Risk of rising US prices could be biggest brake on Donald Trump’s tariff plan
Taken at face value Donald Trump’s embrace of reciprocal tariffs is a declaration of total trade war, that would amount to perhaps the single biggest peacetime shock to global commerce.
In promising to levy import taxes on any nation that imposes tariffs or VAT on US exports, he is following through on a campaign promise to address a near trillion dollar trade deficit – the difference between the value of America’s exports and its imports – that he believes amounts to a tax on American jobs.
In response, he wants to deploy tariffs as an “external revenue service”, simultaneously easing the US deficit and, so the theory goes, pricing out imports in favour of domestic production.
Follow latest: Trump’s trading tariffs
With a promise to reestablish industries, from chip production lost to Taiwan, and car and pharmaceutical manufacturing to Europe, he is promising a country-by-country tailored assault on the status quo.
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Donald Trump unveils new tariffs for trading partners
Risk to Britain remains uncertain
His primary targets appear to be the major trading partners with whom the trading deficit is greatest.
Mexico and Canada, the European Union (whose 10% tariff on US cars is a particular irritation), as well as the ‘BRICS’ nations – Brazil, Russia, India (which imposes 9% tariffs on US imports), China and South Africa.
What it means for the UK will not be certain until the details are revealed in April, but it is a blow to the emerging view in Whitehall that Britain might wriggle through the chaos relatively unscathed.
To begin with, the US runs a trade surplus with the UK – in a quirk of statistics, the UK thinks it has a surplus too – and Brexit has placed it outside the EU bloc with the ability at least in theory to be more agile.
The UK also imposes direct tariffs on very few US goods following a deal in 2021, brokered by then trade secretary Liz Truss, that removed tariffs on denim and motorcycles bound for Britain, and cashmere and Scotch whisky heading the other way.
But we do add VAT to imports, and Mr Trump’s threat to treat the sales tax as a tariff by another name will chill British exporters.
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Donald Trump accepts his tariffs will be inflationary for the US. Pic: AP
Tariffs set to raise prices in US
Analysts have estimated tariffs could add 21% to the cost of exports, amounting to a £24bn blow to national income.
Pharmaceuticals, cars, chemicals, scientific instruments and the aerospace industry – the main components of our £182bn US export trade – will all be potentially affected.
But the pain will certainly be shared.
Tariffs are paid by the importer, not the exporter, and even Mr Trump accepts they will be inflationary.
Rising prices on Main Street could yet be the biggest brake on the president’s tariff plan.
That the United States chose to hold talks with Russia about Ukraine without Ukraine sums up the power imbalance that is upending security assumptions for the whole of Europe.
Volodymyr Zelenskyy, the Ukrainian president, has consistently warned that Kyiv must have a seat at the negotiating table for any discussions about ending Vladimir Putin‘s war to have a chance of success. His European allies also want to have a voice.
Yet these requests were ignored by Donald Trump and his strongman approach to diplomacy, with the president instead dispatching his top diplomat and two other senior envoys to meet Russian counterparts in Saudi Arabia on Tuesday.
(L-R) The US delegation in Riyadh included Steve Witkoff, Marco Rubio and Mike Waltz. Pic: Reuters
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Mr Zelenskyy, apparently by chance, had been due to embark on a pre-planned trip to the kingdom later that same day.
However, he decided to delay the visit to avoid the appearance of giving any kind of legitimacy to the bilateral encounter between Moscow and Washington.
Unfortunately for Kyiv, beyond noisy protest, it has very limited options when it comes to channelling the disruptive force of the Trump White House in its favour.
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The Ukrainian military remains hugely reliant on US weapons to fight Russia’s invasion and Mr Zelenskyy has made clear he would want an American element in any international security force that might be agreed upon to monitor a ceasefire – even though this is a role the US appears reluctant to fill and the Kremlin has said would be “unacceptable”.
It means Mr Trump has significant leverage over his Ukrainian counterpart which he will surely use to try to force through negotiations even on terms less favourable to Kyiv.
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Ukrainians react to US-Russia talks
The US has already reportedly tried to make Ukraine sign away a large portion of its natural resources to pay for US support – an uncomfortable offer that Mr Zelenskyy has so far declined but an indication of the new transactional approach to US foreign policy.
Mr Trump has repeatedly vowed to end Russia’s war in Ukraine – even claiming during the US election campaign that he would do this within 24 hours.
But he never spelled out how.
The past week, however, has offered an indication of the direction of travel and it does not look good for Ukraine.
From unilaterally picking up the phone to Vladimir Putin to sanctioning such a high-level meeting with the Russians in Riyadh, the only currency that seems to matter to the White House is power and right now both Kyiv and its European partners are looking all too weak.
The Duchess of Sussex has relaunched her lifestyle brand under a new name – and shared a rare picture of her daughter Lilibet.
Posting to her recently-created Instagram account, Meghan said she was “thrilled” to be changing the name of her American Riviera Orchard lifestyle brand to As Ever – a project which she “poured my heart into”.
As Ever’s website features an image of Lilibet running outside with her mother, surrounded by nature.
Meghan shares a rare picture of her daughter as she rebrands. Pic: As Ever
In the Instagram video post, Meghan, who married Prince Harry in 2018, says in the caption that As Ever “means ‘as it’s always been’ or some even say ‘in the same way as always’.
“If you’ve followed along since my days of creating The Tig, you’ll know this couldn’t be truer for me.
“This new chapter is an extension of what has always been my love language, beautifully weaving together everything I cherish – food, gardening, entertaining, thoughtful living, and finding joy in the everyday.”
Her Netflix show With Love, Meghan – which the streamer says “reimagines the genre of lifestyle” – launches in two weeks.
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The former Suits star returned to Instagram after four years on 1 January, when she appeared in a black and white video as she ran along a beach and wrote “2025” in the sand.
She followed it up the next day with the trailer for the upcoming Netflix show, with the message: “I have been so excited to share this with you! I hope you love the show as much as I loved making it.”
The launch of the show was delayed due to the devastating LA wildfires in January.
“I’m thankful to my partners at Netflix for supporting me in delaying the launch, as we focus on the needs of those impacted by the wildfires in my home state of California,” Meghan said at the time in a statement to Tudum, the official companion site to Netflix.
Meghan’s latest post before her video announcing As Ever was on Valentine’s Day, when she posted a picture of her and Harry kissing and said: “My love, I will eat burgers & fries and fish & chips with you forever. Thank you for you.”
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