BoE’s Mann says US Trump tariffs are pushing Chinese export prices higher for UK

BoE’s Mann warned US tariffs are lifting UK inflation, as China pushes higher export prices onto Britain rather than the United States.

Summary:

• Bank of England policymaker Catherine Mann said US tariffs are feeding into higher UK inflation via Chinese export pricing.

• China has cut prices for exports to the US but raised prices to other markets, including the UK, to offset tariff costs.

• This challenges the earlier assumption that trade diversion would be disinflationary for Britain.

• The BoE’s latest forecasts now explicitly assume higher import prices linked to the US–China trade conflict.

• Mann said trade diversion into the UK has been limited compared with Europe, blunting any offsetting disinflation effect.

Trade tensions emanating from the United States are beginning to show up more clearly in UK inflation dynamics, according to Bank of England policymaker Catherine Mann. Speaking in California, Mann said the impact of tariffs imposed by US President Donald Trump is being transmitted globally through shifts in pricing behaviour rather than trade volumes alone.

Mann explained that Chinese exporters have responded to US tariffs by cutting prices into the American market, but raising prices elsewhere, including the UK, in order to preserve margins. That pattern, she noted, runs counter to earlier expectations that trade diversion away from the US would deliver cheaper imports and disinflationary pressure for Britain.

Instead, the Bank of England’s latest projections assume that import prices will be higher as a result of the ongoing US–China trade conflict. Analysts say this reflects a reassessment of how global supply chains adjust to protectionism, with pricing strategies proving more important than simple rerouting of goods.

Mann also observed that the UK has seen relatively little trade diversion compared with Europe, limiting the scope for cheaper alternative supply to offset higher prices. As a result, tariff-related cost pressures are more likely to feed into UK inflation than previously thought.

The comments underline the extent to which global trade disputes are complicating the inflation outlook for central banks, even in economies not directly targeted by tariffs, and reinforce the Bank of England’s cautious stance as it assesses the persistence of imported inflation.