Trump’s new tariff threat risks chaos for companies and higher inflation in the US

President Donald Trump has reignited global trade tensions after announcing a fresh wave of tariffs on European exports, a move that businesses warn could disrupt supply chains, dent confidence and push up inflation in the United States.

Under the new plan, a blanket 10 per cent tariff will be imposed on “all or any goods” exported to the US from the UK, Denmark and other European countries from February 1. Trump has also threatened to raise those duties to 25 per cent from June 1 unless negotiations succeed over the US purchasing Greenland, a demand that has already been firmly rejected by Copenhagen and its allies.

Market analysts say the policy represents a sharp escalation in Trump’s confrontational trade strategy and comes at a delicate moment for the UK economy, which has only just returned to modest growth.

Susannah Streeter, chief investment strategist at Wealth Club, said the move had injected renewed uncertainty into global markets. She described the announcement as “migraine-inducing” for both politicians and companies that have already endured months of tariff brinkmanship.

“Just when there appeared to be a lull in the tariff storm, President Trump has whipped up fresh economic chaos,” Streeter said. “This is his modus operandi — unleash uncertainty and threats of more onerous measures to coerce nations to acquiesce to his demands.”

While there may be some relief that talk of military action has been dialled back, Streeter warned that the tariffs themselves look likely to persist. Given how entrenched positions are on Greenland’s future, she said the 10 per cent levy could remain in place for some time, with the risk of a jump to 25 per cent in June “highly possible”.

For exporters selling into the US, the implications are significant. Many firms have already struggled to absorb the cost of existing tariffs, leaving little room to cushion further increases. As a result, higher duties are likely to be passed on to American customers through higher prices.

“That risks lower demand and weaker sales for exporters,” Streeter said. “Some US importers may rush to bring forward orders ahead of June, creating a short-term bump, but longer term they are likely to look for cheaper suppliers elsewhere.”

The knock-on effects are already worrying UK businesses, where confidence has fallen sharply in recent months. Although recent data suggested the economy had begun to stabilise, analysts fear that renewed trade disruption could quickly undermine that progress.

The latest move is also expected to intensify inflationary pressures in the US. Higher prices are likely across a wide range of goods, from cars and chemicals to food products such as olive oil, as well as aircraft and medical equipment. This comes at a time when many US households are already feeling the strain of rising living costs.

Streeter warned that the tariffs could further inflame tensions between the White House and the Federal Reserve, as policymakers weigh the inflationary impact of trade barriers against pressure from Trump to cut interest rates more aggressively.

“Policymakers are likely to be even more cautious,” she said. “Tariffs ramping up again make it harder to justify faster rate cuts.”

For the UK, the episode is expected to strengthen calls for trade diversification. Many firms are already exploring new markets to reduce reliance on the US, mirroring a strategy adopted by China, which has boosted exports by forging alternative trading relationships. The latest tariff threat is also likely to reignite debate over closer trade ties with the EU as a way to offset damage from US policy swings.

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Trump’s new tariff threat risks chaos for companies and higher inflation in the US