The recent tariffs imposed by Donald Trump on trading partners, including the UK, have raised questions about whether they will lead to liberation or liability for the global economy. Despite initial skepticism from investors, it is clear that these tariffs will have far-reaching economic consequences that may not benefit the US in the long run.

The White House has hinted at the possibility of sector-specific tariffs in the future, indicating that this is just the beginning of a potentially prolonged trade dispute. The uncertainty surrounding these tariffs has already had a negative impact on markets, businesses, and consumer sentiment, as evidenced by recent economic indicators such as the ISM Manufacturing Index.

While the UK has not been immune to the fallout from these tariffs, there are signs that professional investors are beginning to value the country’s economic stability. However, as the US veers towards protectionism, the UK finds itself grappling with its own economic uncertainties, as highlighted in the recent Spring Statement.

The reliance on long-term forecasts by the Office for Budget Responsibility (OBR) has led to cautious government policy, driven by a desire to avoid upsetting market participants. This approach has its drawbacks, as evidenced by the government’s reluctance to deviate from the OBR’s projections, even in the face of changing economic conditions.

There is growing skepticism about the OBR’s role in shaping government policy, with calls for a reevaluation of its influence. The tight constraints imposed by fiscal rules have left little room for maneuvering, forcing the government to make hasty decisions based on minor changes to economic forecasts.

As political uncertainty continues to rise, it is becoming clear that the current approach to economic policy may not be sustainable in the long term. A more flexible and adaptive approach may be necessary to navigate the challenges posed by global economic shifts and trade tensions.