American President, Donald Trump, has threatened to impose a 10% tariff on all goods entering the U.S. from the UK, Netherlands, Denmark, Norway, Sweden, Finland, France and Germany from 01 Feb 2026, rising to 25% on 01 Jun 2026, unless an agreement is reached on U.S. ownership of Greenland.

British Prime Minister, Keir Starmer, used an emergency press conference yesterday to downplay the possibility of retaliatory tariffs and a potential ensuing trade war. “We must find a pragmatic, sensible, sustained way through this, that avoids some of the consequences that will be very serious for our country,” he said.

Speaking at the National Retail Federation’s Big Show in New York, before Trump’s latest tariff announcement, Ira Kalish, Deloitte’s Chief Global Economist, warned that U.S. consumer inflation could rise to 4%–4.5%, up from 2.7% last month.

To date, Kalesh said the inflationary impact of tariffs had been muted in the U.S. because businesses have so far absorbed tariff costs on the assumption they would be temporary. However, with Trump’s latest announcement raising the possibility that tariffs will be prolonged, this strategy may become harder for businesses sustain.

“So far, inflation has been limited because companies are passing through only about 10% of tariff costs to consumer prices,” Kalish said. Outlining the impact of tariffs on the U.S. so far, Kalish noted there has been a decline in consumer confidence and an increased expectation of higher inflation.

He also noted the goal of revitalising U.S. manufacturing largely hadn’t materialised because a large percentage of imports were intermediate goods rather than finished products: “tariffs are raising intermediate-goods prices and worsening the cost structure across manufacturing.”

As a result, Kalish said U.S. manufacturers have been cutting hiring to reduce costs, with employment within the manufacturing sector declining since April 2025.

While official data suggests that U.S. consumption remains resilient, Kalish said the figures mask rising household living costs, with inflation in non-discretionary categories pushing lower-to-middle income Americans into higher levels of debt. He added that the upper 10% of U.S. households were driving an increase in spending, in part due to increased wealth from AI-fuelled equity appreciation.

“If you look at the top 10 companies by market capitalisation in the S&P 500, they are all technology companies. Twenty years ago, the distribution was more balanced across industries, such as finance, energy, consumer goods and industrials, but now risk is extremely concentrated in a small number of mega-cap technology companies,” he explained.

Kalish also noted that private-sector employment growth in North America has slowed, not only due to weaker demand but because the labour pool is shrinking.

Citing the Trump administration’s immigration policies as a driver of increased deportations and rising levels of self-deportation, Kalish said an estimated 500,000 people left the United States last year.

He added that some statistics indicate the U.S. population may have also fallen in the last 12months, which would mark the first population decline since 1918 during the Spanish Flu outbreak.

Kalish warned that a reduced labour supply would lead to slower employment growth and, without productivity gains, weaker overall economic performance. He also said labour shortages in sectors reliant on migrant workers, including agriculture, construction, healthcare and hospitality, could constrain output and increase prices further.