- Mortgage Force UK Ltd
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- August 20, 2025
Trump and the impact on the UK
From 7 August 2025 the US put a broad “reciprocal” tariff regime into effect, lifting average US tariffs to multi-decade highs and layering extra levies on sensitive sectors (cars, metals, some tech inputs). This is a genuine regime shift, not just rhetoric. Let’s look at what this potentially means for the UK.
Growth
The US is the UK’s single biggest national export market; higher US tariffs (and any tit-for-tat responses) are a headwind for UK goods like autos, metals and some consumer products. Global supply chains will also get pricier and messier, especially around autos where component costs are already rising under the new US rules. This will likely mean a modest drag on UK GDP through year-end, concentrated in goods exporters and their suppliers.
Inflation
Tariffs are a tax on trade. Even if the UK isn’t directly targeted in every category, higher world prices for traded goods (cars, parts, metals, some electronics) tend to leak into UK import costs. That adds a small upside risk to goods inflation into Q4. The Bank of England itself has flagged global trade tensions as a risk around yesterday’s decision. If imported-goods disinflation slows, UK headline inflation could run a touch hotter than previously forecast.
Financial conditions
Anything that lifts global goods prices or clouds growth can nudge gilt yields and Swap Rates around. Directionally, tariffs are inflationary (pushing yields up) but also growth-negative (pulling them down). Expect more volatility rather than a clean trend. Lenders price fixed mortgages off swaps, so choppier swaps mean more frequent repricing. More reason to stay in touch with your adviser.
There had been speculation of a larger 0.5% cut ahead of the meeting, and this smaller move still leaves the door open for further cuts in the coming months — especially if economic confidence continues to slide.
In contrast, the U.S. Federal Reserve held rates steady, opting to wait for clearer signs from the global economy before making any moves. But with global growth forecasts under pressure, the Fed may not stay on hold for long.
What does this all mean for the UK mortgage market?
As we’ve said, the Bank Rate cut scraped through on a knife-edge vote. New tariff-driven inflation noise makes the MPC more cautious about racing to ease again in 2025.
That doesn’t rule out further cuts, but it does lower the odds of a rapid sequence. A slower glide path tends to keep variable-rate relief gradual and supports current fixed-rate levels rather than forcing them sharply lower. However, the threat of U.S. tariffs remains a key concern.
Fixed-rate pricing
Lenders were already (mildly) cutting into August on softer swaps. Tariff headlines could inject short-term swap volatility, which usually shows up as brief withdrawals on the best-priced deals, more “withdraw and relaunch” behaviour, and tighter windows to secure rates. In plain English: bargains still appear, but they may not stick around. Again, at the risk of significant repetition, this means it pays to keep in touch.
If you’re considering a new fixed rate, the game is timing: secure and keep the application moving. If swaps dip on weak growth news, pounce; if they pop on tariff headlines, expect lenders to reprice quickly. We can help you do just that. More good news.
Do stay in touch. And enjoy the rest of the summer.