It’s been a few days since the Trump Administration announced their planned trade tariffs at the Oval Office in Washington D.C. The full impact is yet to be felt, leaving many wondering how it will affect them and their businesses.
What are Trade Tariffs?
A trade tariff is a duty imposed by a government on imports of goods. No one is exempt from paying their share of the tariff, and while the impact may not be immediate, it can eventually be passed down to consumers at the checkout.
Global Reaction to the Trade Tariffs
The global reaction to the trade tariffs has been substantial and chaotic, affecting not just the UK but countries worldwide. China was the first to retaliate, raising their tariffs on the UK by a staggering 34%, resulting in a 70% tariff on the USA.
The stock market has also reacted negatively, with the FTSE 250 and 100 both down. Many companies are seeing their share prices drop, leading to advice that investors should sell stocks to avoid further losses.
Impact on Businesses
For businesses that rely on global trade, especially with the US, these tariffs are a significant blow. Prices for products are likely to rise, forcing many to reconsider their suppliers. Here are some examples of affected businesses:
- Automotive Industry: Companies like Ford and General Motors may face higher costs for imported steel and aluminium, which could lead to increased prices for vehicles
- Consumer Electronics: Brands such as Apple and Samsung might see higher costs for components, potentially raising prices for smartphones and other gadgets
- Retailers: Large retailers like Walmart and Amazon could experience increased costs for a wide range of imported goods, from clothing to electronics, which may be passed on to consumers
If prices increase, businesses may need to make cuts, although this should be a last resort. It’s advisable to look for suppliers in tariff-free zones, such as the EU or the UK, to avoid additional costs.
How Will This Affect Us in the UK?
The UK is not immune to the effects of these trade tariffs. With the US being one of the UK’s largest trading partners, the tariffs could lead to higher costs for imported goods and materials
Additionally, the uncertainty surrounding the tariffs could impact investor confidence, leading to volatility in the stock market and potential losses for those with investments in affected companies
Conclusion
The impact of the trade tariffs has already begun, but uncertainty remains for those who rely on US trade or have invested in stocks and shares. While China has retaliated, it’s still unclear how the EU and the UK will respond in the coming weeks.