Trump Tariffs and how it will affect the UK jobs market
Trump Tariffs and how it will affect the UK jobs market
Donald Trump is a man who is not afraid to make big decisions. He courts controversy. Trump invites division. But for every action, there is a reaction.
The UK has been issued a 10% tariff on exports to the US. However, with the UK being dominated by it’s services sectors which is not tariffed like the product sector, the impact is cushioned.
Are we safe
It looks safer to be in the UK than it does in say Vietnam for example. Vietnam is dominated by cheap manufacturing to be exported to places like the US. That near monopoly sees Vietnam in a difficult position. But that doesn’t mean the UK is off scott free.
The UK automotive market has already taken a battering from ever increasing EV targets that seem increasingly unrealistic to keep meeting. Add the rapidly emerging and cost vs value proposition from China and it’s looking hairy. Then sprinkle on Rachel Reeves tax and NI increases and you’re doing serious damage. And that’s before Mr Trump has thrown 10% premiums for import tax’s on to the flames.
Any industries or businesses within the supply chains of the automotive market will be effected but would have already been pretty beaten up. So the difference the tariffs make is mitigated to a degree as the damage has already been inflicted.
What about other industries
Chemicals is another export that will be affected. However, chemical product costs tend to have healthy margins associated with them. Therefore whilst prices might increase on certain products to mitigate the tariffs, they can be adjusted if a product line sees a notable drop in profits.
The other area would be certain luxury or food goods, but even with the food goods, they tend to be desirable luxuries rather than cost effective easily substituted products. Paying a premium from people already paying a premium is less troublesome.
Could US tariffs actually be a good thing for the UK
At a surface level, if the UK has lower tariffs than competitors, the answer could simply be yes. But if other countries economies are affected directly by those tariffs between the US and themselves then that means less disposable cash from those markets to buy UK goods and services.
Are tariffs here to stay
The answer depends on who you ask but given that already Trump has back tracked after only a matter of days, the chance of these staying high for long are low. It will cause backlash for the US economy as they do not have the domestic resources currently to replace the global supply chain infrastructure they have become reliant on.
By keeping tariffs in place to give US companies time to build that infrastructure, other countries will alter to supply other markets instead limiting trade dealings with the US. And whilst Trumps plan to make America great again is endearing, can a US producer make garments for peanuts on mass? Can the US produce mass produced parts on the extreme cheap? Nope. I can’t see the American Consumer being too happy about dramatic price increases for products they suddenly struggle to get hold of that used to be dirt cheap and readily available.
Conclusion
The tariffs will reduce dramatically and fairly quickly. It’s a show of strength rather than an economic tactic. Think of it as America waving their proverbial sword around. However, that sword isn’t the biggest sword in the armory anymore. There is a certain far east goliath that are quickly taking ground and if America wants to recover, they’ll need to pick diplomacy over throwing their weight around.
The UK jobs market will likely not be affected too much by this and if anything, has an opportunity, if played right, to step in to produce export products that the US is no longer seen as a reliable source for moving forward.
