UK’s open economy is vulnerable to chaotic global effects of Trump tariffs British policymakers watch nervously, fearing a weaker pound and inflation even if US tariffs are not applied directly.
If that is their verdict, US bond yields would rise – and as the lurching bond selloff in the early days of 2025 showed, where US Treasuries go, gilts (UK government bonds) tend to follow.
“The intellectual basis for the kind of advocacy of tariffs comes from arguments on the US side about large US deficits in manufactured goods, which obviously the US has with China and with the EU.
But even if the UK can avoid being slapped with tariffs directly, the fact that we are a very open economy makes us vulnerable to a significant slowdown in international trade flows – a point Reynolds also made.
He is right that, so far at least, the UK does not appear to be directly in Trump’s sights: the president has not expressed the same sense of grievance against the UK as he has against the EU, for example, which has “treated us so terribly”.
