The 10% tariff introduction – on top of our existing levies – is disappointing, but will not kill our sectors. It is in the small, not catastrophic category – some of our members report possible additional costs of tens of millions of pounds, which is, sadly, better than we anticipated. Such levels distort the cost of goods and raw materials – perhaps irrevocably.
Ultimately, there is a broader concern that these will add to a scarcity mindset and price hikes on the highly integrated wider operating ecosystem that our sectors are built on – primarily relating to aluminium and steel. Companies in the supply chain are more likely to be impacted when utilising these materials – overall, the cost of doing business will be driven up by any tariff hikes regardless of where these tariffs are placed, and on what.
We and our members commend the UK Government’s ‘keep calm and carry on negotiating’ approach, rather than knee-jerk reactions. We in the UK have been given the baseline 10% tariff – which is a clear indication of our government’s work on this area but doesn’t necessarily feel very “special”- but hopefully more to come. There is obviously a huge amount of detail that isn’t clear yet and we now play the waiting game. A good example is the question mark over exemptions to the tariffs, notably airworthy goods, which have previously undergone different treatment. We don’t currently know if these exemptions will be retained, but given the criss-cross nature of our supply chains, we would hope this would be the case. Momentum in gaining exemptions or improvements on this starting position is crucial for maintaining confidence in the market.
