Recession? Inflation? Wide-ranging fallout from 'liberation day'

The US president wants to revive the manufacturing sector with a mix of protectionist policies, tax cuts and deregulation. Higher tariffs on foreign imports are supposed to encourage investment by US companies and overseas businesses that want to avoid the tariffs.

- Phillip Inman

The cash generated by the tariffs will be the source of funds for tax cuts, unlike Trump's first administration when tax cuts were funded, Liz Truss-style, by extra borrowing.

Rightwing groups that bankrolled Trump in 2024 want him to bring down debts, insisting the president work harder to balance the books. That's also the rationale behind cutting government staff numbers.

Are more tariffs on the way?

There is much more to Trump's tariff scheme. He has yet to apply tariffs to pharmaceuticals and rare-earth minerals. He also intends to end a "de minimis" rule that allowed goods worth less than $800 (£620) into the US tariff free. The de minimis rule is widely considered to be something Chinese household goods and clothes makers such as Shein exploit.

These extra tariffs are expected to be tailored so they hit China and affiliated countries the hardest.

Will there be a recession?

A prolonged downturn in the US is a possibility that is rapidly becoming more certain as countries react to US tariffs with countermeasures of their own. China's rapid response, which was to impose a like-for-like 34% increase in import charges on US goods from 10 April, could be the start of a broader tit-for-tat that harms all major trading nations, including the UK.

Rachel Reeves cannot know the outcome for the UK because such sweeping protectionist policies have not been tried in the modern era.