The Chamber's Policy Director, Chris Fletcher, looks at the impact of US tariffs on world trade.
It has been just over two weeks since the US President unveiled his bold vision for a new era of global trade, centred around the concept of "reciprocal" tariffs. Dubbed "Liberation Day," the announcement saw Donald Trump, with a gameshow-style chart in hand, highlighting the countries with the highest tariffs on US goods and their proposed new “reciprocal” tariffs. While the calculation of these new tariffs was questionable – they were based on trade deficit data, the President’s ambition was clear: to free the US from dependence on foreign goods and bring jobs back to the US in order to boost the economy.
While his supporters and the assembled audience cheered with confidence, the rest of the world seemed stunned by what they had just witnessed. Businesses, investors, and markets globally did not share Trump’s optimism or certainty. The only clear outcome so far is that the old world order - built on decades of trade, trust, and cooperation - has been effectively thrown in the dustbin of history.
Here at the Chamber we’ve been trying to not only keep up with the barrage of announcements but keep in contact with members if they’ve been impacted as well as try and keep the information flowing as best we can. Our International Trade Team have a wealth of experience and contacts and have put together a great package of information and support here. The challenge has been ensuring the information is current and updated accurately reflecting a fast moving and volatile environment.
So, where does this leave us?
There appears to be a temporary pause in the tit-for-tat tariff escalations, and businesses must adapt to yet another "new normal"— a phrase we’ve grown all too familiar with in recent years. Complacency is not an option, as the impact of these changes is far-reaching.
For businesses exporting directly to the US, price increases are inevitable, even if a trade deal is reached. Those not trading directly with the US may still face rising supply chain costs. From April 17th, the US plans to impose a $1.5 million charge on all Chinese-made ships docking at US ports. With an estimated 70% of ships globally manufactured in China, these additional costs will ripple through supply chains. We have also been contacted by a manufacturer who uses US goods to manufacture goods for export to guess where? Yes, China. So it isn’t all about one direction of trade flow across the Atlantic. Talk about being caught in the trade war crossfire!
We are also monitoring the potential issue of goods dumping, where markets close, and traders seek alternative outlets for cheaper products.
The crux of the problem is that Trump has not just upended but destroyed the status quo, leaving everyone waiting to see what the next move is. Until there is more clarity, formulating a response or strategy remains nearly impossible. With his characteristic truculent attitude and dismissive remarks about these tariffs being "medicine" to heal the US economy, any significant rollback seems unlikely—unless countries are willing to negotiate.
Another overlooked aspect, and possibly an opportunity for business, is the immense time and financial investment required for this policy to succeed. Even if the US manages to mobilize the infrastructure and workforce needed to replace what the Far East has perfected over decades, it will potentially take years to have any impact. Meanwhile, global trade will not pause, new deals will be struck, and businesses will adapt. While this won’t be easy, we’ve developed a siege mentality over the last few years through Covid, Brexit and price shocks caused by global conflict, and this is yet another challenge to navigate.
Finally, if this is impacting on you as a business get in touch and let us know. We are getting requests in all the time from all sorts of sources trying to work out what impact this is having right now on the ground. We are also keen to know of any plans that you have to step up trading with other non-US markets.
Have Your Say on Impact of US Tariffs
At Greater Manchester Chamber, we are keen to understand how the tariffs impact your business. Our survey will take no more than five minutes to fill in, and your responses will inform our discussions with local and central government about what we can do to help. Take the survey here.
Find Out More
Join us on 24th April for our Chambers Trade Academy Webinar as we invite policy experts and advisers to provide insights on the US tariffs and tips on how companies can mitigate risks and manage uncertainty.