Politicians believe tariffs will revive a lost era of American manufacturing. But they won't improve people's everyday livesDonald Trump appears to be testing the boundaries of the power he can accumulate and then exert upon his allies, with a singular ambition: to coerce them into submitting to US supremacy. Though the president temporarily walked back his threat to unleash severe universal tariffs on Mexico and Canada, he has since imposed 25% tariffs on all steel and aluminium imports, which will primarily hit Canada, Mexico and China, and has announced a new plan for reciprocal tariffs" on American trading partners. Above all, he clearly intends to wage a trade war against China. His brash, bombastic and belligerent threats reflect the reactionary political energy that drove his rise, which feeds on displays of dominance and disruption. His trade war won't work to restore US economic dominance - but it tells us a lot about how both sides of the political aisle blame the US's economic precarity on China's economic ascent.Over the past decade both Democrats and Republicans have blamed growing economic discontent on the sharp decline of American industry. The share of the US workforce employed in manufacturing has been in decline since the 1950s: today, just over 8% of American workers are employed in manufacturing, compared with 32% in 1953. The postwar era holds a powerful resonance for both the right and the left, and is often romanticised as a period when unionised male breadwinners in the industrial working class enjoyed far greater economic stability and prosperity than working and middle-class people do today. Viewed through this prism, since the decline of US manufacturing has occurred at the same time that China has emerged as a global manufacturing powerhouse, China's gains equate to the US's - and its workers' - losses.Melanie Brusseler is a political economist and the US programme director at the thinktank Common WealthDo you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

While UK may not be in direct line of fire, knock-on effects on global trade has British businesses worriedWe're vulnerable at the moment," says Fiona Conor, the managing director of Trust Electric Heating, a Leeds-based radiator manufacturer, who has been considering expanding into the US market.After a predictably unpredictable start to Donald Trump's second term as US president, Conor is worried her options could be limited, as businesses across the UK brace for a global trade war. Continue reading...

The US president announced what he called reciprocal tariffs' on all other countries on ThursdayThe UK government will wait and see" whether tariffs announced by Donald Trump actually come to pass", a senior minister said.The US president announced what he called reciprocal tariffs" on all other countries on Thursday evening, claiming it was fair to all". Continue reading...

Despite growth in 2024, living standards fell. Inequality, weak public investment and government cuts threaten prosperity. Labour must offer voters something differentThe picture painted by official data for the UK economy in 2024 reveals a country broken by 14years of Conservative party rule. True, the economy grew - somewhat unexpectedly - but GDP per head fell, showing prosperity didn't reach most people. There are a few reasons for this decline but none suggests a healthy society. One is runaway wealth inequality, with gains hoarded at the top. Another is stark regional disparities, with some areas falling further behind despite national GDP rising. A third is rising immigration without enough job creation - more workers, but not enough well-paying positions.A growing economy means little if it doesn't improve living standards. In 2024, it didn't. This political reality has shaped recent years, and not in a good way. It's worth recalling a Newcastle woman's tart response to the political scientist Anand Menon in 2016 when he warned that Brexit would hit GDP: That's your bloody GDP, not ours." That continuing frustration explains the current backlash against mainstream politicians. No wonder SirKeir Starmer wants his party to be one of disruption.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Bank to offer first two-year deal under 4% with rivals likely to follow suitThe first sub-4% mortgages for months are going on sale, handing a much-needed boost to first-time buyers and those worried about refinancing their home loan.Santander on Thursday will start offering fixed rate deals at 3.99% lasting for two and five years. However, eligible borrowers need a 40% deposit, or a sizeable amount of equity to access the deals. Continue reading...

Modified US duties will be enforced without exceptions', said president, in controversial bid to boost economy

Downturn in jobs market will mean workers will be unlikely to be able to bid up their wages, says policymaker

Analysts say measures so far have been less than feared but traders still cautious as uncertainty about US policy has basically exploded'Asian markets were mixed on Tuesday as traders kept a nervous eye on Donald Trump's next moves after he signed off on 25% tariffs for steel and aluminium imports, having warned of more measures to come.The president has lived up to his campaign pledges to resume his hardball trade diplomacy to extract concessions on a range of issues, including commerce, immigration and drug trafficking. Continue reading...

Ex-treasury secretaries caution against administration's subversion of checks and balances, specifically MuskA group of five former US treasury secretaries are warning that the Trump administration has put the country's key payment systems under siege" and is undermining the checks and balances of the federal government.The secretaries warned that the administration had compromised roles historically given to non-partisan career civil servants and had replaced them with political actors", according to a New York Times op-ed published on Monday. The secretaries specifically called into question Elon Musk's so-called department of government efficiency", or Doge, and the appointees that Musk has installed within agencies, including the treasury department. Continue reading...

