The Governor of the Bank of England, Andrew Bailey, has issued a caution regarding the potential for a "fragmenting" economy in light of Donald Trump's promises to impose trade tariffs on other nations.
Addressing MPs on Tuesday, Bailey emphasised the importance of maintaining an "active dialogue" with the incoming US administration after Trump's victory at the polls. On the topic of possible tariffs, Bailey stated: "I would be very clear, fragmenting the world economy is not a good thing."
Yet, he also mentioned that it's premature to "jump to conclusions" about how specific tariffs might influence UK policy, adding: "I don’t think we can make that judgment today because we literally do not know what their intentions are."
Trump has been vocal about his plan to impose a 20% tax on all imports, a move economists have cautioned could negatively impact UK economic growth. While speaking to the Treasury Select Committee, Bailey refrained from speculating on the outcomes of such policies until they are fully confirmed.
He noted that US policymaking does not adhere as strictly to pre-election pledges as in the UK, hence it is "important that we wait to see what the administration actually does". Bailey concluded that it's vital for policymakers to "be in an active dialogue with the Trump administration on those policies as they affect the UK".
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