Bank of England warns of ‘substantial’ risks to UK from Trump tariffs
Governor Andrew Bailey cautioned over the ‘major shift’ going on in the US after President Trump imposed trade tariffs on various countries.
The Governor of the Bank of England has said recent US trade policy poses “substantial” risks to the UK and the world economy.
Speaking to MPs on Wednesday, Andrew Bailey said there is a “major shift going on in the US” which the Bank would have to “take very seriously”, when quizzed about the impact of new tariffs.
His comments come after President Donald Trump continued his aggressive trade plans earlier this week, targeting Canada and Mexico with import tariffs of 25%.
Mr Trump and his administration have claimed higher tariffs on US imports will help it gain leverage over allies and rivals around the world.
But experts have warned that trade barriers could hurt both the US and other countries’ economies, including the UK.
Mr Bailey told the Treasury Select Committee: “The risks to the UK economy and the world economy are substantial,” while adding: “Trade supports growth.”
When asked if US trade policy could lead to people in the UK having less money in their pockets, he answered: “Yes, that’s right… We serve the people, and we have to take it very seriously.”
Economists have forecasted that the tariffs could trigger higher prices and more inflation in the US, leading to higher interest rates.
The National Institute of Economic and Social Research (NIESR) recently predicted lower economic growth in the UK as a result of higher global interest rates.
Separately, Mr Bailey also warned of the risks around the US potentially leaving institutions like the International Monetary Fund (IMF) and the World Bank.
The IMF and the World Bank are designed to help manage the global economy, lending money to countries to protect against financial crises.
But there is growing concern that the US might disengage from the institutions or pull out entirely, after some of Mr Trump’s allies, including key White House staff, previously recommended withdrawing.
Mr Bailey said the move would be a “very damaging thing for the world”.
But he said he was encouraged after hearing that the new US treasury secretary, Scott Bessent, “believes in multi-lateralism, and I strongly welcome that”.