US president says 25% tariffs on steel and aluminium imports to be introduced this week as Chinese tariffs come into effect

FTSE 100 hits record high as pound falls after US president says he will impose 25% levies on steel and aluminium importsUK steelmakers have warned that the imposition of new US tariffs would be a devastating blow" to the industry, after Donald Trump said he would announce 25% tariffs on steel and aluminium imports into the US.Gold reached a record high and aluminium prices rose as financial markets were rattled by the US president's comments, which caused concern in the UK and the EU. Continue reading...

UK jobseekers say employers are hiring fewer staff - whom they expect to do more for less payThis is the worst I've ever experienced in the job market, including the aftermath of the 2008 financial crisis, which also left me unemployed for a time, and the pandemic," said David Hoghton-Carter, 46, a corporate strategy professional from Leeds.Hoghton-Carter was among the 1.57 million people in the UK who were trying to find work between September and November 2024, and is still hunting after nearly two years. Continue reading...

US president accused of shifting goalposts' by premier of Ontario for adding further tariffs on top of existing metal duties, as China's fossil fuel levies come into forceDonald Trump has said he will announce new 25% tariffs on all steel and aluminium imports into the US on Monday that would affect everybody', including its largest trading partners Canada and Mexico, in another major escalation of his trade policy overhaul.Trump's pre-announcement came as China's retaliatory tariffs, announced last week, came into effect. The measures target $14bn worth of products with a 15% tariff on coal and LNG, and 10% on crude oil, farm equipment and some vehicles. Continue reading...

A 25% tariff on all steel and aluminium imports, as flagged by the US president, is more evidence that Australia cannot rely on our ally to do good by usNews that the US president, Donald Trump, was going to place a 25% tariff on all steel and aluminium imports in to the US came as it generally does with such things - out of the blue, with no reasoning, and little to no understanding of whether Trump even knows what he is doing.Speaking to reporters on Air Force One on the way to the Super Bowl, Trump talked about reciprocal" tariffs. As an aside he said that we'll also be announcing steel tariffs on Monday" and when asked who they would affect he said everyone". When further asked about aluminium he replied aluminium too" (because hey why bother to mention that upfront?). Continue reading...

Base rate cuts may ease borrowing costs but without stronger public spending and targeted tax relief, economic stagnation will persistIt will be welcome news to many that we have been able to cut interest rates again," said Andrew Bailey, the Bank of England governor, last week. Plenty of mortgage holders would agree. Savers might not share Mr Bailey's sentiments. However, he justified the cut, made despite inflationary risks, by arguing that falling worker bargaining power would see price pressures subside. Without rate cuts, the Bank warned, there wasthe risk of anaemic economic growth.The chancellor, Rachel Reeves, backed the Bank, saying its action would ease cost of living pressures". That is true, but the benefits of lowering the burden of borrowing won't outweigh the costs of Ms Reeves' fiscal choices. She is counting on up to six base rate cuts by mid-2026 to buoy consumer sentiment. But relying solely on monetary policy is not effective economic management. Continue reading...

The US president has recognised something that is rarely acknowledged: monetary policy is political. The question is how to make it democraticIf I asked you to list the things that make democratic politics meaningful, what would you include? Most likely elections and education. Perhaps the NHS, or the armed forces, or the justice system. I'm guessing that interest rates didn't come to mind, which is strange, because they're crucial to democracy. Last week, Donald Trump reignited a debate about who should be in charge of the monetary system that controls a country's interest rates. You may disagree with Trump on a lot of things, but he's not wrong to recognise that monetary policy - a subject that can seem dull and horribly technical - is fundamentally political, and tells us a lot about democracy.Interest rates shape everything. They influence whether you can buy a house, and how many houses get built. They affect which businesses expand, what new technologies emerge, and which towns thrive or flounder. In the 1990s, central bankers hailed the great moderation", a period of low and stable prices dominated by central bank independence. Then came the financial crisis, the eurozone crisis, and then the pandemic. The giant bailouts that followed these events were often described as unconventional". But perhaps they simply uncovered a fact that was always there - that monetary policy is not as apolitical as some would like people to believe.Leah Downey is a junior research fellow at St John's College Cambridge and the author of Our Money Continue reading...

