Despite being trailed for months, US president Donald Trump’s reciprocal tariff announcement yesterday (2 April) has still caused significant global reverberations throughout markets and the international trade community.
Implementing an additional blanket 10% tariff on all imports from Saturday (5 April) and country-specific reciprocal rates equivalent to approximately half those charged by each nation from Wednesday (9 April), Trump has thoroughly upended the global trade order.
Trade experts from the Chartered Institute of Export & International Trade gave their view on what this will mean for UK firms, international supply chains and geopolitics in the months and years ahead.
‘Significant and painful’
Marco Forgione, the Chartered Institute’s director general, shared the following thoughts on Trump’s tariff announcements, highlighting the potential impact on UK industry:
“The impact on UK trading businesses of both the 10% tariff on UK goods, and also the 25% tariff on all foreign-made vehicles, will be significant and painful, both to our members and the wider business community.
“This is particularly the case as cars are the UK’s top goods export to the US. These tariffs come on top of President Trump’s 25% tariffs on steel and aluminium imports, which have been in place since March. What we are seeing here is the outworking of a deliberate unpicking of the world’s multilateral trade system. The negative impact on the global economy will be raw.”
However, he also noted that the UK is in a much stronger position than many other nations, as “one of only 11 countries facing the lowest ‘base’ tariff rate of 10%”.
He adds that “because of the structure of the tariffs, UK businesses do have a potential advantage over manufacturers in other nations”, given that many “face more than double the UK’s tariff rate”.
“This is tentatively positive, in light of hopes around an economic deal between the UK and the US, which is being actively pursued by government as a vital priority.
“However, this will not provide immediate relief for those businesses hurting from these measures. The Chartered Institute stands ready to support businesses in managing these changes and navigating diversification of supply chains where needed.”
‘Cooperation and unity essential’
From Brussels, our director of EU and international affairs Fergus McReynolds discussed the imposition of a 20% reciprocal tariff on EU goods which has “sent shockwaves through industry”.
“Car manufacturers and suppliers, in particular, will face significant challenges.”
The bloc is currently considering its response, he said, adding that, “while the EU would prefer to negotiate, they are prepared to retaliate with tariffs and other measures if necessary”.
"There is a division on whether to use the anti-coercion instrument as part of the response. We expect to see the outlines of the EU's strategy following the meeting of EU trade ministers on Monday.”
"It is crucial for the EU to work closely with key trading partners to ensure a coordinated response. It is imperative that these partners do not allow themselves to be played off against each other. Cooperation and unity will be essential in navigating this complex situation."
‘One of the biggest changes in years’
The Chartered Institute’s Import Advisory Practice lead, Ilona Kawka, noted that the sudden shift in the international trade environment highlights the importance of supply chain resilience:
“The introduction of tariffs at a minimum level of 10% by the US is one of the biggest changes to the international trade landscape in years.
“This situation is another example showcasing the importance of supply chain resilience, which will enable firms to react quickly and mitigate the financial impact.”
She noted the practical challenges for firms trying to negotiate the implications of tariffs, adding that “it will take a good few years for the market to recover, as many companies have long-term agreements with their suppliers that they cannot break”, given the penalties incurred for terminating contracts early.
Considering the wider ramifications, she says this could “be the start of a global tariff war that will change how goods are moved and manufactured across the globe”.
“Beyond this, these tariffs could also influence relationships between countries and wider geopolitical dynamics.
“The most affected countries will need to explore and focus on new markets, which could also bring opportunities as well as challenges.”
‘Blow after blow’
UK public affairs lead Grace Thompson said that this is yet another setback for businesses trading internationally, which have “experienced blow after blow in the past few years, whether it be the challenges of reacting to consistently-evolving regulations at home and abroad, fielding economic hits from the Russia-Ukraine war and managing the ensuing cost of living crisis and sluggish domestic growth”.
“From March, they have had to deal with aluminium and steel tariffs, and now there will be the 10% ‘reciprocal’ tariffs and the 25% tariffs on auto imports.”
She added that this is “a huge amount for businesses to field, at a time where we need to actively be encouraging exporters to grow”.
“It is vital that we keep all channels open to mitigate the effects of these tariffs where possible and support the exporting community.”
‘Muted sigh of relief’
The organisation’s sanitary and phytosanitary (SPS) expert Joseph Goldsworthy said there’s been a mixed reaction from the food and drink sector.
“The tariff placed on UK goods could have been higher, so there are some muted sighs of relief. Nonetheless, the 10% rate will still be challenging for traders, especially when trying to secure new trade.
“British food has wide appeal among American customers, but many traders will fear the additional tariffs may scare those customers away.”
He noted that for iconic, British luxury goods, there’s some hope that they’ll weather the potential price hikes:
“Exports of UK drinks have always been strong, with Scotch whisky sales traditionally doing very well in the US.
“While the 10% additional tariffs are not ideal, there is hope that demand for this luxury product will be sustained even with the eventual rise in price for US consumers.”
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