The latest polls suggest that many UK small businesses are deeply concerned about the effects of Trump's tariffs and a significant number are refocusing on the EU as a result.
Two new polls paint a grim picture of the sentiment among UK businesses following the announcement of new US trade tariffs.
A snap poll conducted by the British Chambers of Commerce (BCC) among 600 of its members has found that 62% of UK firms with trade exposure to the USA say they will be negatively impacted by US tariffs. Alongside having to increase prices (cited by 32% of respondents), 15% said they would seek alternative suppliers, while 13% said they expected to absorb the costs.
The poll was conducted as news emerged of retaliatory action by China. As a result, it's not just those firms with trade exposure to the USA that are concerned - 41% of those with no exposure also say they will be negatively affected.
"We source part of our products from China, as well as the UK - most of our goods will be UK origin but a small amount maintain Chinese origin - this will be a massive negative impact for our company." A micro manufacturer (BCC poll).
Shevaun Haviland, BCC director general, said: "With retaliatory moves by other countries likely to escalate, the prospect of a global trade war is increasing, alongside a widening of the economic fallout. But there is strong support for the government's approach to continue negotiation and not immediately retaliate. We believe a deal can be done as the US has already been open to talks. But firms don't want to have all our eggs in one basket and want to see closer trading relationships with the EU and other markets."
"These tariffs now mean trade is more difficult with America, which was one of the largest markets we were pushed to take advantage of post-Brexit. If trade is now going to be ultimately more difficult with the EU and America, I fail to see how British businesses are at any sort of advantage." A medium-sized manufacturer (BCC poll).
Small businesses look to the EU
A snap poll of 562 Institute of Directors (IoD) members has found that 37% of business leaders expect to be impacted by the tariffs and of those, 70% expect their profits to decrease as a result. In response to the tariffs, 35% of members will be reviewing their business strategy, 17% will be reviewing supply chain locations and 13% will be reviewing export markets.
The IoD research finds that whilst 42% of members believe the UK government should maintain good relations with all of its trading partners, 34% would like to see closer alignment with the EU.
"The tariffs will mean that we will focus on EU countries to do business with - however, Brexit continues to make this more challenging than before." A micro marketing firm (BCC poll).
IoD chief economist Anna Leach reports that the EU as a whole is the UK's largest export market, accounting for £356 billion of exports in 2023, compared with £187 billion going to the United States.
What should the UK government do about US tariffs?
The BCC poll has found that:
- 44% of firms with exposure to the USA say the UK should seek to negotiate a closer trade relationship with the USA;
- 43% want closer trade with other markets;
- 21% think the UK should impose retaliatory tariffs.
"At this point, most business leaders are adopting a 'wait and see' approach to the tariffs," said IoD chief economist Anna Leach. "Others are looking to re-locate activity to the States or to trade more with other markets. With so much uncertainty surrounding the ultimate end point for tariffs as the UK progresses its own negotiations with the US, it is understandable that businesses will be reluctant to sink time and money into responses which are costly and difficult to reverse. But this will only add to the sluggishness in activity we have seen in the run-up to and since the October Budget announcements, and will further undermine growth."
Written by Rachel Miller.