New research suggests that spending on those with the most complex needs can release so much financial benefit that it should be regarded as an investmentOne of the reasons Rachel Reeves wants faster growth is the taxes it generates and the possibility of spending them to refurbish the public sector.It's troubling that, seven months on from last July's election victory, Labour is still struggling to piece together a coherent answer to the question: where should the government direct its limited funds to spur a surge in growth? Continue reading...

President halts plan to put tariffs on low-value packages but says he will impose duties on more countries next weekDonald Trump halted a key part of his tariff attack on China on Friday, as he threatened to impose new US duties on goods from many more countries next week.Plans to ensure shipments from China to the US worth less than $800 still face tariffs - removing the longstanding duty-free status of low-cast packages - have been delayed to give more time to federal agencies to prepare for the change. Continue reading...

The US president hopes tariffs will help close the huge trade gap by potentially pressuring Beijing into a new dealDonald Trump postponed his threat to tax all imports from Mexico and Canada this week, citing action by those countries against migration and drug smuggling; but it was telling that tariffs on China went ahead.When it comes to the US's neighbours, Trump's Treasury secretary, the hedge fund manager Scott Bessent, made clear in a Fox News interview that tariffs are essentially a negotiating tool - partly aimed at achieving non-economic goals. Continue reading...

Campaigners and retailers say Britain should follow US and EU in phasing out exemption on duties for low-value parcelsTax campaigners have joined retailers in urging the UK government to close a tax loophole to prevent a massive influx" of cheap goods from companies such as Shein and Temu flooding the market.It comes after the EU said it was joining the US in phasing out an exemption on customs duties for low-value parcels that has been used by the companies to export goods from China cheaply. Continue reading...

Chief economist warns that cautious' approach to further interest rate reductions is requiredThe Bank of England is not in a position to declare job done" in tackling inflation amid concerns over rising prices hitting households, Threadneedle Street's chief economist, Huw Pill, has said.Speaking a day after the central bank cut interest rates and slashed its growth forecasts for 2025, Pill warned that a cautious" approach to further interest rate reductions would be required as inflation pressures remained. Continue reading...

US economy added 143,000 new jobs last month, fewer than expectedHong Kong's appeal to the WTO (see earlier post) comes as Donald Trump's new trade war is further blurring the lines between Hong Kong and Beijing.This is threatening to erode the city's main selling point as a global financial hub, reports Bloomberg, explaining:When Trump slapped a 10% levy on China this week, that action for the first time also applied to Hong Kong goods, after the president in 2020 signed an executive order to remove the city's special privileges.One day later, the US Postal Service put a ban on incoming Chinese parcels that also swept up the commerce center, before reversing course hours later.Early indicators of housing demand point to another month or two of decent performance for the housing market ahead of the Stamp Duty changes.But over 2025 as a whole, we think that the housing market will show only a modest improvement, given the Bank of England's gradual and cautious approach will see interest rates fall slowly against a backdrop of stretched housing affordability." Continue reading...

Labor department data shows 143,000 jobs added with unemployment rate steady at relatively low 4%Hiring across the US economy moderated in January, but the labor market continued to grow at a steady pace during the transition period between Joe Biden and Donald Trump's presidencies.New data from the labor department released on Friday showed 143,000 jobs added to the economy in January, short of the 168,000 expected by economists. The unemployment rate remained steady at a relatively low 4%, edging slightly downward from 4.1% in December. Continue reading...

UK economy expected to grow by just 0.75% this year, in fresh blow to Rachel Reeves's attempts to raise confidenceRachel Reeves's plans for growth suffered a double blow after the Bank of England halved its forecast for the year and warned households would face mounting pressure from rising prices.In a downbeat assessment as it cut interest rates for a third time in six months, Threadneedle Street warned people would face a fresh squeeze on living standards from rising inflation even as the economy stalled. Continue reading...

The stock market is not the economy - as shown by the new closing high after the Bank of England's rates cutNever confuse a stock market index with a symbol of national economic health. The truth of that old piece of wisdom was demonstrated on Thursday as the FTSE 100 went on a rip-roaring run - up 104 points, or 1.2%, to a new closing high of 8,727 - while the Bank of England cut interest rates because the UK economy was flat on its back.The point always to remember about the Footsie is that its constituents are an international crew, or at least they operate internationally. Goldman Sachs' analysts calculated recently that, in aggregate, only 22% of the revenues of FTSE 100 companies were generated in the UK. North America, at 29%, and the Asia-Pacific region, at 23%, are more important. Think of the likes of index heavyweights AstraZeneca, BP, GSK and Shell: their UK revenue exposures are measured in low single-digit percentages. Continue reading...

