Weekly Money Update: Trade Wars and Economic Shifts

By Jess Sharp, Money Live Reporter

This past week has seen significant developments in global trade relations and the UK economy, particularly in light of President Trump’s ongoing trade war. Here’s what you need to know.

Trump’s Trade Tariffs Intensify

The United States has escalated its trade conflict with multiple countries by imposing a 25% tariff on all steel and aluminum imports. This move has had immediate ramifications, particularly affecting UK exports worth hundreds of millions of pounds. Sir Keir Starmer, the leader of the UK Labour Party, expressed disappointment over the tariffs but refrained from announcing any retaliatory measures. The UK government appears to be adopting a more passive stance, hoping that this will lead to a broader exemption from tariffs and pave the way for a future US-UK trade agreement.

In stark contrast, the European Union has taken a more aggressive approach, threatening to impose tariffs on $26 billion (€21bn) worth of US goods starting next month. These potential tariffs would target a broad selection of product categories, ranging from steel and aluminum to agricultural products and even whiskey. The Trump administration responded defensively, threatening to levy a staggering 200% tariff on EU alcohol imports.

Canada found itself in a similar situation, facing a proposed 50% tariff after Ontario increased charges on electricity exports to the United States. Despite these threats, no new tariffs were implemented this week.

While Trump aims to revive manufacturing and protect jobs within the U.S., many economists warn that these tariffs could ultimately lead to higher costs for consumers, increased inflation, and prolonged elevated interest rates. Notably, even Tesla, led by Trump supporter Elon Musk, has raised concerns about the detrimental effects of trade tensions on American businesses.

Stock Market Reactions

Investor sentiment has been significantly impacted by these developments, particularly concerning Tesla, which has lost around £800 billion in market value correlated with the tariff disputes. Despite the slump, the stock market showed slight recovery by the end of the week, as analysts assessed the situation.

Economic projections for the UK also turned grim following a disappointing GDP report released on Friday, revealing a contraction of 0.1% for January. This was notably worse than economists’ expectations, which had predicted a growth of 0.1%. The decline was primarily driven by a 0.9% drop in production output. Chancellor Rachel Reeves acknowledged the challenges facing the UK economy and comes under pressure to adjust her upcoming spring statement (scheduled for March 26) in response to these changes, which may include contentious welfare budget cuts.

Interesting Developments in the Business World

In lighter news, this week also highlighted an engaging human interest story involving Grammy-nominated singer Dawn Robinson from the R&B group En Vogue. Robinson revealed she had been living out of her car for the last three years, capturing the attention of readers looking for stories beyond just economic analyses.

Additionally, our cost of living expert Megan Harwood-Baynes successfully assisted a reader, Isla, in obtaining a £500 refund from Turkish Airlines after an unfortunate incident related to a nut allergy.

Upcoming Features

Looking ahead, our long-read piece tomorrow delves into how the soaring costs of childcare and mounting job demands are driving many mothers out of the workforce. We will feature insights from mothers grappling with the financial realities of balancing work and childcare.

Other News This Week

In notable corporate changes, Donatella Versace has stepped down as head of the Versace brand, marking the end of an era after nearly three decades at the helm. Although she will transition into the role of chief brand ambassador, the brand’s new direction will be under the stewardship of former Miu Miu design director Dario Vitale.

In the insurance sector, Zurich revealed that bogus injury claims accounted for a substantial portion of fraud they detected, costing the company nearly £100 million last year. In an initiative aimed at better serving local communities, a regional bank named NW Mutual announced its headquarters in Preston, intending to offer ethical banking services across the North West.

Lastly, Walkers Crisps delighted fans by reintroducing their Worcester Sauce flavour after it was previously taken off the shelves, showcasing the power of consumer demand in influencing product offerings.

Final Thoughts

As we reflect on a turbulent week filled with trade conflicts and economic indicators, it’s crucial to remain vigilant and informed. Keep checking back with Smart Money Mindset for the latest insights into how these developments will impact your finances. Join us tomorrow for our in-depth report on the childcare crisis affecting working mothers across the UK.