While President Trump’s announcement of a 90-day tariff pause has given UK businesses “some welcome breathing space” the retail, hospitality and leisure sectors continue to face prolonged uncertainty and disruption, according to a leading retail expert.
Amanda French, partner and head of retail and leisure at national law firm Clarke Willmott LLP, says the ongoing threat of worldwide tariffs and the US’s trade war with China has introduced a fresh set of challenges for the sector, particularly in areas such as fashion.
“Retailers were already facing £5.6 billion in additional costs from the October Budget, in particular relating to the increases in the National Living Wage, National Minimum Wage and employers’ National Insurance contributions, and the decreased NIC threshold,” says Amanda French.
“For an industry with a large number of part-time lower-paid employees, the changes to NICs result in them paying contributions on earnings above £5,000, representing a cost of no less than £615 per employee, in addition to the increased wage costs.
“In addition, some businesses will see their business rates nearly double on some properties this year and the 75 per cent discount for retail, hospitality and leisure businesses, available since 2020/21, will now be 40 per cent.
“Now, while the 90-day pause brings some welcome breathing space, the uncertainty over whether the US will re-impose tariffs on countries including the UK after the 90-day pause, and its ongoing tit-for-tat tariff war with China, means that British businesses will have to contend with rising costs, disrupted supply chains and shifting consumer behaviour.
“A survey by the British Chambers of Commerce has found that 62 per cent of UK firms with trade exposure to the US expect to be negatively impacted, and many of these will be in retail, hospitality and leisure.
“A substantial proportion of these will be forced to raise prices, so hard-pressed consumers will ultimately pay the price.”
Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.