World economic growth hinges on impact of US tariffs, Bank policymaker says
Economist Swati Dhingra, who is a member of the Bank’s monetary policy committee, said the UK was sensitive to changing import prices.
Future growth in the world economy hinges on how US tariffs affect global trade, although the impact on UK inflation could be less than feared, a Bank of England interest rate-setter has said.
Economist Swati Dhingra, who is a member of the Bank’s Monetary Policy Committee, said the UK was sensitive to changing import prices.
Speaking at the 2025 Dow Lecture for the National Institute of Economic and Social Research (NIESR), she said: “After a sharp recovery from the pandemic, the world economy has stagnated and its future growth will depend on how global trade is affected by the significant shift in US trade policy.”
The “direct price-increasing effects from US tariffs to UK prices” could be “less than feared” as the main imports, including refined oil, are unlikely to experience cost increases on account of tariffs, Ms Dhingra said.
The impact could instead be felt in how the countries that are subject to higher tariffs choose to pass on additional costs to the UK market, she said.
“The broader indirect effects through global markets and trade diversion are more likely to dominate and to reduce prices in the UK,” according to the economist.
“Tariffs are likely to create one-off adjustments in prices, rather than inflationary persistence.
“On the overall impact on inflation in the UK, the direct effect of US import costs and dollar strengthening are likely to be offset by reduced global price pressures.”
US President Donald Trump has raised the threat of increasing tariffs on goods entering the nation, including plans to hike tax on steel imports.
Tariffs could increase domestic production in the US over the long term, but lead to higher import prices and impact other countries that rely on it for imports and exports.
