UK retailers respond to Trump tariffs: ‘The timing couldn’t be worse’
Retail bodies and tax advisers have warned that Trump’s tariffs come at a dire time for UK retail, saying price rises are “inevitable”.
US President Donald Trump announced a 10 per cent tariff on goods from the UK on 2 April, and a range of higher tariffs on many of the countries retailers manufacture goods in.
“The tariffs announced by President Trump this week would in themselves be a blow to the retail industry, but the timing couldn’t be worse as they collide with post-budget headwinds,” Jacqui Baker, partner and head of retail at RSM UK, said.
“Things could change as bilateral negotiations play out, but this does create another layer of uncertainty, which will impact purchasing decisions, future supply chains and ultimately hit already squeezed margins,” Baker said.
Baker said that price rises were “inevitable”, adding that price inflation could knock Brits’ fragile financial confidence.
While consumer confidence ticked up one point in March, insights director at NIQ Neil Bellamy said there was “little evidence” of a full recovery.
“It won’t take much to upset the fragile consumer mood,” Bellamy added.
But Brad Ashton, customs and international trade partner at RSM UK, said that a price shake-up is inevitable.
“Realistically, retailers will need to increase prices to protect margins… In the short term it won’t be possible to unravel contracts or change the origin of product,” he said.
A ‘very challenging period’ for high streets
Prior to the tariff announcement, the Centre for Retail Research (CRR) predicted that over 200,000 retail jobs will disappear next year, along with over 17,000 stores.
Brits are slowly but steadily turning to experiences like meals out and city breaks over buying goods, and the pandemic took many out of the habit of high street shopping.
BDO data found that retailers failed to drive any significant growth in consumer spending in stores in March, with sales in-store increasing just 0.3 per cent, compared to a negative base in March 2024 of minus 1.8 per cent.
This is well below the rate of inflation, which means that actual sales volumes shrank in March compared to the same month last year.
“The retail sector is heading into a very challenging period,” head of retail and wholesale at accounting firm BDO, Sophie Michael, said.
“Retailers were already dealing with a significant cost increases ahead of the tariffs announcement… and now the introduction of tariffs will put a further squeeze on their margins,” Michael added.
Ahead of Trump’s announcement, 58 per cent of retail and wholesale businesses told BDO they expect to be directly affected ‘to a significant extent’ by US government tariffs, Michael said.
Retail stocks exposed to the US fall
Retail stocks exposed to the US, or those who have factories in South-east Asia, fell yesterday.
Nike, which primarily produces its trainers in Vietnam, China, and Indonesia, saw its share price fall 14 per cent yesterday.
Goods produced in Vietnam face a tariff of 46 per cent, and those made in Indonesia face a 32 per cent tariff.
Luxury stocks, which are particularly exposed to the US, also fell. The US is British luxury’s most important export market, accounting for 22 per cent (£12.3bn) of total exports.
While WOSG is listed in London, the swiss-made watches it selss face a 31 per cent tariff.
The CEO of Walpole, Helen Brocklebank, said she was “deeply concerned” about the impact of tariffs on the British luxury sector.
“These tariffs will not only create barriers for UK businesses but also penalise American consumers who value the creativity, craftsmanship, and heritage of British luxury goods.
“We are in continued contact with the UK government, and we welcome their intensive efforts to reach a resolution with the US administration and continue to support a measured, diplomatic approach to securing a fair and mutually beneficial outcome,” Brocklebank said.