You’ve probably heard the word ‘Greenland’ more times than you can count in the last few weeks.
But the fate of this sparsely populated slab of ice and rock in the North Atlantic could have a huge impact on the world.
US President Donald Trump has made it clear he wants the Danish territory ‘whether they like it or not’ for the sake of national security.
He even gave Europe an ultimatum last weekend: Give Washington Greenland, or else face punishing tariffs.
Tariffs of 10% would kick in next month and, if Europe does not relent, the rate will increase to 25% from June.
With the UK’s cost-of-living crisis only recently easing and the economy still not in the best shape, will Trump’s tariffs empty people’s wallets?
To find this out, Metro spoke with several financial experts.
What is a tariff?
‘Tariffs’ is another word you might have heard a lot only a few months ago.
A tariff is essentially a government tax on products imported from other countries. Companies that import goods pay tariffs.
Could this impact the UK economy?
The US is easily the UK’s most important trade partner by volume, accounting for nearly 18% of trade.
So any tariffs, let alone a 25% one, could take a toll on Britain’s limp economy, David Stritch, a senior foreign exchange analyst at Caxton, says.
Take the British automotive sector, which ships out £60billion worth of goods to the US.
‘If UK vehicles and goods suddenly become much more expensive for US consumers, this could have a significant impact on our economy,’ Stritch says.
So, should I be worried?
We’ve spoken a lot about businesses and the economy, but tariffs do still impact regular people, warns Marty Baeur, a retail analyst at Omnisend.
He says: ‘When US tariffs increase costs for manufacturers selling into America, those suppliers often look to protect margins by adjusting pricing across other markets, including the UK.
These retailers would need to make money somehow, so they might pass on the cost rises to consumers.
Shoppers would gradually notice that stores run fewer promotions, like two-for-one deals or 50% discounts, or prices are going up.
These price hikes would mainly be felt in fashion, electronics and homeware ‘where global pricing strategies are common’, says Baeur.
Shrinkflation could even happen, which is when companies make products smaller but charge the same amount. Think a bag of crisps being more air than, well, crisps.
Tariffs could impact jobs and mortgages as well
Rosie Murray-West, an award-winning financial journalist, also warns that tariffs could lead to job losses as companies try to stay afloat.
‘Another period of uncertainty and higher prices for UK companies could be the final straw for many, and a huge loss of income for their employee,’ she says.
Tariffs could spell the return of inflation – another word you’ve probably heard too many times.
Inflation is a loss of purchasing power over time: It means your pound coin will not go as far tomorrow as it did today.
One way the Bank of England has tried to rein in inflation is to increase the interest rates, which determine the extra amount you pay to borrow money.
Murray-West says: ‘If more tariff threats cause price rises, rates will stay higher for longer and consumers will pay more.
‘Those with more in savings may benefit from a higher rate on their cash, though if inflation is higher, their money will be worth less over time.’
People with personal investments or pensions with ties to the stock market may see the value of each drop.
‘Turbulence caused by geopolitical tension typically causes the stock market to fall – the FTSE 100 was down 0.6% this morning,’ Murray-West says.
This might all sound scary, but Murray-West has some simple advice: ‘Don’t panic yet.’
Keep building your rainy day savings in case of layoffs, shop around for sturdy mortgage deals and fight the urge to sell off your stock out of fear.
‘Ride out the storm,’ adds Murray-West.
‘As we saw last year, Trump’s threats are rarely the final word, more a starting point for negotiation.’
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