The recent announcement of tariffs by former President Donald Trump has sent shockwaves through UK businesses, particularly those reliant on exports to the US. With a 10% tariff on UK goods and a staggering 25% on steel, aluminium, and cars, many firms are now grappling with the potential fallout.
Key takeaways
- Tariff impact: 10% tariff on UK goods and 25% on steel, aluminium, and cars.
- Small businesses at risk: 59% of small UK exporters sell to the US, facing significant challenges.
- Market reaction: Financial markets show signs of turbulence, with investors reacting negatively to the news.
- Government response: Calls for emergency assistance for small and medium enterprises (SMEs) are growing.
Business groups express concern
Business leaders across the UK have voiced their alarm over the tariffs, warning of a potential “devastating” impact on the economy. The Federation of Small Businesses (FSB) highlighted that many small and medium enterprises (SMEs) are already struggling with sluggish growth, and the tariffs could exacerbate these challenges.
Tina McKenzie, policy chair of the FSB, stated, "Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat." With 59% of small UK exporters relying on the US market, the implications are severe.
Business leaders adopt a cautious approach
A recent poll by the Institute of Directors (IoD) revealed that over a third of business leaders expect to be affected by the tariffs, with 70% anticipating a decrease in profits. Many are now reconsidering their business strategies, with 35% planning to review their operations in light of the new tariffs.
- Impact on profits: 70% of affected businesses expect profit declines.
- Strategic reviews: 35% will reassess their business strategies, while 17% will look at supply chain locations.
Anna Leach, Chief Economist at the IoD, noted that the uncertainty surrounding the tariffs is causing businesses to hesitate in making significant investments, further stalling economic growth.
Market volatility and investor concerns
The announcement of the tariffs has also led to increased volatility in financial markets. Analysts have reported a decline in futures trading for the S&P 500 index, indicating investor unease. Susannah Streeter, head of money and markets for Hargreaves Lansdown, remarked that the tariffs have unnerved investors, leading to a drop in the value of the US dollar against the pound and euro.
Government’s measured response
In response to the tariffs, UK Prime Minister Keir Starmer has called for a calm and measured approach. Business groups are urging the government to prepare for potential fallout, with suggestions for emergency assistance to SMEs at risk of collapse. The Confederation of British Industry (CBI) echoed these sentiments, advocating for a balanced response to avoid further escalation of trade tensions.
Conclusion
As the UK navigates this new trade landscape, the implications of Trump’s tariffs are becoming increasingly clear. With small businesses at the forefront of the potential fallout, the need for strategic government intervention is more pressing than ever. The coming weeks will be crucial in determining how UK businesses adapt to these challenges and whether a trade deal can alleviate some of the tariff burdens.
Sources used in this article
- ‘Devastating’: Business groups warn Trump tariffs will deal major blow to UK firms, The Independent.
- IoD press release: Business leaders are adopting a “wait and see” approach to Trump’s tariffs, Institute of Directors.
- Business interruption – the most problematic area of cyber claims?, Insurance Business America.
- Trump tariffs to cause ‘untold damage’, UK business groups warn | Donald Trump News, Al Jazeera.
