With the US tariffs in place and looking likely to remain, MEPCA explores the wider implications on the UK-US trade relationship, with expert opinion from Richard Rumbelow, Director of International Business, Make UK, helping manufacturers navigate the new trading landscape.
The shadow of the US tariffs has been hanging over the UK industry since January, evoking an atmosphere of uncertainty for manufacturers exporting to the US. With the 10% tariff on the majority UK goods entering the US now ratified, manufacturers can at least operate from an informed position. However, it is not quite ‘business as usual’ because this new trading landscape is littered with complexities.
Speaking from Geneva while attending the WTO trade negotiations, Richard Rumbelow, Director of International Business, Make UK, took time out of his busy schedule to discuss the tariff implications with MEPCA’s editor.
Richard’s role at Make UK has evolved over the last nine years. Initially, his focus was assessing and responding to the UK’s vote to leave the European Union in 2016. This then led to a more comprehensive international trade relationship role, but maturing the UK’s relationship with the EU continues to be a fundamental part of what he does. Wider trade policy is also a key focus for Richard, which involves closely following the work of the UK government’s trade policy. Richard explained this element of his role encompasses three key areas:
Firstly, he is helping to develop, renew, or set up for the first time, the UK’s global trade deals, of which here are around 70 plus at present. The second part of this is supporting companies, particularly SMEs. Richard explained, “We have a high propensity of SMEs in our economy. As we found out in the EU exit situation, many of them are unfamiliar with international trade and the legalities of it and the practicalities and the administration of it.”
“The third area, which will become more prominent, related to the work of the Department of Business and Trade, is the work of the Trade Remedies Authority. The Trade Remedies Authority is a quasi-agency of government. It is independent but reports into DBT. Its responsibility is to manage the UK’s trade defence arrangements from situations where the UK becomes a safe haven for products, which would have economic harm either to businesses or to consumers.
“And in the current circumstances, the work and role of the TRA will become more important given the prospect of ongoing tariffs being applied by the US and potentially other countries.”
On the tariffs imposed by the US and the impact on the UK economy, Richard was quick to point out that, despite the US having previously been a top growth market for the UK, overall, the EU has been a greater focus:
“The EU has and will continue to be the most prominent geographical economic region for us and our members. And that goes back and is quite clearly linked to the 40 plus years of deep economic cooperation we had with the EU being an integral part of the EU in the development of that economic market.”
Of course, the US remains an important market for the UK, with the cultural and language connection making it attractive to UK businesses. However, the tariffs have contributed to it dropping from prominence as a growth market for UK industries. As Richard explained, “The assumption and also the expectation of our members at this stage is that the US has fallen from that top three position into the top six, being replaced by other countries, other economic areas such as the Gulf [States] and Southeast Asia”
He continued, “I think at the moment, the US is probably on hold in terms of people’s desire to commit to new expansions into the US. They’re trying to manage current relationships with customers, clients, and supply chain in the US, which is uncertain in itself.”
Continuing trade with the US
Uncertainty is rarely good for business, and for many business in the UK, the US is a crucial market. What can individual companies do to mitigate the risks involved in trading with the US?
Richard advised that those companies should do their utmost to maintain relationships with their US customers. To protect those relationships, those companies must ensure they fully understand all customs administration requirements involved in getting their products into the US, including correct certifications and tariff codes, etc., and ensure that their customs submissions are accurate.
This would also be a good time for a company to assess and analyse the wider supply chain supporting its US exports. The reasons for this are twofold. Firstly, because the supply chain “has a bearing on how quickly and whether your goods are going to be subject to tariffs and in what way.” Secondly, because it may present opportunities for a company to adjust its supply chain to work with “countries which may be less restrictive for goods going into the US”, therefore lessening the impact of the US tariffs on their products.
“It is also perhaps a time to look at other export markets,” he suggested, highlighting Mexico, Canada, the Gulf States and South East Asia, including Australia and New Zealand, as markets of great potential for the UK.
Finally, as well as firms being vigilant with customs administration and aware of supply chains, Richard strongly advises that they ensure the Incoterms (International Commercial Terms) are in their favour; “that customs duties and other administrative costs don’t fall on you, they fall on US customers.”
Reciprocal tariffs
So far, the UK has remained level-headed in its negotiations with the US, no doubt contributing to the Economic Prosperity Deal with the US, which has afforded the UK exemptions in automotive and aerospace. But given that the US tariff situation is still unfolding, is it likely the UK will impose reciprocal tariffs in retaliation?
Richard thinks not: “My sense is the UK is not in a position and will not want to retaliate because of the adverse effects that it would have on the UK. I think retaliation against the US or applying reciprocal measures on the US at this stage is not within the review of the UK government, and I think that’s a position that will carry on for the conceivable future.”
However, if the EU chooses to apply retaliatory tariffs, this will add a further layer of complexity for UK exporters, particularly those connected with Northern Ireland, which, due to the Windsor Framework, falls within some of the EU’s trade mechanism responsibilities.
An evolving situation
As evidenced by the timeline so far, this remains a developing situation, which has taken many twists and turns to date, and could continue to do so as the year goes on. This volatility highlights just how crucial it is for the UK manufacturing sector to adapt and diversify into other global markets, and, just as crucially, build more robust, transparent supply chains.
As the US turns inwards, the UK must look outwards, committing to free trade, strengthening its relationship with the EU and developing relationships with other global markets. To keep apprised of the latest developments in tariffs, visit Make UK’s website.
