The FT recently wrote an interesting piece on the effect that Donald Trump's tariffs has had on the state of US Manufacturing. (https://www.ft.com/content/6a322572-7f0d-11e8-bc55-50daf11b720d). We look at what this may mean for UK firms. President Donald Trump’s recent moves to engage in a trade war with former allies seems set to impact manufacturing industries and with 53% of revenue from the manufacturing of machinery and equipment coming from exports (April 2018), there could be headwinds for the UK manufacturing scene.
What does this mean for the UK:
As the UK looks to build it’s own trade agreements in post-Brexit negotiations, the precedent set by President Donald Trump may mean it becomes more difficult to arrange favourable trade deals, particularly with the US.In a more direct sense, jobs in steel and aluminum production in Wales, Yorkshire and the Humberside could be under threat. One must also consider the loss in revenue for suppliers to these large plants. Given the current difficulty in creating new jobs in these regions this is particularly concerning.New EU measures in response to President Trump’s steel tariffs have been proposed covering a range of US imports including steel and industrial products - all in an attempt to “rebalance” tariffs on approximately €2.8bn worth of goods. The real fear domestically is that the UK’s two largest trading partners engage in a tit-for-tat war .
What could this mean for SMEs in Manufacturing:
Rising equipment costs - in particular those made of steel and aluminium.
Greater difficulties in exporting goods, services and equipment outside of the UK.
Uncertainty in any planning to develop an exporting strategy to the US
On the flip-side, greater costs for MNC’s to purchase goods and services outside the UK could mean a boost in demand for equipment and machinery from manufacturers in the UK.
How much the increase in domestic demand will offset the rising costs of materials sourced from abroad remains to be seen. For more research and pieces on the state of UK SME’s Manufacturing, check out our blog