A Bank of England policymaker, Alan Taylor, said on Monday that elevated U.S. import tariffs appear set to remain in place and that their full impact will take years to be realised.
Addressing an audience at a Deutsche Bank event, Taylor characterised the current tariff environment as significantly larger than what prevailed two years ago. "I think the fundamental thing to realise is those tariffs are here to stay at some kind of number that is a lot - an order of magnitude - bigger than it was two years ago," he said.
Taylor framed the U.S. tariff policy as a notable shift in trade policy and argued that it represents a meaningful change to the trade environment. He said the resulting trade shock warrants continued observation by policymakers and market participants.
"So I think we should expect this shock to play out also over many years," Taylor added, emphasising that the economic effects are unlikely to be immediate or short-lived.
Analysis
Taylor's remarks underscore the view that higher import levies in the United States have established a new baseline that is materially higher than levels seen two years ago. He described this as a trade shock that will unfold over an extended horizon and therefore requires monitoring rather than assuming a rapid resolution.
For sectors with exposure to cross-border goods flows, the persistence of elevated tariffs could mean an extended period of adjustment. Taylor's comments signal that policymakers should expect an ongoing process rather than a short-term disturbance.
Key points
- Alan Taylor of the Bank of England said on Monday that elevated U.S. import tariffs are likely to remain in place.
- Taylor described current tariff levels as significantly higher than two years ago and called the policy change meaningful.
- He warned that the trade shock will take many years to fully play out and requires continued monitoring - sectors tied to imports and supply chains are most directly implicated.
Risks and uncertainties
- Duration risk: Taylor said the tariffs are "here to stay" at higher levels, implying a prolonged period of elevated trade barriers.
- Timing uncertainty: He noted the full impact will take many years to materialise, leaving an extended window of economic adjustment.
- Monitoring need: The statement highlights the uncertainty around how the trade shock will evolve and the requirement for ongoing observation by policymakers and market participants.
Conclusion
Taylor's assessment at the Deutsche Bank event presents the U.S. tariff changes as a sustained and meaningful shift in the trade landscape, with implications that will unfold over an extended period and warrant continued attention from policymakers and market observers.