Almost two thirds (63%) of manufacturers that export say they will be impacted by US tariffs. More widely a third (34%) of businesses surveyed overall fear they will be affected. Firms are worried about the direct cost impact but also the wider issue of depressed global demand.
New research by the BCC’s Insights Unit has uncovered the extent to which firms are worried about the impact of US tariffs on their operations. The survey of more than 1,200 firms, of which over 260 were manufacturing exporters, was carried out between Monday 20 January and Friday 7 February.
During this time the US President, Donald Trump, imposed tariffs on Chinese trade and announced plans for tariffs on Canada and Mexico. But he had not imposed any fresh charges on UK imports.
Overall, 10% of businesses think the introduction of new tariffs on goods entering the USA would have a significant impact on them. 23% think it will have a slight impact, 56% no impact, and 10% don’t know.
However, for manufacturing exporters, those most exposed to disruption to trade in goods, 28% think there would be a significant impact. 34% think it will have a slight impact, 31% no impact, and 6% don’t know.
The view from business:
“The situation in the US with possible tariffs on imported goods is a concern.”
Small manufacturing firm in South-West England
“Tariffs will make the business environment much less certain.”
Micro professional services firm in West Midlands
“US trade barriers proposed by Trump may slow the global economy.”
Micro professional services firm in Greater Manchester
William Bain, Head of Trade Policy at the British Chambers of Commerce, said:
“We have entered a new global era when it comes to tariffs after a prolonged period where trade liberalisation has been the watchword.
“There is still a lot of uncertainty around what is going to happen especially as the US approach appears to have both trade and geopolitical aims. The announcement on Sunday around steel tariffs shows how quickly the landscape can change.
“The UK should adopt a flexible and agile approach to these, while assessing the response of other major players. There is a month until the UK’s current tariff quotas expire, we would encourage Ministers to respond cautiously, and retaliatory actions should only be a measure of last resort.
“We are likely to be facing this kind of climate for the foreseeable future. UK firms want certainty and their anxiety in the current environment is understandable. Those who can, will be mitigating their exposure to risk from tariffs but for many SMEs this is not an option. The continuing uncertainty is far from ideal at a time when economic growth is stagnant.
“But the US has a trade surplus in goods with the UK, and our trade and investment relationship should remain robust.
“Our services exports with the US also won’t be subject to any tariffs and are far higher than our goods exports. This gives UK trade a level of insulation from potential impacts.
“However, if the US sees sustained retaliatory action from other countries, there is a risk that a global trade war will unfold.
“If that happens then international trade is likely to face strong headwinds, and those will have a significant impact on every nation that exports, affecting services intrinsic to facilitating international trade in goods too.
“So, it’s important that the government keeps a cool head, takes a pragmatic approach to tariffs and does not get involved in the hype surrounding them.
“It must also stay alert to the increased likelihood of trade diversion with goods previously destined for the United States, being offloaded in other markets.
“The UK’s Trade Remedies Authority (TRA) will have to keep a very close eye on China’s export patterns on goods like clothing, textiles and footwear.
“Businesses will also have to remain watchful for any improper trading practices such as dumping, surges of imports, or unfair subsidies and flag those immediately with the TRA.”
