Trump announced a sweeping tariff of 10% for all goods imported into the country – UK food and drink included – as well as significantly higher taxes against some countries as ‘payback for unfair trade policies’.
US stocks have already hit their lowest levels since 2020, and many countries are either implementing or planning to implement their own tariffs in response.
Analysts and members of the food and drink production industry have all agreed that Trump’s taxes threaten to spark a global trade war that will directly impact UK businesses.
The National Farmers Union (NFU) called the tariff increase a challenge to the UK and for agriculture – the US remains the largest market for British agrifood products outside of the EU. What’s more, the reciprocal tariffs may also result in products destined for the US market being redirected to the UK, negatively impacting our market.
“While this is a developing and concerning situation, we are working in genuine partnership with the government and sharing our expertise on this to ensure, if there is any market disruption in response to a change in the movement of goods and products between affected countries, we can respond swiftly,” said NFU president Tom Bradshaw.
“We stand united in our desire to work together to ensure British farmers and growers are at the forefront of any decision-making and will continue to work hand in glove with government as the situation develops.”
The Food and Drink Federation said Trumps tariffs will more heavily impact smaller businesses.
SME’s worse off
“Whether chocolate or the iconic tea and biscuits, our members are predominantly exporting heritage British food and drink products that are well loved by American consumers,” said an FDF spokesman. “The majority of these are made by the 12,000 small and medium sized businesses in our sector, who will be disproportionately affected by these tariffs.
“We want to work with government as it develops its trade strategy to minimise the impact on our sector and help us continue to trade with all of our major markets, so that people around the world can continue to enjoy the food and drink that the UK is known for.”
Jess Corsair, Agriculture and Horticulture Development Board senior economist, noted the announcements go against the World Trade Organisation (WTO) and its goals of facilitating free, predictable and smooth global trade.
“The new imposed tariffs will increase barriers to trade globally,” Corsair claimed. “The WTO also has the “most-favoured nation” (MFN) principle which means that countries cannot discriminate between their trading partners, so all members are treated equally when it comes to trade. This principle has been ignored as the US has implemented different tariffs on different countries.”
The AHDB warned of the potential economic implications of Wednesday’s announcements, drawing attention to the stock markets.
“There could also be impacts on inflation as tariffs make imported goods more expensive, and as well as slowing down global trade volumes and subsequently slowing global economic growth,” Corsair added.
“This will be a major disruptor of global trade, but the impacts will be difficult to predict until we know how the various trading partners will react. As this starts to become clear we will be able to examine the impacts on the UK and global markets.”
Change and adapt
Distributor and supply chain expert ACI Group urged businesses to adopt a proactive approach to the supply chain challenges posed by the tariffs.
“Wait and see isn’t really an option anymore,” said Karsten Smet, CEO of ACI. “The consensus is that the UK has gotten off lightly with ‘only’ 10% tariffs, and select industries like pharma are exempt, but it’s a bit like being slapped in the face rather than kicked in the nether regions – we’d still be better off without it.
“Taken in the round, the shockwaves this will send through global supply chain, the volatility it has created in the dollar, and the threat of retaliation are all harmful to British businesses looking to trade internationally, especially SMEs.
“It’s important to move quickly and carefully when navigating these choppy waters. Businesses cannot afford to leave their fates in the hands of government trade negotiators given the many complexities at play.”
A spokesman for the British Exporters Association said the US’s move to a protectionist tariff regime created a loser’s game and only promoted retaliation and increased costs across the board.
“However, it is unlikely that the USA will change course in the short-term and so businesses will need to adapt and overcome,” the spokesman added. “Unfortunately, adaptation will come at a cost that not all businesses will be able to bear. This is a backwards step for world trade.”
Joseph Goldsworthy, an academy trade and customs specialist at the Chartered Institute of Export & International Trade, said the unwelcome news will create fears that the additional 10% tariffs will make British food and drink products uncompetitive in the US market.
‘Scare customers away’
“British food has wide appeal among American customers, but many traders will fear the additional tariffs may scare those customers away,” he explained.
“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.
“Ultimately 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.”
Speaking of the UK’s most exported spirit, the Scotch Whisky Association (SWA) shared its own disappointment in the additional tariffs.
A spokesman for the SWA added: “We welcome the intensive efforts by the UK government to reach a deal with the US administration, and we continue to support this measured and pragmatic approach towards a mutually beneficial resolution.”
Simon Geale, executive vice president at supply chain and procurement consultancy Proxima, described Trump’s tariffs as a system shock that will lead to long-term change, regardless of whether they are viewed as unfair or seismic.
“What’s clear is that the US’s protectionist strategy, while controversial, could shift the global balance,” Geale added. “The long-term impacts of these tariffs are still uncertain, and that’s the challenge with economic policy – it’s full of variables, and predicting the future is never easy.
“What we do know is that this strategy is a bet, and as with most bets, there will be a winner and a loser. Companies should brace for increased costs, shifts in the global supply chain, and the potential for a global recession. In such volatile times, businesses must adapt quickly to safeguard their future.”