Fmcg businesses around the world faced some relief after Donald Trump dropped his pledge to introduce tariffs on ‘day one’ – but the US president still vowed to launch eye-watering levies on imports from 1 February.
In his inaugural speech on Monday, the returning president promised to “immediately begin the overhaul of our trade system to protect American workers and families – instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens”.
And while he stopped short of launching levies on goods from China, Mexico and Canada on his first day of presidency – going against his own campaign promises – Trump reiterated plans to impose some tariffs from February, including 25% fees on imported goods from Mexico and Canada.
He added new tariffs on China could depend on whether the US could strike a deal with the Asian country over the future of popular social media app TikTok.
During his campaign trail, Trump pledged to launch punishing tariffs of up to 20% on all imported goods, with that number rising to 25% for Mexico and Canada and an eye-watering 60% for China.
Many experts claimed this could lead to a full-blown trade war, which would massively affect global GDP and lead to higher inflation and interest rates.
“The US is our third-largest market for food and drink exports, with British favourites like scotch whisky, salmon, and cheese in high demand on American tables,” said former FDF chief and ex-head of the Food & Drink Export Council Ian Wright.
“Tariffs on these would squeeze UK exporters, potentially triggering the Starmer government to consider retaliatory measures. With inflation already biting, this trade turbulence could make matters worse.”
Trump also signed an executive action on Monday to have the secretaries of Commerce and Treasury and the United States Trade Representative investigate America’s trade deficits with some foreign countries along with proposals to build an “External Revenue Service” to collect tariffs, identify “unfair” trade practices, and review existing trade deals for potential improvements.
When asked about universal tariffs, he said: “We may, but we’re not ready for that just yet.”
Read more: What a Donald Trump presidency will mean for food & drink
The president’s trade strategy is set to become clearer in the coming weeks. And while any direct tariffs on the UK have not been announced, Trump has pledged to use the levies as a negotiating tool on other countries, including the European Union.
Wright also noted Trump’s ‘America First’ agenda “leaves the door open for tariffs to be imposed simply to protect US industries, with no clear justification”, and that the UK was now ”both more isolated and more precarious” since leaving the EU.
“And then there’s China: Trump’s hardline stance could force the UK into difficult choices, especially if President Xi retaliates with measures that hurt British businesses”, he said.
“It’s not all bleak. Certain sectors, like baby milk, might find unexpected opportunities. Where there are no major US producers, UK brands could step in, filling gaps and thriving despite the storm.”
David Henig, director of the UK Trade Policy Project at European Centre for International Political Economy (ECIPE), said he didn’t believe that Britain would be first in the line of fire for the Trump administration, but that it should “deepen EU ties” against a backdrop of trade uncertainty with the US and China.
Meanwhile, businesses have been readying for the proposed tariffs by ”front loading shipments of containerised goods to the US ahead of any changes in trade policy”, according to the CEO of the Chartered Institute of Procurement and Supply (CIPS), Ben Farrell.
The Grocer previously reported on how sectors like olive oil were prioritising shipments to the US ahead of the election to avoid extra fees.
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