Is there opportunity for UK retailers in Trump’s tariffs uncertainty?

They say a week is a long time in politics and never has that seemed more applicable than now. The real problem for the global economy, and by extension UK business, has been that it’s been more than two months of long weeks, with no end in sight.

Since Donald Trump signed his executive order slapping 10% tariffs on all imports from Mexico, China and Canada on February 1, barely a day has gone by without a new pronouncement or walkback from the White House.

The assault has been, frankly, dizzying and stock markets around the world have reacted as such: plunging with each new rattle of the sabre and then rebounding with each U-turn.

For US retailers and consumers, the result has been chaos. In the first weeks of April, US consumer confidence hit its second-lowest level on record. This was caused by price increases due to some tariffs coming into effect, but also because of the deleterious effect the markets were having on individual 401ks – the US equivalent of UK pensions.

In the UK though, despite the market turmoil, the impact has been lessened. Retail sales in March inched up, and the roiling global markets have had a deflationary impact on certain UK commodities – such as petrol, which fell 2.8% in March.

While this could only be a brief ray of sunshine for UK consumers, given experts are predicting many commodity prices to sore again in April as rising bills and business costs take hold, some retail insiders are strangely sanguine about the longer-term impact of President Trump’s ‘new Golden Age’.

“Look, he’s certainly got a fluid policymaking style,” quips one retail consultant over lunch, “and for UK retailers with a lot of exposure to the US market then, yeah, you’re going to be worrying.

“But I think there’s quite a lot of opportunity there for other UK brands, who aren’t as exposed to the US. I think it could open up a lot of interesting possibilities, particularly with our nearest trading partners in Europe.”

Shifting alliances

Once only the most distant dream of the most ardent Remainers, some experts believe that a protectionist US will force the UK to re-evaluate its trading relationship with the European Union.

“If things keep going the way they’re going, and Trump doesn’t back down, then new trading alliances will be formed,” says one exasperated banker. “There’ll be a softening of the EU-UK relationship, which we’re already starting to see.

“We want free trade. The EU wants free trade. It just makes sense. They were once our biggest market. In 2017, UK clothing exports to the EU were over £6bn. Now it’s more like £3bn. If you can get some of that market back through some kind of new agreement, then that can only be a good thing.”

While UK retailers and consumers alike may want to see closer trading ties between Britain and Europe, there will be likely be a political price to pay one way or the other. Trump’s administration has made its views on the EU very clear, while Brussels has already shown a willingness to play hardball and would take a dim view on any UK deal that softened standards.

Accidentally deflationary

While obviously not the intent of Trump’s administration, as has been seen with petrol prices, some of the turmoil caused by the tariffs could have a deflationary impact on UK consumers when it comes to certain products.

“The UK trade system is still quite similar to that of the European Union,” explains William Bain head of trade policy at the British Chambers of Commerce. “So, where there is no domestic competition, then goods could come on the market from abroad and have the effect of reducing prices.”

Bain says that US tariffs on products like consumer electronics, toys, garden and home furniture, ceramics, and other industrial and electrical goods from China could see them being sold cheaper in the UK and elsewhere.

“So, for example, if these tariffs charges from the US on electronics remain temporary and then, in three months’ time, they go back to 145% on say flat-screen TVs and China is still manufacturing vast quantities of them, then there’s the opportunity to put those on the European market.

“Consumers could see some benefit there in terms of lower prices. But in terms of where we are right now, it’s hard to know if that’s still going to be the case in a month or three months’ time.”

While a flood of cheaper Chinese products into the UK because of the high tariff walls in the US could benefit UK consumers, it could also be a blow for UK retailers being undercut.

Currys chief executive Alex Baldock this week raised concerns that such products could be “dumped” in the UK by companies such as Amazon, Shein and Temu.

Buy It Direct chief executive Nick Glynne also said: “The long-term threat with the tariff crisis is… the mass movement of Chinese factories selling directly to consumers either via marketplaces such as Temu and eBay or websites such as Shein.”

Buy British

While economic protectionism is a big reason why the global economy is in the parlous state that it’s in, there could be some upsides to it for UK retailers.

Data published this week by Barclaycard found that, while the government has refused to issue calls to buy British in response to Trump’s tariffs, UK consumers are effectively doing it for them.

A survey of consumers found that 71% want to “support UK businesses by buying more UK products,” and a further 67% said they were “worried that the products [they] buy from outside the UK will become more expensive”.

And, while news of the global turmoil caused by Trump’s tariffs hasn’t yet really filtered through and hit UK consumer confidence, it’s clear the news is cutting through to some spending habits – with 39% of respondents saying they have “been influenced by recent news around tariffs to make changes to my shopping habits”.

“Consumers are being mindful of the impact of recent global events and the impact they may have on their finances,” says head of retail at Barclays Karen Johnson. “In a bid to keep costs down, households are adopting more prudent budgeting.”

While these may only be thin strands to cling on to, it’s all better than having nothing to grab at all. The worry is that, at the whims of capricious policymakers and skittish global markets, these few crumbs of comfort will disappear in the months, and possibly years, of long weeks to come.