What the Block on Trump’s Tariffs Means for UK Businesses

In early April, US President, Donald Trump, declared that he had the authority to impose sweeping global tariffs as he was acting against a nationwide emergency.

Turns out he was wrong.

A US trade court has deemed the ‘reciprocal’ tariffs illegal, and that Trump had “exceeded his authority” in implementing them. The US Court of International Trade have immediately invalidated the controversial tariffs by invoking the International Emergency Economic Powers Act (IEEPA), which is only intended to counter “unusual and extraordinary” threats.

Twists and turns

This block is only the latest twist in a saga that has seen the US president change his mind several times on the severity of the tariffs imposed on different countries. China, in particular, has seen many fluctuations, with tariffs as high as 145% being imposed at one point before being replaced with a significantly lower 30%

President of financial firm, Exit Stage Left Advisors, Ted Jenkin, even went so far as to say that these announcements are welcomed by stock market investors. On the subject of Trump’s tariffs, the business head said that “once [Trump] delivers bad news, investors are buying those stocks when they are beaten down waiting for him to chicken out and watching those stocks rebound in value”.

Were the UK-US trade talks a waste of time?

UK Prime Minister, Kier Starmer was the first global leader to hold talks with Trump in an effort to reduce the tariffs, with the talks eventually yielding a reduction in the 25% steel and automotive tariffs being reduced to Trump’s baseline of 10%. But with this latest news coming out of America, where does it leave UK businesses, and were those UK-US talks a waste of time?

Perhaps not.

While the court ruled on the majority of Trump’s tariffs, it wasn’t asked to look at those imposed on steel, aluminium, and automobiles. These were instead issued using a different statute and as such, will remain for the time being.

That’s unlikely to be what the industries affected will want to hear, but it’s worth mentioning that those that have seen tariffs suddenly removed may still have to contend with tariffs down the line. An analyst at Goldman Sachs is reported to have said that “this ruling represents a setback for the administrations tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners”.

Indeed, the US government has already launched an appeal against the decision, but the lack of backing from the international emergency powers act is certainly a blow to Trump’s plans. Without it, he may need to take a slower and more staggered approach to tariff increases.

A busy period ahead?

On the news that the tariffs have been blocked, Forbes Burton’s senior Client Manager, Ben Westoby predicted that UK businesses may flock to take advantage of this. He said that “it’s inevitable that those that US firms that import from the UK will be looking at supply chains to see if they can expedite the process to stock up before any potential tariff reinstatements occur. This could create an extremely busy period for UK exporters”.

It also means that UK businesses are less likely to be affected by the practice of ‘goods dumping’ from countries with significant manufacturing capabilities and large tariffs such as China. With a surplus of stock intended for the US, countries can ‘dump’ these products at a reduced price in countries with more lenient tariffs and trade agreements. This can potentially upset the economy by putting pressure on native businesses.

While it may be prudent to capitalise on this current tariff block, it’s far from certain that it will last, leaving UK businesses in much the same place as before: a trade limbo with no long-term answers.

Concerned about how the changes might affect your business?

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