Nearly four in 10 UK businesses are raising their prices in response to the looming threat of increased tariffs, as concerns mount over a potential global trade war instigated by US President Donald Trump, a survey has revealed. The poll, conducted by banking giant HSBC and involving 1,500 businesses, found that 39% are upping their prices in anticipation of higher tariffs. The survey also disclosed that half of the companies are redirecting their export markets towards countries with fewer trade barriers, aiming to avoid the worst impacts of any potential trade conflict.
Businesses are also strategising to adapt their supply chains to withstand the storm, with 41% planning to diversify and nearly a third (31%) considering bringing the chain back in-house. Additionally, 41% stated they would broaden the range of products and services they offer to help counterbalance any negative effects. The survey's results, which were gathered in November for the bank’s 'going global for growth' report, come in the wake of Mr Trump's initial salvo over the weekend, imposing 25% trade tariffs against Canada and Mexico, and 10% on Chinese imports.
Canada swiftly announced plans for retaliation, although Mr Trump declared a month-long hiatus before the tariffs on imports from Canada and Mexico take effect. However, with no signs of a ceasefire with China, the trade war between the two nations has since escalated, with Beijing retaliating with a comprehensive set of economic measures targeting the US. Mr Trump has also threatened that the European Union could be next, causing stock markets to plummet sharply on Monday. In the midst of trade tensions, he has stated a deal "can be worked out" with Britain even though he claimed the UK was "out of line". Businesses across sectors are bracing for financial impacts from the ongoing trade war.
Earlier this week, Diageo, the company behind Johnnie Walker and Guinness, issued a stark warning that potential US tariffs floated by Mr Trump could inflict a $200m (£161m) dent in their profits. The London-listed drinks behemoth has even abandoned a crucial sales target amidst the uncertainty provoked by the tariff threats and unpredictable consumer demand. The beauty giant Estee Lauder is another firm feeling the heat as it announced an increase in job cuts – potentially up to 7,000 positions globally – as part of cost-saving measures, partially attributing this decision to concerns over looming tariff hikes.
Stuart Tait, head of commercial banking at HSBC UK, said: “Far from retreating to more cautious positions, our report highlights how growing businesses remain as ambitious as ever and are adapting to changes as they arise. “Businesses are finding creative ways to ensure they continue to trade overseas successfully, whether that’s looking to different international markets or diversifying their supply chains.”.
The survey also points out that despite the uncertainties surrounding Brexit, the EU continues to be the top region for UK companies engaging in buying and selling goods and services abroad, with 72% of internationally engaged companies targeting the bloc. However, this shows a decline from 84% in 2023. The US leads the way as the primary international hub for 57% of UK-based businesses, with Canada coming in second at 40%, China following closely at 34%, and the Middle East and North Africa region attracting 28%. Minister for services, small business and exports Gareth Thomas said: "It’s great to see so many British businesses trading internationally and seeking out new markets, with more aspiring to.
