Bulletin: Tariff changes and inflation

US tariff policy update

President Trump has announced that countries which have not made new trade deals with the US will face additional tariffs. This includes 35% for Canada (up from previous rate of 25%) to apply from 1 August, 25% for Mexico for fentanyl and cars tariff, and 50% tariff on steel, aluminium, and copper - all of which start in 90 days.

Additionally, the US and EU have agreed a new trade deal, ending several months of diplomatic tension and uncertainty.

Under the deal, most EU goods entering the US will be liable to a 15% tariff, rather than the 30% previously threatened. Metal products will continue to be liable to the higher 50% tariff.

In return, the EU has agreed to buy US energy products and military equipment, whilst also investing more in the US.  

IGD opinion 

The election of President Trump, accompanied by a radical shift in trade policy, triggered significant concern and disruption, potentially suppressing global trade and investment.                                  

However, recent events, illustrate the value of making agreements with the US. The new deal with the EU, alongside those with the UK and other partners is protecting these nations from the latest update to reciprocal tariffs.

This is encouraging for those nations, but two important caveats remain:

1. Comparative disadvantage: The EU deal is less favourable than the arrangement under the previous US administration, which maintained average tariff rates around 5%. It also falls short of the terms secured by the UK.

2. Conditional commitments: The US retains the right to reintroduce higher tariffs if the EU fails to meet its substantial investment obligations.

As such, while the EU and UK deals offer a degree of relief, it is only a temporary resolution to ongoing trade tensions, which could have a wider global economic impact.

Why UK food inflation isn’t cooling off

Retail food inflation in the UK continues to outpace general inflation, and it’s not easing anytime soon. According to our latest Viewpoint report, food inflation is forecast to peak at 5.1% in 2025, driven by rising regulatory costs, extreme weather, and global commodity pressures.

From higher business rates and excise duties to climate-driven crop failures and soaring input costs, the food system faces mounting challenges. The risk of stagflation is growing, and businesses must stay agile to navigate what lies ahead.

See our latest article, Why is UK retail food inflation still rising?

Ultra-processed foods and baby foods

New research from the University of Leeds  which analysed 632 baby food products marketed to children under three, has revealed:

• Around 31% of ready-made baby and toddler products were classified as ultra-processed foods (UPFs)

• More than half of snack products contained added sugars, and 41% of main meals were overly sweet

Earlier this year DHSC changed its advice to parents, suggesting that they should look for baby food products with low sugar content and that processed baby food should only be given to children occasionally. 

IGD opinion

The debate around UPFs is intensifying. While some experts call for tighter restrictions, others caution against sweeping reforms without stronger evidence. IGD’s own research shows that while consumers are increasingly aware of UPFs, many remain confused about what they are and how to avoid them.

See our free report, Ultra-processed foods: a consumer perspective.

IGD ShopperVista subscribers can access the Ultra-processed food report here.

Climate change and the food system

This year’s Earth Overshoot Day fell on 24 July, marking the earliest point yet when humanity’s demand for natural resources exceeded what earth can regenerate in a year. We are now using resources 1.8 times faster than ecosystems can replenish - driving biodiversity loss, climate instability, and economic risks like food insecurity and stagflation.

See our latest article, Earth Overshoot Day and our food system.

IMF growth forecasts

The International Monetary Fund (IMF) has slightly upgraded its UK growth outlook. GDP is now expected to grow by 1.2% in 2025, up from 1.1% in April, and by 1.4% in 2026, compared to the previous 1.3% forecast. The IMF states that the revision reflects stronger private consumption, supported by looser monetary policy, rising consumer confidence, and increased public spending announced in the October 2024 budget. These factors are expected to help sustain the UK’s economic recovery into next year.

Food allergy risk: IGD launches new industry template

With food allergies and intolerances rising across all UK demographics, the pressure is mounting on the food system to ensure consumer safety. In response, IGD is launching a new allergen risk assessment template and guidance to help drive consistency in allergen procedures.

Join our webinar on 9 September, 14:30–15:30 to explore the new approach, developed by the IGD Technical Leaders Forum, a cross-industry group championing best practice in allergen risk management.

New rules to boost high street hospitality

The Government is cutting red tape to speed up the conversion of empty shops into cafés, bars, and music venues. New ‘hospitality zones’ will fast-track permissions for outdoor dining and extended hours. The changes aim to reduce costs and complexity for small businesses and are part of the upcoming Small Business Plan.

Hospitality and catering businesses can now access comprehensive market data and expert insight with IGD’s new service, Away From Home.

Payments for farmers

Farmers in England will soon receive payments for reducing pollution in nearby rivers and lakes, Environment Secretary Steve Reed announced. The revamped Sustainable Farming Incentive (SFI) scheme, set to relaunch next year, will include new actions focused on water quality. The NFU also launched a programme to help farmers measure and improve pollution levels. Reed hinted at easing planning rules to allow farmers to build reservoirs more easily amid growing drought concerns.