Trump’s tariffs to push UK prices up, survey suggests
Tariffs will significantly harm British exporters that trade with the US, according to a survey by the British Chambers of Commerce (BCC), as a global trade war risks battering the UK economy.
President Trump today doubled down on his controversial economic policies that include a ten per cent tax on all UK goods exported to the US as economists continue to evaluate how inflation may be impacted.
Around a third of British businesses exposed to tariffs are planning to raise their prices, which may ring alarm bells at the Bank of England.
Now a snap poll by the BCC suggests two in five businesses which export to the US will suffer a “significant negative impact” from tariffs while some 15 per cent of companies said they would explore alternative suppliers that dodge tolls.
In signs that British firms were prepared for the worst, around 40 per cent of businesses said the sweeping tariffs were better than they had been expecting.
The survey cited concerned manufacturers that source parts from China and sold to markets in South East Asia which are likely to see their profit margins shrink.
BBC director general Shevaun Haviland said the snap data showed “very clearly” the extent of firms’ concerns over a global trade war.
“There is strong support for the Government’s approach to continue negotiation and not immediately retaliate,” Haviland said.
“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.
Haviland also said spiralling employment costs induced by higher national insurance taxes would hinder further investment in the economy.
“The government must do all it can to head that off by providing practical support around infrastructure projects, reforming business rates and cutting red tape in the right areas,” Haviland said.
Analysts at Jefferies and at leading think tanks such as the Institute for Fiscal Studies (IFS) are expecting Chancellor Rachel Reeves to hike taxes in order to rebuild her headroom, which could be wiped out by lower-than-expected growth.
The Spending Review, which is expected to be released in the coming months, could relieve some of those concerns if enough public spending costs are dialled down as Haviland suggested Chancellor Reeves should consider different “fiscal options”.
“[The government] must stick firmly to its pledge of no further tax rises for business in the Autumn Budget,” Haviland added.
UK growth is now expected to be below one per cent this year, according to various forecasters, ramping up the risk of stagflation.