The implementation of new tiered tariffs on almost every country in the world by the United States is the biggest shake-up in global trade for a century. Repercussions are already being felt on global stock markets – but what impact will the tariffs have on UK engineering and manufacturing?
Few industry experts doubt that the tariffs, which vary from country to country, will have a significant effect. They will add a 10% surcharge on everything from the UK at a bare minimum, while some materials commonly used in engineering and manufacturing are being hit with additional eye-watering rises of 25%, and industries that rely on them – such as the automotive sector – are also seeing a 25% tariff as standard.
“The introduction of a 25% tariff on aluminium and steel, and the 25% tariffs on automotive imports into the US, will have a significant impact on the UK’s high-tech manufacturing industries, particularly aerospace and automotive,” says Jamie White, managing director at Exactaform, a Coventry-based precision cutting tools manufacturer.
The tariffs will hit Exactaform because it supplies those industries. “These sectors rely on precision-machined components, where material costs and supply chain efficiency are critical,” says White.
“With aerospace manufacturers already managing complex global supply chains, any additional cost pressures could affect competitiveness and production lead times.”
The same is true for the automotive sector, where weight reduction is a key consideration. “The increased cost of aluminium will make sourcing and manufacturing more challenging,” White adds.
Sectors that rely on metals will be most keenly affected by the tariff hike. “Steel-heavy industries like automative and construction will feel the pinch first when tariffs rise,” says Andy Coussins, executive vice-president at business software company Epicor. “Higher prices can ripple through entire operations, and potential supply constraints mean delayed production timelines.”
Yet not everyone is convinced that there will be a net negative impact on the steel industry as a result of the new tariffs. “Although the tariff raises immediate concerns of reduced demand and price pressures for many steelmakers, certain specialist producers – those focused on high-grade, niche steel products – will be better equipped to weather the storm,” says Emma Parkinson, CEO of International Energy Products, a specialised steel stockholding firm.
Parkinson is confident that the UK’s pedigree in steelmaking will ensure it is better insulated to attract interest in a more competitive and challenging market. “Areas such as Sheffield have a longstanding reputation for manufacturing advanced steel products, which is a significant advantage on the global stage,” she says.
There are about 10 manufacturers worldwide that are able to produce steel of a standard that aerospace, energy and automotive sectors require, Parkinson adds – those that can should be able to withstand price hikes through tariffs and could stand stronger as a result.
“This scarcity gives British specialist producers an edge. While American customers may have to shoulder higher costs to access this high-value steel, UK firms with a strong pedigree can continue to command respect for quality and reliability, potentially insulating them from the direct repercussions of the new tariffs,” Parkinson says.
While the unveiling of tariffs has been long trailed by Trump and his team, uncertainty over what shape they would take left companies in the dark about how to plan their response. Various approaches could have included a flat rate for all countries to the different levels that were eventually unveiled.
“Trump’s tariffs have caught the manufacturing industry by surprise,” says Rory Farquharson, partner at business management consultancy Elixirr, who predicts “an immediate impact on short-term earnings forecasts”.
How manufacturers react will be key to them surviving and thriving in the sector. “In the long term, manufacturers must also quickly adapt by investing in areas to become more nimble and operationally efficient – so expect to hear and see even more around AI and robotic process automation, including in global business services, not just production, in order to mitigate short-term profit impacts,” says Farquharson.
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