A sum of £200 million “could be added” to the UK retail for sourcing goods from the US, as the result of a trade dispute between EU and the US, says new research from Retail Economics.
The new duties are said to bring a first wave of the immediate costs of £85 million a year to retailers.
A range of goods from the US including cranberries, bourbon will be impacted by the measure. The duties will be imposed in two phases, with the first tranche being triggered immediately.
The first tranche is said to trigger additional duty rates of 25% for cover products as diverse as peanut butter, orange juice, and ladders.
The trade disagreement initially focused on the steel and aluminium sector, where for some years Western economies, led by the EU and the US have been concerned about global overcapacity which they argued was the result of Chinese state policy. Until now both the EU and the US had effectively contained the dispute by using targeted Anti-dumping measures to apply additional duties to Chinese steel and aluminium products deemed to have unfairly benefitted from Chinese state supports.
“Our research shows that the cost of sourcing consumer goods from the US could rise as much as £200 million for UK retailers. The first wave of EU duties will cost UK retail £85 million a year will come into force immediately,” Richard Lim, chief executive of Retail Economics.
“It will become critical to pay close attention to this dispute because it’s future course is unpredictable, fast moving and could quickly escalate to engulf other, seemingly unrelated areas of trade. This has come at a time when retailers margins are already under intense pressure from past rises in sourcing costs and escalating operating costs.”
“The Trump administration has already condemned EU retaliation and has warned that it will retaliate in turn, sparking the possibility of a full-blown tit-for-tat trade war. Separately, President Trump has opened up new fronts on trade by imposing 25% duties on $50 billion of trade from China and opening an investigation into EU automotive sales in the US, concerned at the US automotive trade deficit with Germany in particular. If that investigation leads to new duties on EU auto exports we can expect to see even more “retaliation” from the EU and consumer products are almost certain again to be in the firing line.”
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