decades and that his rates have been designed to 'make America rich again'.
He has claimed that making it more expensive to import goods into America means that more products will be made in the country.
Moreover, it is hoped that the measures will increase trillions of dollars that can help pay for deep tax cuts.
Trump assistant Peter Navarro said the rates will collect £ 4.5 trillion, although much of the pain in the form of higher prices will probably fall for American shoppers and companies.
How will it be the British economy?
While the UK succeeded in avoiding some of the higher rates imposed on China and the EU, it has not escaped unscathed, with all British exports to America with a tax of 10 percent.
Keir Starmer has warned: “There will be an economic impact … both here and worldwide.” He's right.
The £ 60 billion of goods that the UK sends to the US every year – our largest trading partner – have only become £ 6 billion more expensive.
Trump stops a gigantic graph that shows some of the mutual rates that his administration intends to accuse abroad. Each country will be charged at least a rate of at least 10 percent to import goods to the US
The first of eight pages with mutual rates that the White House announced during Wednesday's event in the Rose Garden
The National Institute of Economic and Social Research estimates that the rates this year will reduce growth in the UK to 0.6 percent and next year almost zero – well under 1 percent and 1.9 percent by the office for budget responsibility just over a week ago.
Economists at Barclays are still gloomy, warning for a hit of 1.5 percentage points for British growth this year, which pushes the economy into a recession.
The delay will be anything except the limited £ 9.9 billion of tax 'headroom' Chancellor Rachel Reeves, has left himself in her spring statement – the scene for more tax increases or cutbacks (or both) in the budget in the budget this fall.
Jobs are also in danger. The 25 percent rates for cars can mean that no fewer than 25,000 jobs are lost, according to the Institute for Public Policy Research.
What is the impact on British consumers?
The route on the global stock markets will be a bitter blow to millions of British savers with pensions, Isas and other investments in shares.
Households can also be hit by higher prices. Ministers are consulting cases about a possible retribution – and every reaction will probably cause pain for consumers.
Prices of American import such as Tesla cars, Levi's Jeans, Jack Daniel's Bourbon and Harley-Davidson Motorcycles can all rise if the UK sets the rates on American goods.
There is also the risk that the more general costs of doing business around the world will increase as the supply chains are disrupted, which means that companies can be forced to increase prices.
A potential benefit in the short term is that British shoppers can see lower prices for some goods, because countries are looking for an alternative destination for their wares to prevent American rates.
Prices of American input such as Tesla Cars, Levi's Jeans, Jack Daniel's Bourbon and Harley-Davidson Motorcycles can all rise if the UK The rates for American goods (file image)
Trump seemed intentionally to wait until the markets were closed to make his announcement
Great -Britain, however, could draw rates on countries such as China to prevent them from dumping cheap goods here.
Which British regions are the most affected?
The West Midlands and east of England produce more than 40 percent of British goods that are exported to the US every year – worth around £ 25 billion.
About 21.5 percent of exports to the US come from the West Midlands, with cars that make up 49 percent of them, according to PWC.
Jaguar Land Rover and Aston Martin are both located in the region. The east of England makes up 19.6 percent of export to the US with medicines and pharmaceutical products that are good for 30 percent.
What is the effect on the global economy?
The impact in the longer term will depend on whether this escalates in a trade war and how long.
This increases the ghost of stagflation – a combination of high inflation and weak economic growth.
Ric Deverell, chief economist at Australian Investment Bank Macquarie, describes it as “the largest commercial shock in history.”
And a report from the Aston University suggests that the £ 1 trillion of the global economy could wipe, which means that the fear is fueled that many countries will undergo recessions.
