Business groups have warned that Donald Trump’s tariffs will have a “devastating” impact on UK firms who are already grappling with sluggish growth.
Experts also cautioned of more turbulence in the financial markets as investors react to the sweeping measures affecting global trade.
Trump confirmed a 10% tariff was being imposed on US imports of UK goods – the same level as the global “baseline” he was setting for countries around the world.
Meanwhile, a 25% import tax has been confirmed for steel, aluminium, and cars.
The Federation of Small Businesses (FSB) warned the move will deal a “major blow” to small and medium businesses, who are already facing pressure from weak growth at home.
Currently, 59% of small UK exporters sell into the US market, the FSB said.
“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” Tina McKenzie, the FSB’s policy chair said.
“The fallout will stifle growth, hurt opportunities, and put a serious dent in the global economy.
“The UK Government should now be ready to provide emergency assistance to any SMEs at risk of collapse.”
Influential business group, the Confederation of British Industry (CBI), said the announcements were “deeply troubling” for businesses and likely to have ramifications around the world.
Rain Newton-Smith, the CBI’s chief executive, said a “cool and calm reaction from the UK Government is the right response”, adding: “UK firms need a measured and proportionate approach which avoids further escalation.
“Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.”
Other experts suggested that UK firms that export to the US will be forced to review their trade deals with the world’s largest economy.
Emma Rowland, trade policy adviser at the Institute of Directors, said: “The US is the UK’s largest single trading partner, and an important export market for UK industries, particularly automotive, pharmaceutical, chemicals and whisky.
“Exporters to the US will be forced to review the viability of the US as a destination for their goods, and as a supply chain location.
“Alternatively, they may well have to reduce their profit margins to remain competitive.”
Meanwhile, analysts said the full range of tariffs had sparked fresh worries in the financial markets.
Susannah Streeter, head of money and markets for Hargreaves Lansdown, said: “As threats have turned into facts, the plan for blanket tariffs on US trading partners has unnerved investors.”
Futures trading – which indicates stock movements before markets open – for the US’s S&P 500 index fell 1.7% on Wednesday evening.
The US dollar was also weakening against the pound and the euro.
But the UK may have been spared some of the pain facing other countries, Mr Streeter suggested.
“The UK may appear to have been dealt a better hand compared to some nations, but given it’s so intertwined with the global economy, a drag on growth looks inevitable,” she said.
“The Government is taking a pragmatic approach, and hoping for a trade deal, which may alleviate more of the tariff burden, but the outcome is uncertain.”
(Photo by Andrew Harnik / Staff via Getty Images)
This article was written by Anna Wise from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.