By Harry Mottram: The old saying that if America sneezes Britain catches a cold is likely to hold true over the international economic fallout from President Trump’s threatened tariffs. Mexico, Canada and possibly the EU face immediate tariffs of up to 25% which has sent shock waves around the world with markets down and a near panic amongst businesses in the affected nations. Even the USA business community is warning of the potential cost to them and to consumers which is the opposite of what the tariffs are supposed to achieve.
Add to that threatened tariffs on China, possibly Britain and any other country that Trump believes do not buy enough products from the USA creating a trade deficit and we have a problem. And I haven’t mentioned the new USA president’s vague threats to annex Greenland from Denmark, his desire to take over the Panama Canal from the Panamanian Government and even the nonsensical idea that Canada should become the 51st state. Added together with the tariffs these threats have led to feverish diplomatic talks around the world as Governments decide how to react.
More to the point the immediate effects of Trump’s rambling rants have been to threaten economic stability not just abroad but here in the UK where a generous view of our economy is that it is flat lining. Tariffs will lead to a slowdown in trade overseas depressing growth and stifling business in Britain pushing up the cost of living as everything imported will cost more as the cost of those tariffs hike prices in the countries hit. Inflation is usually tempered by the banks increasing interest rates – and if that happens here, in the EU and other major economies like China then it is bad news for business.
Ian Carrotte of ICSM said this is a major concern for UK companies, sole traders, SMEs and the self employed as the British economy is ‘running on empty.’ He said: “Many smaller firms in manufacturing, hospitality, logistics, retail, printing and allied trades and construction have very little leeway when it comes to inflation. If interest rates go up again or inflation rises to double figures or energy costs surge then with historic debt they become insolvent – and since Covid and the Cost of Living Crisis thousands of businesses have gone to the wall. Tariffs are the last thing trade needs as even if they don’t apply to this country.”
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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com