EU firms should move plants to UK to avoid tariff ‘flare ups’
European companies should urgently ramp up manufacturing capacity in Britain to avoid the worst effects of Donald Trump’s tariff regime, a top accountancy firm has said.
According to Alex Altmann, head of the German desk at Lubbock Fine, the 10 per cent US import tariff agreed as part of newly inked UK-US trade pact has left Britain “well placed to act as a bridge between the US and EU”, and should spark EU-based manufacturers to prepare relocation plans.
“The geographic proximity of the UK to the EU – especially manufacturers in France and Germany – keeps the supply chains short,” he said. “This is both more cost-effective and resilient against future flare ups over tariffs.”
Altman’s comments follow a period of robust public interventions by US and EU politicians, set off by Donald Trump’s vow on Friday to levy 50 per cent tariffs on all US imports from the western trading bloc from 1 June.
Writing on Truth Social, the US President said his administration’s “discussions with them were going nowhere”, branding EU negotiators “very difficult to deal with”.
The comments triggered an aggressive sell-off in European equities and sent nerves coursing through European exporters, many of which had hoped the the EU and US were getting closer to signing a deal that would keep tariffs down after Trump’s 90-day pause concludes in early July.
Following Trump’s salvo, European Commission President Ursula von der Leyen said Europe was “ready to advance in talks swiftly and decisively”. President von der Leyen then shared a call with her US counterpart, after which Trump pushed back the start date of the 50 per cent tariffs 9 July.
EU is ‘still very far’ from long-term tariff deal
Despite the reprieve, Altman warned European firms not to pin their hopes on the US making a concession in the near future, saying they should start “building contingencies”.
“There’s a risk that many EU companies look at the success of the UK’s tariff renegotiation and assume the EU is close behind. The reality is the EU is still very far from a long-term deal with the US,” he said.
“Relocating manufacturing to lower tariff regions like the UK will help these companies maintain their output and protect their margins,” he added.
Any uptick in relocations would represent a major boon for Britain’s moribund manufacturing sector. UK manufacturers have been battling a unsavoury cocktail of rising costs, heightening geopolitical tensions and trade disruptions from tariffs, all of which have acted as a handbrake on production.
Altman argued the slowdown, as well as the chastening effect that Brexit had on British manufacturing, means there is considerable slack in the sector on which EU firms can capitalise.
He said: “The outflow of manufacturers after Brexit means the UK has surplus capacity. EU businesses can take advantage of the existing infrastructure – like factories, machinery, expertise and logistics networks – getting up and running quickly.”
“A lot of EU companies already have spare manufacturing in the UK, they should be bringing that back onstream.”