Recent comments from US President Donald Trump to impose new tariffs have created concerns for many businesses trading internationally.
While these measures are still proposals, the potential impact on UK companies that import from or export to the US could be substantial and potentially worth preparing for.
What are the proposed tariffs?
Trump has indicated that the US may impose tariffs on goods from eight European countries, including the UK, unless they support his wishes to buy Greenland.
If a deal is not reached, UK goods could face an initial tariff of 10 per cent from 1 February and potentially rise to 25 per cent later in the year.
Tariffs are taxes placed on imported goods and are usually calculated as a percentage of the sale price.
While tariffs are technically levied on US firms importing foreign goods, the added costs are usually passed back through the supply chain and impact exporters.
Higher costs for suppliers and reduced demand from partners can cause a ripple effect and result in increased pricing and delays through global supply chains.
Who will these tariffs affect?
For businesses that import or export to the US, the impact can be significant. Even businesses that do not trade directly with the US may still feel the effects.
The sectors most likely to be affected are machinery, automotive, aerospace and food and drink products.
The BCC Insights Unit surveyed businesses’ initial reaction to these proposals and found that one in three UK firms claimed they would be at risk from the proposals of new tariffs.
Of those who claim they will be affected, a third have already begun taking action in response to the announcement.
How should UK businesses respond?
Markets have reacted nervously to Trump’s comments and stock prices have faltered globally, showing just how much international trade is affected by tariff changes.
Businesses should get ahead of these proposals and prepare by:
- Reviewing their supply chains and reliance on US trade – assessing how much revenue depends on the US market.
- Speaking to suppliers and customers – understanding how this could affect supply chain costs and where pressures may arise.
- Exploring alternative supply routes or suppliers
- Reviewing pricing structures, contracts and cash flow forecasts
- Exploring new markets and additional revenue streams – helping reduce reliance on any single trading relationship.
- Monitoring any changes – staying updated on the ongoing Government’s guidance and trade negotiations.
While it may be too early to make drastic changes, building flexibility in your future contracts and planning for different scenarios can help your business build resilience and respond more quickly if tariffs are introduced.
How can we support your business?
Businesses that plan ahead and seek expert guidance are better positioned to prepare for the potential tariff changes.
Our expert team can help you understand how these potential tariffs will affect your business and international supply chains.
We can help assess the potential risks to your finances and model the impact of tariffs on your margins and cash flow.
With the right support and understanding of the ongoing changes, you can help take away some of the uncertainty in the current trading market.
For further advice on how tariffs will affect your business, contact our team today.