As the transition begins, questions remain about how Trump’s second stint in the Oval Office will shape global trade in the months and years ahead.

During his action-packed campaign Trump pledged to impose tariffs of up to 20% on imports from overseas countries, including the UK, and significantly higher duties on BRIC nations.

In principle, this promise was made with a view to protecting US manufacturing as well as to encourage US consumers to purchase domestic products rather than opting for imported goods.

The US remains the UK’s largest export market, with official data showing total UK exports to the US reaching £188.2 billion in the four quarters leading up to the end of Q2 2024. Of all these exports, 31.3% were goods and 68.7% were services.

Speaking on how UK exporters could be affected by the implementation of tariffs, if introduced, Umar Butt, CEO of the UK and Europe at global logistics specialists Aramex has outlined the current state of play and the potential challenges ahead.

Umar said: “There’s certainly a lot to unpack in terms of what these tariffs could mean for businesses. For UK firms, the introduction of tariffs would compel them to either absorb the costs, squeezing profit margins, or pass them on to consumers, potentially reducing demand for goods from industries which typically export in high volumes from the United Kingdom, such as automotive, pharmaceutical, and machinery.

“From a shipping perspective, fears of new tariffs are also likely to trigger significant front-loading at US ports once again, with reports of retailers and manufacturers already actively front-loading imports in anticipation.

“This could lead to congestion at key ports, causing delays in unloading, and the surge in shipments may also increase shipping costs, making it more expensive for UK firms to deliver their goods to the US. So, we would urge exporters to work closely with their logistics partners in the coming weeks and months to minimise the impact of any potential tariff-related disruptions should they be implemented. As what might seem like the most efficient course of action could ultimately result in higher costs down the line.”

With the introduction of tariffs looking likely, trade talks between the US and the UK could be bumped up the political agenda. The UK will therefore likely face a choice between negotiating a deal with the US to mitigate the impact of tariffs on British goods or align themselves with its European allies.

While this poses some optimism for UK business there is a risk the UK could be caught in a cross-fire, as any imposed tariffs from the US could still be met with similar retaliatory measures.

During his first term, Trump did use the threat of tariffs as a negotiating tactic, ultimately softening his stance to secure a deal eventually. Nevertheless, he imposed tariffs on the EU, which had some ripple effects for UK exporters.

Despite this, the impact was not as severe as many had anticipated. UK exports to the US saw strong growth between 2017 and 2021, even during the challenging period of the Covid-19 pandemic.

In the short term, Umar Butt of Aramex believes that while the prospect of tariffs may cast a shadow over UK exports to the US, their potential impact is unlikely to be as severe as it might initially appear.

Umar continued: “For UK exporters, it’s crucial to stay agile and be prepared for a potentially turbulent period. With recurrent geopolitical tensions kickstarting a regular cycle of supply chain disruption, instability has been somewhat of a recurring theme since the Covid-19 pandemic. Businesses have become more resilient as a result.

“We also must remember that we have been here before. During his first term, tariffs were introduced on foreign goods and the global economy didn’t come to a grinding halt. While his proposed tariffs this time are more far reaching, and could of course lead to more unpredictable ripple effects, ultimately experts are already predicting that a more moderate stance will probably be taken, which is encouraging.

“That being said, in the run up to Trump’s inauguration UK exporters should still be prepared to put contingency plans in place to stay informed of any developments as they happen and mitigate any potential cost hikes. Looking through a logistics lens, this can be achieved by focusing on optimising supply chains and shipping strategies to better absorb the impact of potential tariffs – whether that be shifting away from just-in-time practices and adopting more flexible inventory models or re-evaluating the most efficient and cost-effective shipping methods available.”

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