Donald Trump has managed another blow to world trade, Professor Costas Milas of the University of Liverpool’s management school.
A flat tariff rate of 15% seems, at face value, less confusing than multiple tariff rates. Nevertheless, this will apply for up to five months, after which, no exporter (or even importer) will know what to expect next. The main issue is that in anticipation of the mid-term elections towards the end of the year, and with US inflation (the Fed’s preferred measure) already at 2.9%, Trump might (or might not) be willing to lower tariffs from 15%.
The problem for the UK economy remains a significant one, not least because my recent paper shows that trade uncertainty, again on the rise, is a major driver of future GDP and CPI inflation developments…
