From Kate Lester, Founder and CEO, Diamond Logistics
What the actual, Mr Trump?
Well, we knew it would be ‘exciting’, but here it is — global trade Armageddon. Trump returns to office and reintroduces tariffs — and what tariffs they are. At last count: 104% on goods from China, and an additional 10% on goods from the UK, on top of the 25% we already pay.
But what can you do? Mitigate the impact of the new Trump tariffs.
And before we get into our top tips to help you do just that, let’s underscore what the impact of these tariffs might be, according to www.taxfoundation.org in an article [here]:
- +$2.87bn in revenue for the US
- GDP impact: -0.7%
- Capital stock impact: -0.6%
- Hours worked (converted into full-time jobs): -605,000
And this was the calculated impact before retaliatory actions were taken. Oh my giddy aunt!
BBC sources say:
‘All three major stock indexes in the US plunged more than 5%, with the S&P 500 dropping almost 6%, capping the worst week for the US stock market since 2020.
In the UK, the FTSE 100 plunged almost 5% — its steepest fall in five years — while Asian markets also dropped and exchanges in Germany and France faced similar declines.’
What we need are several strategic steps UK businesses can take to mitigate the impact of the new Trump tariffs. Here’s a breakdown:
1. Understand the Scope and Impact
- Identify Affected Products: Review which goods are targeted (e.g., steel, cars, agriculture).
The following were not impacted by the additional tariffs, including the 10% baseline tariff:
- All articles subject to 50 USC 1702(b), such as books and other informational materials – find out more here
- Steel and aluminium products, which were separately impacted by a 25% universal Section 232 tariff
- Automobiles and automobile parts, also under a separate 25% universal Section 232 tariff
- Copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy products — some of which were under investigation for Section 232 tariffs
- Any products that become subject to future Section 232 tariffs
- Products from Mexico and Canada compliant with USMCA, except for goods targeted by Section 232 tariffs
- Imports from countries subject to Column 2 of the HTSUS, which at the time were Cuba, North Korea, Russia, and Belarus
Want to find out more about Section 232 tariffs? This Wikipedia page might help.
- Identify the country these are applicable to. This is relevant if — like Musk — you import multiple components into the US (I know, I’m laughing too… the irony). BBC has a good list here.
- Assess Financial Exposure: Model the cost impact on profit margins and pricing.
2. Supply Chain Adjustment
- Diversify Supply Chains: Shift to suppliers or production in tariff-free countries (e.g., within the UK or neutral trade partners).
- Nearshoring or Onshoring: Consider moving some production to the US market to bypass tariffs — see JCB’s decision to build its own factory in the US.
3. Pricing Strategy
- Pass Costs Strategically: Increase prices where feasible, particularly in less price-sensitive segments.
- Absorb Selectively: Absorb tariffs in highly competitive markets to maintain market share.
4. Legal and Trade Maneuvering
- Use Trade Zones or Warehousing: Explore bonded warehouses or foreign trade zones in the US to delay or avoid duties.
- Exploit Classification Tweaks: Work with trade lawyers to see if goods can be reclassified under less-tariffed categories.
5. Engage in Lobbying and Trade Advocacy
- Industry Groups: Join UK/EU industry associations to advocate collectively.
- Government Support: Pressure the UK government to negotiate exemptions or retaliate proportionally to create leverage.
6. Invest in U.S. Operations
- Local Presence: Setting up production or partnerships in the US can avoid tariffs and may also play well politically.
- M&A Strategy: Acquire or partner with US-based firms to build domestic manufacturing capacity.
7. Currency Hedging
If tariffs affect the pound-dollar dynamic, use hedging strategies to mitigate currency volatility alongside tariff costs.
8. Communication with Customers
Be transparent about the reasons for price changes or supply issues to maintain customer trust.
We can’t make the tariffs go away — but we can help.
If you need support with the international side of your business, call your local Diamond site today or enquire here.
