UK Tariff Impact: Markets Expect Faster BoE Rate Cuts Amid US Trade Pressures

UK faces new US tariffs, prompting markets to price in faster Bank of England rate cuts. Learn how these trade moves impact inflation, GDP, and future UK-EU-US relations.

Fikri Fairuz Alam

Duhani Capital Research

Duhani Capital Research

5 Min Read

Apr 7, 2025

Markets Reprice Rate Cuts After US Tariff Shock

Financial markets now anticipate sharper interest rate cuts by the Bank of England, following the US’s new tariff measures. The UK, despite facing a lower 10% tariff compared to the EU’s 20%, has seen a more dramatic market reaction.

Tariffs Pose Sector-Specific Risks, But Limited GDP Impact

While exports to the US represent only 2.2% of the UK’s GDP, critical sectors such as automotive and pharmaceuticals remain exposed. Analysts estimate the overall impact on GDP could be around 0.2%, unless a global slowdown amplifies the effect.

Inflation Pressures Likely to Remain Contained

The UK has yet to retaliate against US tariffs, reducing inflationary risks. In fact, cooling growth may introduce deflationary pressures. The Bank of England is still expected to cut rates quarterly, targeting a 3.25% base rate by 2026.

Fiscal Policy Under More Pressure Ahead of Autumn

New trade barriers tighten the UK’s already limited fiscal space. With government spending likely to remain steady, further tax hikes seem inevitable to meet fiscal rules and stabilize the budget.

Strategic Trade Choices: EU Ties Over US Deals?

With US-UK trade negotiations in limbo, the UK may lean towards deeper EU alignment. Closer European integration could offer stronger economic benefits and more reliable growth prospects.

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Disclaimer: This website is owned and operated by Duhani Capital Ltd., prepared in compliance with applicable regulations. It is not intended for distribution, use, or account opening by any individual or entity in jurisdictions where such actions are restricted or prohibited by law, regulation, or internal policies.

Risk Warning: Trading Foreign Exchange (‘Forex’) and Contracts for Difference (‘CFDs’) involves a high level of risk due to leverage, which can amplify both gains and losses. These products may not be suitable for all investors, as you may lose your entire invested capital. It is essential to trade only with capital you are prepared to lose. Before engaging in trading, ensure that you fully understand the risks involved, consider your investment objectives, and seek independent advice if necessary. Please note that Duhani Capital Ltd. operates on an execution-only basis and does not provide financial advice or recommendations.

Restricted Jurisdictions: This website and its services are not intended for individuals residing in or legal entities based in the following jurisdictions, including but not limited to: USA, Cuba, North Korea, Lebanon, Libya, Mali, Myanmar (Burma), Nicaragua, Crimea region, Sevastopol, Somalia, Sudan, South Sudan, Syria, Venezuela, Yemen, Zimbabwe, Japan, and Iran.

Company and Licensing: Duhani Capital Ltd. is incorporated in Dominica and operates in partnership with Financial Master Management Ltd. for trading and dealing in Forex & CFDs. Financial Master Management Ltd. holds the exclusive Master Financial Dealer License (License No: 2023/C0010-0004).

FinCEN Registration: Duhani Capital Ltd. is registered as a Money Services Business (MSB) under the Financial Crimes Enforcement Network (FinCEN), Registration Number: 31000280238735.

Copyright © 2025 Duhani Capital Ltd.

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Rruga Pavaresia, Nd:129 H.5, Ap/27, Durres Albania

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+355 524 20144

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support@duhanicapital.com

Disclaimer: This website is owned and operated by Duhani Capital Ltd., prepared in compliance with applicable regulations. It is not intended for distribution, use, or account opening by any individual or entity in jurisdictions where such actions are restricted or prohibited by law, regulation, or internal policies.

Risk Warning: Trading Foreign Exchange (‘Forex’) and Contracts for Difference (‘CFDs’) involves a high level of risk due to leverage, which can amplify both gains and losses. These products may not be suitable for all investors, as you may lose your entire invested capital. It is essential to trade only with capital you are prepared to lose. Before engaging in trading, ensure that you fully understand the risks involved, consider your investment objectives, and seek independent advice if necessary. Please note that Duhani Capital Ltd. operates on an execution-only basis and does not provide financial advice or recommendations.

Restricted Jurisdictions: This website and its services are not intended for individuals residing in or legal entities based in the following jurisdictions, including but not limited to: USA, Cuba, North Korea, Lebanon, Libya, Mali, Myanmar (Burma), Nicaragua, Crimea region, Sevastopol, Somalia, Sudan, South Sudan, Syria, Venezuela, Yemen, Zimbabwe, Japan, and Iran.

Company and Licensing: Duhani Capital Ltd. is incorporated in Dominica and operates in partnership with Financial Master Management Ltd. for trading and dealing in Forex & CFDs. Financial Master Management Ltd. holds the exclusive Master Financial Dealer License (License No: 2023/C0010-0004).

FinCEN Registration: Duhani Capital Ltd. is registered as a Money Services Business (MSB) under the Financial Crimes Enforcement Network (FinCEN), Registration Number: 31000280238735.

Copyright © 2025 Duhani Capital Ltd.