The re-election of Donald Trump has sparked discussions on potential trade barriers.
- The US dollar experienced a rise against the pound and euro after the election outcome.
- Business leaders express concerns over high tariffs impacting UK exports to the US.
- The luxury sector fears the repercussions on North American trade relationships.
- Caution is advised for businesses committing to US dollar pricing.
Following Donald Trump’s re-election, the financial markets responded with the US dollar appreciating 1.4% against the British pound and 1.8% against the euro. This immediate economic reaction has led to conversations about potential trade implications for UK businesses, particularly within the fashion sector.
A British footwear executive noted that the company’s expansion plans in the US are not expected to be significantly affected, citing economic growth during Trump’s previous tenure. However, the potential imposition of high tariffs on imports from China remains a concern, although alternative manufacturing sources may mitigate this risk. Moreover, political relations could impact trading dynamics, but drastic measures are not anticipated.
The luxury industry, represented by Helen Brocklebank of Walpole, expressed significant concern over proposed tariffs, which could pose threats to British exports worth approximately £13 billion. The potential for a 10% to 20% tariff on luxury goods could not only harm UK businesses but also lead to increased prices for American consumers. The looming necessity for the UK to align with US trade policies targeting China adds another layer of complexity.
Recollecting the Boeing/Airbus dispute, which led to tariffs affecting goods like cashmere and tailoring, stakeholders warned against underestimating the impact of such trade tensions. Businesses absorbing tariff costs rather than passing them onto consumers may face financial strain, as indicated by a director from a premium clothing brand. Additionally, there may be an increase in orders as wholesalers try to stock up ahead of any new tariffs.
Paul Alger of the UK Fashion and Textile Association emphasised the importance of monitoring the UK-US trading relationship closely. The ongoing review of the US’s De Minimis rule, allowing duty-free imports up to a certain value, coupled with the potential for sudden duty rate changes, highlights uncertainties facing exporters. Consequently, caution is advised for businesses planning US dollar pricing strategies for 2025.
Navigating the uncertain trading landscape will be crucial for UK fashion businesses as they adapt to potential changes in US trade policies.
