The US president’s decision to impose tariffs on imports has sent shockwaves through global markets, and the UK economy is bracing for collateral damage.

While the headline 10% tariff on British goods might seem manageable, the real pain runs much deeper.

Luxury cars and steel exports will be hit with a punishing 25% charge, hammering key industries. Worse still, the broader slowdown in global trade threatens to strangle economic growth, worsening an already fragile UK outlook.

There’s also the lurking danger that manufacturers hit by tariffs will seek alternative markets to offload excess production, potentially flooding the UK with cheap imports and putting British jobs at risk.

For Rachel Reeves, this is nothing short of a disaster. She was already on a fiscal knife edge, with just £9.9billion in headroom after her Spring Statement.

That's barely enough to cover minor economic shocks, let alone a full-blown trade war. That cushion could now be obliterated by the fallout from Trump’s tariffs.

If Reeves was on a knife edge before, she’s now at the pointy end of the blade.

Jason Hollands, managing director at Evelyn Partners, warns: “The hit to the economy from a global trade war could leave the Office for Budget Responsibility’s forecasts and Rachel Reeves’ plans in tatters.”

Reeves will have to act, and whatever she decides, taxpayers won’t like it.

Last month’s Spring Statement was based on economic growth assumptions that have now been shattered.

“This could force the Chancellor to come back for more tax rises or public spending cuts in her Autumn Budget,” says Hollands.

Her most likely move? Extending the current freeze on income tax and National Insurance thresholds, he says.

These are already due to remain frozen until 2028, dragging millions into higher tax bands as wages and pensions rise. Now, Reeves could push that out to 2030 – or even further.

There are other levers she could pull – I recently listed 10 potential Budget tax hikes – but Hollands believes extending the freeze is the most likely. She could even pretend it isn't really a tax increase, although it is.

Reeves does have another option: tearing up her own fiscal rules. Just last week, she called them “non-negotiable". Now, she may have no choice but to rewrite them.

By framing Trump’s tariffs as an unavoidable global shock, Reeves could justify an about-turn. In normal circumstances, breaking her own rules would spook the bond markets. But given the scale of this crisis, they might just let it slide.

That could spare the economy another round of tax hikes and spending cuts – moves that would only deepen the pain.

So what will Reeves do?

At this point, even she doesn’t know.

Reeves faces a nightmare choice, and so do we. The Chancellor has made one mistake after another since taking charge of the nation’s finances. Now, we’re relying on her to steer the country through its biggest economic challenge in decades.

She wouldn’t be my pick for the job. But she’s what we’ve got.

If Reeves presses ahead with more tax freezes and stealth tax hikes, she risks further slowing the economy at precisely the worst moment.

Yet, ironically, she may have been handed a political lifeline.

The blame for this latest economic turmoil lies squarely with Trump. That gives Reeves a rare opportunity to shift the narrative. Instead of taking the heat for Britain’s struggling economy, she can frame this as an external crisis, one that demands decisive action.

It’s a rewriting of history, of course, given the damage she’s already done. But rewriting history has never been a problem for Rachel Reeves.