UK central bank cuts interest rates to 4.5%, and warns growth will be half as fast as expected this year, sending pound sliding

From iron ore to beef prices, a global trade war triggered by the US would cause significant disruption for consumers and businesses

Decision will lead to lower borrowing costs for those on trackers - but fixed-rate deals will stay the same

Weak jobs market and above-target inflation will dent Reeves's growth plans and may wipe out fiscal headroom

Latest quarter-point reduction comes with warning households face inflation of 3.7% by autumn

Growth forecasts likely to be downgraded, with rate-setting committee tipped to cut lending rate from 4.75% to 4.5%

Rolling coverage of the latest economic and financial newsThe eurozone's private sector returned to growth, marginally, last month, a new survey shows.S&P Global's monthly poll of purchasing managers across the euro area has found that the region's economy was able to eke out growth in January, for the first time since August.The slow pace of growth in the services sector, which was evident almost all of last year, continued at the start of 2025. Putting it more positively, growth at service companies played a crucial role in keeping the eurozone economy in expansion over the past year.Sluggish, but slightly accelerating growth in new orders and employment gives hope that this sector will gain a bit more momentum in the first quarter of this year.Demand growth has subsided in line with a tight monetary stance, and the positive output gap in the economy is narrowing. Housing market activity has eased, and house price inflation has lost pace. There are signs that economic activity is stronger than preliminary national accounts figures imply, however, and wage costs continue to rise.Although inflation has eased and inflation expectations have fallen, inflation pressures remain, which calls for a continued tight monetary stance and caution regarding decisions going forward. This is compounded by elevated global economic uncertainty. Continue reading...

European Commission also urges EU lawmakers to phase out exemption on customs duties for parcels under 150Parcels sent from China by online retailers such as Shein and Temu will face strict new customs controls as part of a crackdown by the European Commission on dangerous products" flooding the EU market.Brussels officials also urged EU lawmakers to phase out the exemption on customs duties that is allowed for parcels under 150 (125), which enables foreign suppliers to sell cheap goods in the bloc without paying the tax. Continue reading...

Fears grow for global trade, with major indices likely to plunge as US trading partners quickly retaliate, raising chance China and EU will follow suit

From rising gilt yields to higher inflation, the UK may suffer indirectly from US tariffsDonald Trump has announced the US is to put tariffs on imports from Canada and Mexico, and increase those on Chinese goods, and suggested he will bring in similar levies on items from the EU. What could these new charges mean for the UK? Continue reading...

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British policymakers watch nervously, fearing a weaker pound and inflation even if US tariffs are not applied directly

The UK is likely to make a cut this week; Trump has made it very clear he wants his central bank to follow suitThe Bank of England is preparing to announce a cut in UK interest rates on Thursday, with central banks around the world facing increased scrutiny as Donald Trump ramps up his attacks on the US Federal Reserve.Trump wants lower borrowing costs to boost the economy, even though the US has maintained the highest rate of growth in the G7 richest nations for several years and has every prospect of topping the G7 poll in 2025. Continue reading...

Canada's prime minister makes televised address after Donald Trump signed an order authorising drastic tariffs of up to 25% on Canada's exports to the US. In retaliation for Trump's tariffs, Trudeau announced a 25% tariff phased in across C$155bn ($107bn) worth of American products

Rachel Reeves is all for growth; her party and the country needs it. But still we hear nothing about the most obvious solution...In 1935, Sinclair Lewis wrote a satirical book, It Can't Happen Here, about a lying demagogue, Buzz Windrip, who rises to power and transforms the American scene for the worse within months.There were fears of parallels with the plot of the book when Trump first became president. This time, the fears are far more serious, as Trump's barrage of executive orders challenges the constitutional checks and balances designed by the founding fathers to inhibit the autocratic desires of a future wrong'un becoming president. Continue reading...

The chancellor's apparent volte-face in backing a third runway has left many in her party disillusioned and led them to label it as an act of desperationIn 2020, Rachel Reeves, the MP for Leeds West and Pudsey, was clear why she opposed expansion of nearby Leeds Bradford airport. It would, she said, significantly increase air and noise pollution", so on environmental grounds, it should not happen.By the autumn of 2021, as shadow chancellor, Reeves was the senior Labour figure chosen to lead her party's hugely ambitious plans for a green industrial revolution. Continue reading...

