Tariffs might seem manageable now – but they’ll quietly squeeze households later

For more than a year, major institutions like the World Trade Organization (WTO) have been warning that rising tariffs and policy uncertainty would stifle global growth. This is reflected in the ways governments have been deploying tariffs unpredictably. Notably, the US has increasingly deployed threats and sudden tariff swings as tools in broader disputes.

Recent global trade updates from the likes of UN Trade & Development (UNCTAD) suggest this uncertainty is not fading. This reinforces the sense that trade volatility has become a lasting feature in the world economy rather than a temporary shock.

Contrast this unsettling picture with the strength of global trade and economic growth. One WTO report has noted that global trade volumes grew strongly in the first half of 2025, and projects that it will have been even stronger in late 2025. The IMF (International Monetary Fund) similarly notes that the global economy has shown “resilience” to trade shocks, even as the damage from shifting policies is starting to appear in more recent data.

While some interpret this as proof that the global economy can simply shrug off trade shocks, others have issued a warning. The global economy only appears resilient to tariffs; in reality, short-term offsets such as changing suppliers or altering supply chains have masked damage that will surface later through slower growth, higher costs and declining living standards. Over time, this damage will show up in everyday life – in what people pay, how secure their jobs feel, and how far their wages stretch.

My research on resilience in global supply chains has found that it is not something that businesses can achieve once and then forget about. What is happening now is not resilience, but temporary adjustments.

Imagine a supermarket that suddenly faces higher import costs on fruit because of tariffs or trade restrictions. At first, it does not redesign its entire supply network. Instead, it might buy from a different country for a few months or dip into existing stock in warehouses or distribution centres.

But if costs and availability remain in doubt, these temporary fixes stop working. Stock runs out. Emergency suppliers cost more. And when margins are squeezed for long enough, businesses respond by raising prices, freezing hiring, cutting hours, delaying pay rises or shedding jobs altogether. This is why resilience must be understood as a continuous process.

The same logic applies at national level. For countries like the UK, resilience to changing trade conditions means maintaining the ability to adjust repeatedly without exhausting households through ongoing cost-of-living pressures, income volatility and prolonged uncertainty about jobs and pay.

But when politicians interpret trade shocks as short-lived (as happened in the wake of Brexit), they tend to delay intervention. This could be holding back sector-specific support, postponing investment or relying on firms to absorb costs. This shifts the burden down the chain. Businesses protect their margins by passing costs on, and households become the shock-absorbers.

Tariffs and inequality

One lesson from my research is that some regions and communities are far more sensitive to tariffs and trade friction than others. This has the potential to deepen regional inequality, concentrating job losses and price pressures in already vulnerable areas.

For example, London and the south-east are less exposed to the direct impact of tariffs than many other parts of the country because their economies are dominated by services and finance.

Regions with more manufacturing and exports – such as the West Midlands, east of England, Northern Ireland and parts of northern England – rely more heavily on goods that face tariff barriers, such as cars and machinery. This means employment and business incomes can be more directly affected.

Addressing this imbalance requires more than a one-size-fits-all approach to trade policy. I have found that what matters is helping regions (and businesses in those regions) build resilience in ways that match the kind of disruption they face.

In practice, this depends on how often and how hard they are hit by tariffs. In places where trade costs rise repeatedly, businesses need support that helps them to keep operating without cutting jobs or squeezing pay every time costs increase. That means access to finance, help with managing cost pressures, and support that allows employers to retain workers when margins tighten.

In regions where tariff shocks are less frequent but still disruptive (as has happened to the US itself in its trade war with China), businesses need early signals about where pressures are emerging, and government support when costs spike. Without targeted backing, businesses pass costs on in the easiest way possible – through higher prices, delayed wage rises or job losses. When government treats resilience as a national average, it risks overlooking those places where adjusting is hardest and most costly.

Global trade uncertainty is going to continue. As such, policy needs to be designed for endurance rather than optimism. That involves shifting the focus away from short-term trade volumes and towards reducing the pressure of repeated tariff adjustments before they reach households. That means acting earlier in regions and sectors repeatedly exposed to disruption, rather than waiting for rising prices and job losses to hit households.

Umair Choksy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.