Dollar rises as fears grow for global economy over Trump's threat of tariffs | World News

The US dollar has risen as Donald Trump secured a return to the White House – but there are fears the UK and global economies will suffer from the president-elect's promises of new tariffs.

Investors have returned to “Trump trades” betting on lower taxes and higher interest rates in the belief that he will raise tariffs on foreign imports to protect domestic industries.

This will drive up prices for imported goods and inflation – and increase borrowing and the national debt in the US.

A leading British think tank said Britain's already slow economic growth rate is likely to be more than halved if Mr. Trump imposes sweeping import tariffs.

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The National Institute for Economic and Social Research said the UK economy's growth would reach 1.2% in 2025 without US tariffs – but just 0.4% if they were implemented as promised by the new president.

Companies will largely pass on import costs to customers, with tariffs likely to be particularly inflationary for U.S. buyers.

Analysts also said Mr Trump's pledges posed a “threat” to global financial security.

Erik Nielsen of banking group UniCredit said: “Trump's fiscal promises are seriously problematic – for the US economy and global financial markets – as they promise to significantly expand an already excessive deficit while threatening to undermine key institutions.”

“It must be concluded that Trump represents a serious – and so far largely underestimated – threat to the US government bond market and therefore to global financial stability.”

U.S. Treasury yields – essentially the interest rate the American government pays on its debt – have also risen as investors bet that the Federal Reserve will take a more cautious approach to cutting interest rates in the coming months.

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US stock markets are expected to be higher at the open on Wednesday – while in Asia, shares were lower on Hang Seng on fears that Mr Trump could impose 60% tariffs on Chinese goods.

Meanwhile, Bitcoin rose almost 8% to a record $75,345 as investors bet on a victory for Mr Trump.

Oil prices have also fallen to less than $75 a barrel, beating expectations that the Trump administration will expand drilling and encourage more crude flows to the United States.