Rachel Reeves's s bold infrastructure plans for Heathrow, transport, housing and more rely on training a new generation of construction professionals before the shovels go in the groundEven a nonexistent Heathrow third runway or HS2 northern leg have arguably done their bit for the economy: keeping a small army of planners, lawyers and lobbyists busy over years of tussle between the builders and the blockers", as Rachel Reeves has styled them.Now the blockers are, as the chancellor made clear in laying out her vision for turbocharged infrastructure growth, as welcome as rare bats or newts at a construction site. But are the builders ready to take their turn? Continue reading...

A third Heathrow runway, planning law reform to build more houses and a windfall tax on oil and gas - but will it all make up for the cost of Brexit?

Economists fear full-on, tit-for-tat trade war as US also imposes tariffs on Mexico and ChinaMark Carney, the favourite to replace Justin Trudeau as the Canadian prime minister, has vowed that his country is going to stand up to a bully" after Donald Trump imposed 25% tariffs on goods coming in from Canada.There are now 25% tariffs on goods coming into the US from Canada and Mexico, while China is being hit with tariffs of 10% on imported goods, leading some economists to fear the outbreak of a full-on, tit-for-tat trade war. Continue reading...

As the US president imposes import taxes on three key trading partners, we examine potential repercussionsDonald Trump has vowed to impose sweeping tariffs on imports from Canada, Mexico and China.There will be 25% tariffs on goods coming into the US from Canada and Mexico, and 10% on imports from China from this weekend. Continue reading...

Voters in Biden's home town turned to Trump to lower prices, but some are wary of the president's economic plansThe annual Downtown on Ice festival is under way in Scranton, Pennsylvania. Ice sculptures are dotted around the city - there was little chance of them melting as an Arctic blast pulled temperatures down to 15F (-9C).Inside Boscov's, a 100-year-old department store, Sue Sloan says she can't wait for spring. The 60-year-old housekeeper says she's also looking for other changes. Everything is so expensive," she says. Food prices, eggs, meat, gas, electricity, everything. It's terrible," she says. Continue reading...

Elton John, Paul McCartney and thousands of other artists have called for protection from data crawling. The government must listenAsked for a definition of intellectual property and ChatGPT answered: IP refers to creations of the mind that are legally recognized and protected from unauthorized use by others." The bot's summary helpfully ended: Intellectual property laws exist to encourage innovation and creativity by granting creators exclusive rights over their work for a certain period.Too bad that the tech giants behind such artificial intelligence (AI) tools have chosen to play fast and loose with the rules. As Silicon Valley bosses were expressing concerns about the distillation" of their models with the launch of the Chinese DeepSeek chatbot earlier this week, the House of Lords was debating legislation to protect against unfettered datacrawling by AI.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

The chancellor's growth speech was not perfect - but it is a start after decades of underinvestment in BritainPity Rachel Reeves, the chancellor of the exchequer. Before she had even got through her highly anticipated growth speech" on 29 January, criticism flooded social media and the airwaves. Her approach is too scattered, some said, and too reliant on measures whose impact will be felt only over the long term. Some programmes run counter to the government's environmental commitments, others said, and they are not evenly distributed across the UK. It is all too expensive. The Ryanair chief executive, Michael O'Leary, even went so far as to declare publicly that Reeves hasn't a clue".Don't get me wrong: the speech was not perfect. But perfection is not possible under the UK's current economic and financial conditions, and to pursue an elusive optimum would be to make the perfect the enemy of the good. Moreover, Reeves's speech did succeed in five areas. Continue reading...

Pharmaceutical company says that it will not go ahead with investment at Speke, near LiverpoolDonald Trump's White House will invoke emergency powers to introduce tariffs on Canada and Mexico, Reuters reports:Two sources familiar with the matter said that Trump was expected to invoke the International Emergency Economic Powers Act (IEEPA) as the legal basis for the tariffs, declaring a national emergency over fentanyl overdoses that killed nearly 75,000 Americans in 2023 and illegal immigration.The statute enacted in 1977 and modified after the 9/11 attacks in 2001 gives the president broad powers to impose economic sanctions in a crisis. Continue reading...

Head of ONS Prof Sir Ian Diamond summoned days after review of statistics widenedThe head of the Office for National Statistics has been summoned for a grilling by MPs next week amid concerns the UK's faulty economic data has become virtually unusable".The cross-party Treasury select committee has asked Prof Sir Ian Diamond to appear before it, after the ONS conceded in December that it might not be able to launch a new series to replace the problematic labour force survey (LFS) until 2027. Continue reading...