How Trump's tariffs might affect you and your money

US President Donald Trump has introduced import taxes on goods coming into America in the latest escalation of the global trade war.

While he paused some higher tariffs on some countries, the UK has still been hit with the blanket 10% tariff on nearly all of its goods being brought into the US. Trump says it is in retaliation to UK tariffs on American goods.

The UK has appeared to have come off lightly compared to other economies, but much uncertainty remains over the potential impact on British consumers.

Here's how you and your money could be affected.

UK interest rates dictate the costs households have to pay to borrow money for things such as mortgages, credit cards and loans. Higher rates also boost returns for savers.

They are currently at 4.5%.

Until very recently, economists and financial markets had predicted that the Bank of England - which sets the interest rate - would cut them twice this year to 4%.

However, those forecasts have changed and the Bank is now expected to make four 0.25 percentage point cuts by this time next year, taking borrowing costs to around 3.5%.

The Bank is facing a balancing act. On the one hand, its core remit is to keep the inflation rate at 2%.

If Trump's tariffs push up prices and fuel inflation, interest rates could stay higher for longer.

Bank governor Andrew Bailey has said it is the Bank's job "to make sure that inflation stays low and stable".

But, if business confidence suffers because of the uncertainty surrounding US tariffs and firms report steep falls in orders, the Bank might feel compelled to act to boost sentiment - and that's where the steeper rate cut might come in.

The tariffs Trump has just announced will be paid for by the businesses which import goods into the US.

Clarissa Hahn, economist at Oxford Economics, says this means that the initial impact of price rises will be on US consumers, as American firms are likely to pass on the extra costs to their customers.

However, she adds people in the UK could subsequently be affected by the measures, which come into effect on 5 April.

One way is via the value of the pound and exchange rates, which dictate the cost to UK businesses importing goods and raw materials from abroad. If import costs go up, these extra costs could be passed on to consumers through higher prices.

Following Trump's speech on Wednesday, exchange rates between the dollar and pound fluctuated. If the value of the dollar strengthens as some economists have predicted, import costs could rise for UK firms importing goods.

Higher prices in the UK could also "prompt workers to demand higher wages", which would further raise costs for businesses, according to Ahmet Ihsan Kaya, principal economist, at the National Institute of Economic and Social Research.

Ms Hahn adds if the UK government decides to retaliate with tariffs of its own on US goods entering the UK, there is a risk UK prices could rise if British businesses pass on extra costs to customers.

However, some economists have suggested prices could also initially fall as a result of Trump's decision to impose tariffs.

Swati Dhingra, economist and member of the Bank of England's monetary policy committee, which sets interest rates, has suggested that firms which normally send their goods to the US, may instead send them to countries such as the UK which don't have such steep tariffs, potentially leading to a flood of cheaper goods in the UK.

"Tariffs of the proposed magnitude are likely to prompt firms that export to the US to lower their prices to retain demand for their products," she suggests.

British companies which sell products to the US are set to be the hardest hit from the latest measures.

The UK exported almost £60bn worth of goods to the US last year, mainly cars, pharmaceuticals and machinery. Other industries with a big market in the US include fishing and electronics.

If America's demand for UK products dwindles due to the extra charges importers face, this could hit company profits and ultimately lead to job cuts unless British firms find new customers outside the US.

According to the Institute for Public Policy Research (IPPR) think tank, Jaguar Land Rover and the Mini factory in Cowley, Oxford, appear to be the most exposed to US tariffs on cars.

The UK exports one in eight cars built in Britain to the US.

The IPPR says more than 25,000 jobs in the UK car manufacturing industry "could be at risk" from a 25% tariff on all foreign-made cars sent to the US which came into force on 2 April.

The tax will be widened a month later to include foreign-made car parts.

Jaguar Land Rover has since announced that it will "pause" shipments to the US for April as it addresses "new trading terms" in relation to Trump's tariffs.

The pharmaceutical industry is also heavily reliant on trade with the US, says Ms Hahn, of Oxford Economics.

The US makes up 40% of AstraZeneca's sales and 50% of GSK's. Although both British-headquartered firms have manufacturing facilities in America, raw ingredients for life-saving medicines and vaccines travel between the UK, EU and US.

At this stage, pharmaceuticals have been exempted from a 10% tariff set to come into effect on 9 April.