Traders have been warned that it could “get worse before it gets better” when it comes to the volatility being caused by tariffs this year.
On a free webinar hosted by the Chartered Institute of Export & International Trade yesterday (25 March), a panel of government and industry experts shared concerns over the uncertainty caused by the trade war initiated by US president Donald Trump’s administration.
“His trade agenda is not just back, it’s turbocharged,” said Garima Srivastava, the senior international trade legislation adviser at the Chartered Institute. She added that the Trump administration was now acting “with more confidence and fewer filters”.
‘Bumpy ride’ ahead
During the webinar, over half (58%) of the delegates said they’d already been affected by new tariffs this year.
“Buckle up for a bumpy ride,” said Sean McGuire, Europe and international director at the CBI.
“This volatility and unpredictability is causing many concerns, even for those businesses that have not yet been impacted by tariffs.”
“This is an unprecedented situation with the US; we are monitoring it closely but, like everyone else, we are affected by the uncertainty,” said Andreas Lendle, deputy head of trade in goods at the Department for Business and Trade (DBT).
“Even if the UK isn’t affected by certain US tariffs, it could still affect UK companies producing elsewhere and shipping to the US,” added Lendle, who also said that retaliatory tariffs from other countries could impact British supply chains.
Geopolitics a ‘board room issue’
McGuire, who was in Washington DC earlier this month, said that the “narrative and rhetoric” around tariffs was united among those he met from the Trump administration.
“The US feels it has been unfairly treated by the world, with a lot of injustice towards US companies and tech firms,” he said, adding that the Trump administration is adamant “that this will end under Trump, with tariffs the means to bring this to an end and restore the US position on the global stage”.
“Geopolitics is now a boardroom issue,” he added.
“Beforehand, it was an ‘any other business’ matter, but it is now a core issue. It’s not just the US – it’s China, shipping routes and a whole range of issues. Companies are holding off investment into other areas such as digital, AI, or people, and that is a serious concern.”
He urged the UK to “use other levers” to boost its “growth agenda” and “attract investment with the rest of the world grappling with the economic challenges of tariffs”. He highlighted life sciences, infrastructure and the green sector as domestic areas in which the UK could attract investment.
Disruption
Srivastava noted that tariffs were disrupting businesses in many ways, with firms either needing to “absorb the higher costs or pass them on”. While some businesses were “re-routing” or “restructuring supply chains to avoid hot spots”, she noted that this wasn’t a “click and go strategy”.
She said SMEs in particular could struggle with the “compliance overload” caused by new trade measures, including “added bureaucracy, new customs codes, additional documentation and increased security at borders”.
“Tariffs are not just taxes, but a source of volatility,” she said, saying firms now needed to be “agile” to navigate this uncertainty.
Proactive, not reactive
Sophie Lavis, the European compliance and customs manager at Flora Food Group, said her company was trying to be “proactive” rather than reactive when trying to navigate the unpredictability that’s emerged in trade.
“We’re trying to do as much homework and research as possible, in the hope that it’s not needed,” she said.
“If it is needed, our hope is that we are covered internally and we can continue as we are.”
Flora Food Group has acquired a new production site in the US as part of its strategy to “mitigate” any potential impact of possible US tariffs in her sector, while reducing the “production stress” on its US sites.
She also noted that her company has used and is considering “expanding” its usage of free trade agreements (FTAs) as a way of diversifying its trade and de-risking the impact of future tariffs. “It’s great fun,” she said.
Lendle said DBT is continuing to work on new and existing FTAs as part of its strategy of supporting UK firms to navigate the current volatility.
He said the department was working on new FTAs with India and the Gulf Cooperation Council (GCC) while looking to upgrade deals with Turkey and Switzerland, and highlighted the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the UK joined last year.
For more support navigating tariffs, the Chartered Institute has a suite of training courses, webinars and advisory services, which you can view here.
