Tag: Make UK

Uncertainty remains over the impact recent US tariffs will have on the steel and automotive sectors, Stephen Phipson, chief executive of Make UK, said during a Business and Trade Committee hearing this week.

“We’re waiting for the full effects,” Phipson noted, highlighting three main areas of concern, with possible direct and indirect impacts on demand and jobs.

“There is a case to be made that some areas, they can probably stand a 25% tariff in terms of the consumer prices, but others certainly can’t. So there would be a direct effect there,” he said.

“There is the indirect effect, particularly around the EU; a lot of our … manufacturers are in the supply chain to EU businesses, which are then exporting final products to the US. It depends on where the EU negotiations end up as to what the effects will be in terms of volumes on UK manufacturing; so, that’s a grave concern,” he added.

For some steel products, he expects buyers to pay the 25% tariff as they cannot currently be sourced domestically in the US.

“With the 25% on steel, which [are] not normal steel products. These are advanced products. These are more specialty steel, specialty components. Now, in a lot of cases, the customers can’t do without those. They’re the single source for those items. So, the consumer will actually end up paying the 25%, but the question … is, does that curtail demand in the process of doing it whilst people re-source, if those tariffs persist for any length of time?”

Stability is also a concern, Kallanish learns from the session.

“We don’t know from one day to the next, whether [US President Donald] Trump’s going to carry on, whether he’s going to suspend, whether he’s going to change; it makes planning your business and your investments extremely challenging,” Phipson said.

“It’s … very difficult to know exactly what the demand reduction will be as a result of tariffs,” he added.

He also highlighted the work manufacturers were doing to mitigate the impact.

“Other manufacturers are … putting in temporary contingency plans at the moment, hoping that in the next month or two we can get some sense, and they don’t have to do the next level, which will be, if you see a demand reduction, scaling back factory capacity.”

He told the committee the manufacturing sector will “absolutely have to” lay off staff if a tariff deal is not done with the US by summer.

“Many of [the] large companies [have] put contingencies in place … [which] gives them maybe three months of gap. So that gives you an order of time scales before there would be a reduction in capacity planned,” Phipson noted.

“For SMEs, they’re living hand to mouth. They want to know day to day whether adding 10% to their product is going to reduce the amount of volume they’re shipping to the United States. And so for them, it’s a much more direct impact; so the larger ones can put this off for a few months, but the smaller ones are going to see it now,” he concluded.

Carrie Bone UK