The election of Donald Trump as US President has caused significant concern among UK fashion retailers due to potential tariff implications.
- Following Trump’s election, the US dollar surged against the pound and the euro, impacting international trade dynamics.
- UK luxury exports, predominantly to the US, face potential threats from proposed tariffs, risking higher costs for American consumers.
- British fashion leaders express apprehension over the possibility of an intensified US-China trade war under Trump’s administration.
- Stakeholders are urged to exercise caution with financial commitments to US markets due to potential abrupt changes in tariff laws.
Donald Trump’s election as President of the United States has led to a significant rise in the US dollar, with a 1.4% increase against the British pound and a 1.8% increase against the euro. This fluctuation in currency value poses challenges for UK businesses reliant on exports to the US.
An executive from a British footwear company noted that while there may not be immediate effects on their US expansion plans, the real concern lies in the potential implementation of high tariffs. During Trump’s previous term, the economy benefited, yet the threat of tariffs remains a significant barrier to importing goods from China. Alternative manufacturing sources may need to be considered.
Helen Brocklebank, CEO of a luxury industry body, highlighted North America’s critical role as a market for British luxury exports, comprising 24% of total trade. The possible imposition of a 10% to 20% tariff on imported goods by the Trump administration presents a substantial challenge. Such tariffs would not only affect UK businesses but also impose higher prices on American consumers.
The UK government faces pressure to align with US trade policies targeting China, while simultaneously managing relations with the EU, which could retaliate with tariffs of its own. This scenario risks placing the UK in a precarious position amidst a potential trade conflict involving three major economies: the US, EU, and China.
Previous trade disputes, such as the Boeing/Airbus conflict, serve as a reminder of the impact of US tariffs on British products, exemplified by the 25% tariffs on cashmere and wool. One British clothing brand director expressed concern over potential tariffs, indicating that absorbing extra costs could be necessary rather than passing them onto consumers. There is also an expectation of increased orders as partners seek to stock up before potential tariff impositions.
Paul Alger of the UK Fashion and Textile Association emphasised vigilance regarding the UK-US trade relationship. The ongoing review of the US’s De Minimis rule, which allows tax-free imports below $800, is of particular interest. Any changes could affect importing strategies, and companies are advised to be cautious when setting US dollar pricing for 2025 due to potential sudden duty adjustments.
The evolving political landscape following Donald Trump’s election necessitates strategic adaptations from UK fashion retailers to navigate possible tariff challenges.