UK firms put the brakes on investment plans post tariffs, survey finds
Three quarters of UK manufacturing and logistics firms are bracing for a hit from US tariffs, with many putting the brakes on investment plans in a blow to the Government’s growth ambitions, new data reveals.
Larger businesses are more likely to be expecting a squeeze from new global trade policy, according to a survey carried out by HSBC UK.
US President Donald Trump unveiled plans earlier this month to hike tariffs and introduce new levies on all goods being imported.
This included a baseline 10 per cent tariff for most countries, including the UK, while specific goods including cars, steel, and aluminium now face a 25 per cent import tax.
HSBC’s survey of 2,000 business leaders showed that 73 per cent of UK manufacturers, and 75 per cent of transportation and distribution firms said tariffs would have an impact on their business.
This rose to 22 per cent and 26 per cent, respectively, who warned they were expecting a “considerable” impact.
IT and telecommunications firms were the most concerned, however, with 86 per cent of the sector bracing for a hit from the new policies.
Across all sectors, two thirds of UK businesses said the uncertainty and rising tariffs would affect them in some way.
This jumped to 79 per cent of larger businesses with more than 250 staff.
Mr Trump’s tariffs mean US companies buying products from international suppliers will now have to pay an additional tax to the state.
The president has said this will boost home-grown production and support US businesses, but economists have raised concerns the sweeping changes will slow economic growth for countries around the world and raise the risk of a US recession.
Tensions between the US and China have also escalated with “reciprocal” tariffs reaching 145 per cent on Chinese exports.
Meanwhile, HSBC found that many businesses have been making changes amid the global trade uncertainty.
Some 21 per cent of business leaders surveyed said they had delayed investment decisions, a move which could put the breaks on plans that might boost economic growth.
Some economists, including Bank of England policymaker Sarah Breeden, have said tariffs were likely to hamper economic growth in the UK by weighing on activity.
Nonetheless, 14 per cent of firms said they had reconfigured their supply chains as a result, and 12 per cent reported expanding into new international markets, according to the survey.
HSBC UK’s head of global trade solutions, Stephanie Betant, said that “while UK businesses broadly acknowledge that tariffs will have some impact, relatively few anticipate severe disruption”.
“This underscores the structural advantage of an economy where services — a sector less exposed to tariff-related pressures — play a dominant role.
“Tariff measures have largely targeted goods, leaving much of the services sector comparatively insulated.”
She added that, from discussions between the bank and its business customers, many had been “scenario planning” for a while, “from reshaping their supply chains to investing in new production facilities”.
Press Association