The world of trade is shifting once again. With President Trump’s recent decision to slap 25% tariffs on all steel and aluminium imports, businesses across the UK and EU are scrambling to figure out their next move.
The big question now is: How can businesses adapt to keep moving forward and stay competitive?
The EU is fighting back
The European Union isn’t taking this lightly. It’s hitting the US with €26 billion ($28 billion) in retaliatory tariffs, targeting everything from textiles to home appliances and agricultural products, with a particular focus on goods from Republican-led states.
What this means for businesses
Rising trade tensions
President Trump has vowed to match EU retaliatory tariffs likely leading to a full-blown trade war that could disrupt transatlantic trade. Businesses need to rethink supply chain strategies to avoid financial hits.
Higher costs for EU businesses and consumers
Steel and aluminium suppliers now face increased costs when selling to the US. President Trump’s next move could extend that to a far wider set of goods. That could lead to higher prices for US customers while EU tariffs will push up the cost of US sourced components and finished products – this already is creating financial uncertainty and, if long term, may lead to job losses in EU and US manufacturing.
A push for new markets
European businesses will likely pivot to markets in Asia, Latin America, or the Middle East to offset losses. At the same time, we may see more intra-EU trade, as European companies look closer to home for materials and supplies.
The UK’s playing It cool
Unlike the EU, the UK isn’t rushing to retaliate; at least, not yet. The government is prioritising negotiations with the US, hoping to work out a better deal instead of escalating tensions.
UK-US trade talks just got trickier
The UK has been pushing for a free trade agreement with the US, but these tariffs complicate negotiations. While steel and aluminium represent a modest fraction of UK GDP, the real concern is whether an escalating trade war will extend to big-ticket UK exports like pharmaceuticals, cars, aircraft parts, and whisky. If that happens, British businesses will feel the impact far beyond metals.
A delicate balancing act
The UK is caught between US trade policies and its ongoing relationship with the EU.
A misstep could damage trade with either side, so the government is treading carefully.
What can businesses do?
The good news? You still have options. Instead of waiting for the dust to settle, companies should take steps now to protect their supply chains and keep operations running smoothly.
Key strategies you should consider:
1. Identify key materials and diversify your procurement and supply chain operations to reduce dependence on the US market
2. Reshore or nearshore operations to improve agility and reduce reliance on the US
3. Reconfigure your supply chains to improve agility otherwise you will have to manage market uncertainty with inefficiency (high inventory, excess capacity and/or low service levels)
4. Leverage advanced analytics and AI tools to model scenarios. With real or near-time data you can make smarter, faster decisions about sourcing, pricing, and distribution.
5. Review cost structures and adjust pricing strategies to absorb tariff-related increases
The bottom line: adapt and stay ahead
This situation is still unfolding, and it’s hard to predict where things will land. But one thing is certain: businesses that stay flexible, rethink their supply chains, and prepare for different scenarios will have the upper hand.
Instead of seeing tariffs as an obstacle, think of them as an opportunity—to build a stronger, more resilient operation.