Keir Starmer is one of a many global politicians that have dubbed the US trade war as the ‘end of globalisation’, and he could be right.

Whether this is one of Trump’s many policy statements that quickly gets reversed or the start of the imposition of his ideology and world view (remember he says tariffs are ‘a beautiful thing to behold’) the markets finally think he is serious.

We’ve seen a global drop in equities with a particular fall in the US stock market with many on Wall Street dubbing Trump’s Liberation Day as ‘Liquidation Day’.

So what does this mean for British Business?

The US has imposed 10% tariffs on UK imports into the US, lower than those imposed on the EU. Exporters to the US may oddly consider the UK a more attractive route to export than European neighbours. The fact is however that goods shipped to the US from the UK will be 10% more expensive to import. This is however only the direct impact of the US trade war.

One of the latest articles on Sky News attempts to explain the impact on global trade using a smartphone as the example which is a really straightforward read to get your head around the likely impact of the tariffs. The fact is however, that the true impact of the trade war is almost impossible to predict. The last time there was an attempt to use tariffs in such a way was in the US in the 1930’s when the world was far less integrated…it was a disaster for the US by the way.

The current global economy is so integrated that international de-coupling is almost impossible to forecast.

So if we can’t accurately forecast the impact, we should do nothing right?

The simple answer is no, businesses should always be looking ahead and contingency planning is vital, particularly importers and exporters exposed to the US. The global trade war is undoubtedly going to be inflationary (the markets certainly think so) and therefore businesses should be looking at their supply lines and customer base:

• Conduct a customer risk assessment - do we have any clients directly impacted by the new tariffs.
• Do the US tariffs on other nations potentially give us a competitive advantage in other overseas markets as companies look for new supply partners
• Supply chain analysis - what are is your direct exposure to American imports. When do we need to price this into our products and how will we communicate this to customers
• Assess how the business can absorb any tariff increases
• Identify strategically vital business resources and plan for alternative supply routes and increased costs
• Stay nimble!
   

Liquidity is going to be vital for all businesses during this turmoil as commercial relationships and markets shift to meet the new reality. Despite the uncertainty around whether these tariffs are short term or long term, conducting contingency planning and reaching out for professional support in good time is vital. The availability of time to transform and rescue a business is always the biggest enemy and the businesses that will best meet the challenges ahead will be hard of the game and in doing so, staying nimble.

https://news.sky.com/story/amp/why-the-device-youre-reading-this-on-shows-us-how-trumps-tariffs-could-herald-one-of-the-most-painful-episodes-in-modern-times-13343764