Millions of people are beginning to feel the effects of Donald Trump’s ‘Liberation Day’ tariffs as the measures threaten an international trade war, which could hurt economies across the globe.
International stock markets are already plummeting, and with China imposing and the EU promising counter-measures, many economists predict that the impacts are set to deepen.
Another less-regarded area where tariffs have hit is oil prices, which have a direct impact on the cost of fuel domestically. These prices have plummeted in the US and UK as producers prepare for the economic fallout of Trump’s tariffs.
This is because forecasters have begun increasing the odds of a possible US recession, which would lower economic activity and so reduce the demand for oil. Pre-empting this, producers have begun lowering their prices in anticipation of lower uptake.
While this trend is indicative of a worrying trend for the global economy, it does come with some silver linings.
These lower crude prices should soon be reflected in domestic fuel costs in the UK, spelling good news for drivers. The cost of filling up a fuel tank will become cheaper as a result, making for some crucial savings at a time when other costs rise across the board.
Simon Williams, head of policy at the RAC, said: “With oil tumbling to its lowest price for four years, drivers ought to see cuts of up to 6p a litre at the pumps ahead of the notoriously busy Easter weekend on the roads.
“As long as the barrel carries on trading around or below the $65 mark, retailers will be obliged to pass on the savings they’re benefitting from to their customers on the forecourt.
“Petrol should drop from its current UK average of 136p to 130p a litre and diesel from 143p to 137p. If unleaded were to fall to that level, it would be the cheapest since summer 2021. Diesel hasn’t been that low since September that year.”
For an average car with a 50-litre fuel tank, this means a full refill will drop by £3, from £68 to £65, a decent saving that will likely be appreciated by regular drivers.
Mr Williams adds that the RAC believes fuel retailers should be motivated to to lower fuel prices “as they continue to be scrutinised by the Competition and Markets Authority (CMA).” A recent report from the watchdog found that fuel margins, which is the profit retailers make at sale, “remain stuck at high levels.”
Dan Turnbull, Senior Director of Markets at the CMA, said: “While there are several factors contributing to the higher fuel prices seen in recent months, fuel margins remain stuck at high levels which impacts prices paid by drivers at the pump.
“The ‘fuel finder’ scheme set to launch this year should be a game changer for drivers – allowing them to find the cheapest fuel prices while boosting competition between fuel retailers.”
This tool, first called for by the CMA in 2023, is set to enable drivers access to live, station-by-station fuel prices on their phones or satnavs. This should improve competition between retailers in the UK, the watchdog says, which in turn should lower costs.
