New research from 1,000 SMEs across the UK has revealed exactly how much of an impact President Trump’s erratic threats of trade tariffs are having on businesses.
Data from Paragon Bank has laid bare that more than one in five of the nation’s SMEs say that the tariff threat is their single biggest challenge, placing it above all other concerns, including problems recruiting staff, tax burdens, and regulatory red tape.
Direct impact on takings
As the world waits on the whim of the US President, businesses in the UK are reporting that they are already feeling the impact of the tariffs.
In the survey, a quarter of businesses said that their profit margins have already been directly hit, and 17% are recording reduced sales. Among these, 23% said that they were suffering from reduced access to export markets or falling demand from overseas clients.
22% of business leaders also said that the uncertainty over the future is affecting their ability to strategise, while 20% said that there has been a direct impact on their production time.
State of limbo
While there seems to be a temporary lull in the tariff storm after the World Economic Forum in Davos, the possibility of escalation remains. Just a week ago, Trump was threatening to introduce new tariffs on eight European countries, including the UK, unless they supported his wishes to buy Greenland.
In this climate of uncertainty, the survey found that the transportation, storage, and manufacturing sectors are reporting the most vulnerability.
However, businesses in all sectors pointed to the same issues, with 30% reporting a rise in the cost of imported goods, 28% reporting supply chain disruption, and 27% saying production costs had increased.
Continued turbulence
The trade tariff wrangle has been going on for many years, and unfortunately for businesses, it isn’t showing signs of abating. Some businesses in the UK, therefore, have had no option but to “delay investment decisions or scale back growth plans,” said Phil Hughes, Deputy Managing Director of SME Lending at Paragon Bank.
He added: “Trade tariff disputes have created significant challenges for SMEs, not only those directly involved in import and export markets, but also businesses further down the supply chain.” Hughes recognised that many businesses have shown “resilience in absorbing these rising costs”.
There have recently been increasingly urgent calls to make funding for SMEs easier to access, as this could prove a lifeline for those businesses that have managed to ride the tariff storms so far, but are not sure how much longer they can continue fighting without sinking.
