London, United Kingdom – Louise Verity, a 42-year-old businesswoman from Northampton, a town in the heart of England, has been worried about the Trump tariffs since she first heard of them brewing in January.
Her business, Bookishly, sells literary gifts to book lovers – prints, arts, stickers, all to do with classic literature.
More than 60 percent of her sales are to the United States. They will now be hit by a 10 percent tariff, which is milder than the taxes imposed on other countries, but still serious enough.
“I’ve been following the news constantly, up all night hitting refresh, waiting to see what was coming,” she told Al Jazeera.
“The 10 percent tariff on the UK could be worse. The way I feel is, if it was 30 percent, I would be giving up and waiting for it all to collapse. It is still a lot to try and absorb. The other thing is, what do we say to our customers? I don’t have any useful information.”
She expects big businesses to just pass on the extra costs to consumers, something she feels unable to do. “I can’t say to everyone, ‘Don’t worry, we will be OK.’ Because I don’t know,” she added.
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Verity is like thousands of small and large business owners across the world trying to do the maths, to see if they can keep afloat despite the tariffs, an attempt by President Donald Trump to boost the US’s finances at a seeming cost to almost everyone else.
Tina McKenzie, policy chair of the Federation of Small Businesses, said, “The news of 10 percent tariffs on UK-US trade is a major blow to SMEs. Currently, 59 percent of small UK exporters sell into the US market. Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat.
She predicted that the fallout will “stifle growth, hurt opportunities, and put a serious dent in the global economy. Now, we’ll need to look at the fine print to work out the precise implications for the UK’s small exporters”.
Condemnation has been widespread.
Australia-based economics professor Steven Hail said after discussing “ostensibly rational arguments” in favour of Trump’s tariff strategy, “we could find no such arguments which were coherent. There is no grand plan which makes any kind of sense.”
That sentiment resonated with many other observers, including senior analyst at Swissquote Bank Ipek Ozkardeskaya, who told clients, “Trump’s tariff announcement was worse than expected.”
“The universal tariff was set to 10 percent – in line with expectations – but the tariffs imposed to main trade partners are much higher than that: 34 percent for China, 20 percent for Europe and some 24 percent on Japanese imports. The UK comes out less harmed with a 10 percent rate, while Vietnam and Lesotho are the hardest hit with tariff rates of 46 percent and 50 percent, respectively.”
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In theory, countries can now negotiate with the US to lower their rates.
The market reaction to all this has been bad and predictable. Markets fell pretty much everywhere. The price of oil, a decent measure of expected global growth, fell below $70 a barrel.
Shares in Nike, which makes many of its shoes in Vietnamese factories, fell 14 percent as the tariffs were announced.
‘Short-term disruption is inevitable’
At first, there was some relief that the UK had a lower tariff rate compared with the EU.
Some saw this as evidence that the UK has a stronger relationship with Washington, especially amid increased tensions between Trump’s administration and the EU.
But Simon French of the London-based stockbroker Panmure Liberum said, “It does not mean that. It has everything to do with the blunt use of long division that an eight-year-old could do, and no special UK carve out.”
Michael Field, chief equity strategist at Morningstar, said, “A 20 percent tariff on all European goods is potentially devastating for many industries, if indeed these tariffs are permanent and fixed in nature. This is unlikely, given that administration officials have intimated that negotiation will be possible. Short-term disruption is inevitable, however, given that the tariffs come into place on April 5, leaving governments no time to stop the process.”
There is talk of governments needing to come to the aid of small businesses in particular, to protect jobs and wages.
“Consumer goods, healthcare and industrials sectors will be amongst the sectors worst affected by the new measures,” said Field. “Worse possibly, will be the response by the EU, and the likely counter-response by the US government. All of which will ratchet up the damage to exporting and importing businesses. The coming weeks will be telling, whether this event has the potential to reshape global trade, or whether, as many have predicted, there is a deal to be done.”
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UK Prime Minister Keir Starmer has said he will “keep a cool head”.
Whether he can make Trump any cooler looks like a long shot.
One old economic cliche is that when the US sneezes, the rest of the world catches a cold. That’s supposed to describe how a downturn in the US ripples outwards.
But among the places facing a 10 percent tariff are the Heard and McDonald Islands in the Antarctic. Since these are populated by penguins only, it seems unlikely that US is going to raise much in extra tax from this region.
