One of the UK’s most influential industry organisations has warned the government to take action and “prepare for the worst” to protect British firms over doing business in the US after yet more flip-flopping around Trump tariffs.
The British Chambers of Commerce (BCC) says it is “far from clear” whether the US president will hit the UK and other countries with a higher tariff rate in the future.
Overnight, a new tariff arrangement came into effect at a 10 per cent rate, rather than the expected 15 per cent level that the US president had threatened.
It came after the Supreme Court blocked his wider-reaching tariffs, meaning this executive order is implemented for 150 days, up until 24 July, unless Congress renews it.
The group has now penned a six-point plan for Keir Starmer’s party and say other strategic options are also on the table – warning that not taking any action will be harmful to firms’ longer-term confidence and ability to plan.
“While a new 10 per cent tariff rate, instead of the threatened 15 per cent, will provide some relief it shows how difficult it is for businesses to plan ahead,” said William Bain, head of trade policy at the BCC. “It is far from clear what will happen next, and whether a higher tariff rate is still on the way. Despite the immediate reprieve, there is fresh uncertainty for UK firms exporting goods to the US.
“This makes it very difficult for firms to understand the prices and margins they will be able to secure for their goods, currently under production, for export in several months’ time. Inevitably this will have an impact on their sales and hit the economy.”
The government said on Monday that “nothing is off the table” when it comes to response to the tariff threats, but it has been clear previously that dialogue rather than trade war is the preferred route.
Stock markets fell on Tuesday morning, partly in response to the tariff uncertainty.
The German DAX, the Euro Stoxx 50, France’s CAC 40 and Spain’s Ibex 35 were all in the red in early hours of trading, though none by more than 0.6 per cent. Meanwhile, the FTSE 100 was down less than 0.2 per cent by 10am. Investors are still weighing up the impact of AI on individual stocks around the world, as well as several commodities including gold and oil being in the headlines due to global events. Now, tariff uncertainty may be offering another downward pressure on companies’ share prices.
In more practical terms, the BCC want the government to help British businesses guard against such rapidly changing environments.
“The BCC has provided government with a six-point plan to guard against the worst economic outcomes from the new tariffs and potential further hikes,” said Mr Bain.
“This includes continued negotiation with the US government, engagement with the US Congress, an uplift in UK Export Finance capacity and reviewing the UK’s Global Tariffs.
“The risk of further tariff pain to come is still real and the government must do everything it can to prepare for the worst.”
The BCC estimate that thousands of businesses may be worse off, with up to £3bn in extra costs for exporting goods to the US needing to be absorbed if Trump lifts the new tariff by the added 5 per cent.
Tariff fees are ultimately paid for by US businesses importing goods, with those costs usually needing to be either passed on to US customers or absorbed by the selling firm which reduces their profit margins.
Kathleen Brooks, research director at XTB, noted the “effective global tariff rate is now 10.2 per cent, but this is likely to increase in the coming months if the President gets his way” with the further uplift.
It remains uncertain whether the money already taken for tariffs over the past few months will have to be repaid and, if so, who that money would go to.
