Bank of England Warns Trump Tariffs Could Hinder Global Growth and Increase Risk of ‘Severe Shocks’

The Bank of England has issued a warning that Donald Trump’s extensive tariffs could jeopardize global economic growth, increasing pressure on government finances and heightening the chances of experiencing “severe shocks” within the financial system.

According to the Bank’s financial policy committee (FPC), the global risk landscape has worsened and “uncertainty has amplified” since their last update in November. The recent US tariff announcements have contributed to a “notable rise in risks to global growth” as well as inflation rates.

These issues have shaken investor confidence, raising the possibility of a “further sharp correction” in financial markets, which could strain heavily indebted companies and complicate borrowing and debt refinancing for governments.


The Bank of England cautioned that rising government bond yields—which essentially represent the interest rate that countries pay on their debt—would “limit their ability to respond to future shocks.” Following Trump’s announcement of additional tariffs on various nations, government bonds, including the traditionally reliable US treasuries, have experienced a significant sell-off.

The FPC indicated that a significant shift in the nature and reliability of global trade could diminish the chances of international collaboration, particularly in addressing global challenges and shocks, “which could undermine the resilience of financial systems.” Overall, the committee emphasized that “severe shocks are becoming more probable.”

Increased geopolitical tensions would also have ramifications beyond global trade, as noted by the FPC, leading to a greater risk of cyber-attacks that could exacerbate other stresses and disrupt financial services and payments to households and businesses in the UK.

The committee noted that since their last assembly in mid-November, “global trade policy uncertainty has escalated and certain risks have manifested. On April 2, the United States announced a broad range of tariffs, prompting some countries to respond with their own tariff announcements. This development has led to a significant increase in the risks to global growth and a dampening of the central outlook, along with rising uncertainty regarding global inflation.”

These comments follow remarks from German finance minister, Jörg Kukies, who stated on Wednesday that the country’s economy faces a risk of another recession due to ongoing trade tensions.

skip past newsletter promotion

JP Morgan has estimated a 60% likelihood that the global economy could be heading into recession by the end of the year.

Nevertheless, the Bank of England has sought to allay some concerns by emphasizing that financial markets are functioning in an orderly manner and that the UK banking system remains robust.