Stock markets opened with big falls this morning with the FTSE 100 index down nearly 6% as the fall-out from Donald Trump’s tariffs continues to wreak havoc around the world.
British companies want the government to build closer trading relations with the the EU and other markets to loosen ties with the US.
A snap poll of members of the British Chambers of Commerce revealed that almost two-thirds (62%) of those trading with the US expect to be hit by tariffs.
Of these, 20% expect a significant negative impact, 42% some negative impact, while 7% report some or a significant positive impact. Only 16% expected no impact.
The survey also revealed that 40% of firms considered the 10% tariff to be better than they had been expecting.
Alongside increasing prices, 15% said they would seek alternative suppliers, while 13% said they expected to absorb the costs. About a third (36%) said they would take no action at this time.
The poll came as Asia’s major stock markets plunged on opening on Monday, with Japan’s Nikkei 225 dropping by 6.3%, Hong Kong’s Hang Seng down 9.8%, and India’s Nifty 50 and Sensex losing 5%
Among the biggest losers were British banking giants: shares in HSBC were down by more than 15% in early trading in Hong Kong, while Standard Chartered fell by 18%
It also follows further confirmation that Prime Minister Sir Keir Starmer will take action to support British businesses, as reported by Daily Business on Friday.
The ban on producing new petrol and diesel cars will still come into effect in 2030. However, manufacturers will now be given more flexibility to balance the annual targets on EVs against each other and avoid fines by selling more EVs in later years of the mandate.
The non-compliance fine will be reduced to £12,000, and people who want to purchase EV’s will be supported.
“We’re putting £2.3 billion towards tax breaks for people buying electric vehicles and improving charging infrastructure,” said Sir Keir.
These plans were due to be made before Mr Trump’s tariff announcement, but smaller UK firms like Aston Martin and McLaren are to be allowed to keep making petrol cars beyond the 2030 deadline. Some hybrid vehicles will be able to stay on the market until 2035.
Darren Jones, Chief Secretary to the Treasury, told Sky: “There’ll be further announcements from the prime minister this week on support for British business.
Mr Jones said Sir Keir has been “clear that he’s unhappy about the tariffs” but it is essential the UK reacts in a “cool-headed and calm way”.
The government has said it is continuing to negotiate with the US after it failed to come to an agreement by Wednesday last week, when Mr Trump placed 10% tariffs on all UK exports to the US.
Responding to the findings of the BCC survey, Shevaun Haviland, director general, said: “This data sets out very clearly the immediate impact of US tariffs and the extent of business concern. With retaliatory moves by other countries likely to escalate, the prospect of a global trade war is increasing, alongside a widening of the economic fallout.
“But there is strong support for the Government’s approach to continue negotiation and not immediately retaliate. We believe a deal can be done as the US has already been open to talks.
“But firms don’t want to have all our eggs in one basket and want to see closer trading relationships with the EU and other markets.
“They do not consider this to be an either/or scenario and we must continue to pursue a three-pronged approach of better trade relations with the US, the EU and the Indo-Pacific region.”
Ms Haviland added: “This survey also gives an early warning sign on the economic impact in the UK of these tariffs, with price increases being the most likely response by firms.
“Other costs are ramping up, with higher National Insurance Contributions chief among them. Businesses are facing increasingly tough conditions and investment will inevitably suffer.
“But a recession is by no means guaranteed. The government must do all it can to head that off by providing practical support around infrastructure projects, reforming business rates and cutting red tape in the right areas.
“It must also stick firmly to its pledge of no further tax rises for business in the autumn budget and instead consider all its fiscal options.”
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