Trump Tariffs
The impact on supply chains and commercial decision-making.
“Tariff is the most beautiful word in the dictionary”
So said Donald Trump in a campaign speech on 19 October 2024 whilst setting out his plans to increase jobs and corporate presence in the US once he was re-elected. This statement was coined, as part of his winning pitch to the US electorate, with the suggestion to impose varying tariffs depending on the trading bloc on all imports into the US – a move which could cost the UK a substantial £22bn in lost exports.
It’s probably worth a quick look at tariffs in a general sense and how they can impact and influence supply chains and commercial decision-making.
The imposition of tariffs or charges for the movement of goods has been an issue for thousands of years. Ancient civilisations would charge merchants a fee or percentage to bring in food products such as salt, wheat, or livestock, and in more recent times tales were told of smugglers battling the ‘Excise Men’ to illegally bring in wool, lace, or brandy, in order to avoid paying hefty import charges. The tariffs were, in part at least, implemented to try to protect national interests and businesses who might suffer from over-importation of similar products, often at a cheaper price.
The same basic principles apply today, and the use and implementation of tariffs can help to control levels of imports, protect local (national) business sectors, and at the same time bring in useful amounts to the revenue coffers.
How could this affect me?
If the new Presidency of Mr Trump does bring with it a sweeping range of increased tariffs then the impact could be widespread, and would extend beyond the immediate point of importation or export of goods to those involved in the subsequent supply chains. Commentators have differing views on whether the proposals will support and enhance the commercial position for the US, or whether it will isolate and separate US businesses from the wider marketplace. Whether this makes other markets – the EU for example – a more attractive proposition is open to discussion, but the UK Prime Minister Sir Keir Starmer stated that the UK did not have to take sides.
“The national interest demands that we work with both.”
Lord Mayors Banquet 2 December 2024
If history repeats itself then any move by the US to impose higher tariffs on imported goods will result in retaliatory measures by other trading blocs, possibly including the UK. This would make UK products harder to sell to US customers, but also impact the import of high profile US items such as the often-mentioned Levi jeans, Jack Daniels, and Harley Davidson, as well as various electronic items and raw materials used by UK businesses.
What should I do?
UK businesses that are either directly involved in importing from, or exporting to, the US will need to ensure that their products are accurately classified for customs purposes, and that any origin statements and certificates are up to date. This would be expected in the normal course of business, but with potential tariff increases should be reviewed and updated accordingly.
Whilst there is no guarantee that these proposed measures will make it into actual law next year, nor any suggestion that there is a looming trade war involving the US and the rest of the world, it might be prudent for businesses to explore potential other markets or providers in case the US becomes unattractive due to trade charges.
If you would like to discuss any concerns over any potential changes to the import and export processes for your business please contact one of the team.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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