What the US election result could mean for UK businesses

After a historic election, logistics expert David Hooper reflects on what trade under Trump could mean for British manufacturers, and why costs associated with Chinese supply chains are expected to rise.

On the back of political changes on our shores, businesses of all kinds are crying out for certainty so they can plan for the future.

Whether Donald Trump will provide US industry, and in turn exporters to the US, with that stability remains to be seen, but there are a handful of warning signs for UK businesses based on announcements in recent weeks that could put a strain on one of our largest export markets.

While there is a long road ahead before anything is formalised, the bottom line is increased tariffs could result in UK products becoming more expensive in the USA.

Among the policies referenced in the build-up to Donald Trump’s election victory is a 60% tariff on Chinese products arriving in the USA and, more importantly for UK businesses, up to 20% extra to pay on all other goods imported into the USA regardless of origin.

For now, this is just speculation, but as a result of the well-publicised focus on restricting Chinese exports, UK businesses who export Chinese components could be hit the hardest.

After the EU, the US is the largest market for UK exporters, with around 15% of goods going across the Atlantic, which means a huge number of businesses will need to adjust to the new state of play.

To protect against future disruption, businesses should:

1. Look at what impact the 20% and China-specific 60% tariffs could have on their products
2. Review contracts to see if they are exposed to a change in legislation
3. Check the origin of products: does the manufacturer qualify the goods as UK origin? A review of origin is especially important for Chinese products
4. Look at the worst-case scenario: if 20% tariffs were added to products, how much more expensive would this be for customers?
5. Factor in increased checks on goods and speak to an expert to find out the potential costs and disruptions
6. Consider insurance for trade disruption
7. Explore growing markets as an alternative, which we are already working with businesses to do

It is worth mentioning that these suggestions are based on announcements made on the election circuit. None of what’s been propositioned is policy at this stage and these tariffs may well meet with opposition within the USA.

Other factors which may soften any potential blow are that UK goods are often positioned as high-quality, meaning it’s possible some premium products could absorb costs.

On the same token, if they are less price-sensitive, customers might take on the additional expense.

Either way, it means reliability and quality could be more important than trying to bring costs down, to ensure the customer keeps on investing.

In theory, Trump has already been clear in setting out his stall, but if approved, it might not be the kind of export picture UK businesses would have hoped for at the start of the month.