Trump tariff war: Threats and opportunities

Trump tariff war: Threats and opportunities

  • 17.03.2025 09:00
  • foodmanufacture.co.uk
  • Keywords: Trade War, Tariffs

The ongoing tariff war between Trump and trading partners like the EU and UK has created significant economic uncertainty. Retaliatory measures such as alcohol taxes are affecting industries, while also presenting potential opportunities for some sectors to expand.

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Estimated market influence

ACI Group

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The uncertainty of trade has caused volatility in normally stable markets.

Blick Rothenberg

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Melissa Thomas, head of Canada desk at Blick Rothenberg, suggests that the liquor trade war could open up new opportunities for UK alcohol producers.

CCEV

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The Comité Européen des Entreprises Vins (CCEV) expressed deep concerns about the impact of tariffs on the wine industry, warning of layoffs and price increases.

SpiritsEurope

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SpiritsEurope is deeply alarmed by the renewed threat of tariffs on EU and US spirits, urging both sides to stop using their sector as a bargaining chip.

Argon & Co

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Argon & Co research found that 66% of C-suite leaders feel confident in mitigating geopolitical risks, but Ben Wright warns against underestimating these challenges.

Context

Analysis and Summary: Trump Tariff War - Business Insights and Market Implications

Overview

  • The ongoing trade war between the U.S., EU, and UK due to tariffs on steel, aluminum, and alcohol has significant business and market implications.
  • Key impacts include export restrictions, supply chain disruptions, and shifts in consumer markets.

UK Exports Impact

  • Fact: UK exports of metal-containing products (steel, aluminum) to the U.S. were worth £2.2 billion in 2024.
  • Implications: The new tariffs will affect not only raw metals but also furniture and machinery, creating supply chain disruptions for UK manufacturers.
  • Uncertainty: Trump’s unpredictable tariff policies (e.g., potential escalation or rollback) add long-term uncertainty for businesses.

Opportunities for UK Alcohol Producers

  • Fact: Canada’s retaliatory tariffs on U.S. alcohol products (C$30 billion worth of goods) have removed over 3,600 American-made alcohol items from Ontario’s LCBO shelves.
  • Opportunity: UK producers can fill this gap in the Canadian market, leveraging anti-U.S. sentiment and demand for British spirits like whisky and champagne.
  • Risks: The UK Food and Drink Exporters Association (FDEA) warns of increased competition and supply chain disruptions.

EU Tariff Retaliation

  • Fact: Trump threatened a 200% tariff on EU alcohol products, including wine and spirits, in response to the EU’s 50% whisky tax.
  • Impact: U.S. imports of EU wine alone are worth $4.9 billion annually, with the EU accounting for nearly half (40%) of all U.S. spirits exports.
  • Consequences: The tit-for-tat tariffs will likely lead to layoffs, price increases, and economic losses for businesses in both regions.

C-Suite Responses

  • Fact: 66% of C-suite leaders feel confident about mitigating geopolitical risks over the next five years.
  • Analysis: Despite this confidence, experts warn that leaders may underestimate risks. A “resilience by design” approach is crucial, including alternative sourcing and contingency planning (e.g., Plans B-Z).

Long-Term Effects

  • Market Volatility: Trade uncertainty has already caused instability in stable markets (e.g., corn futures volatility).
  • Global Supply Chains: Disruptions to trade routes and increased competition will reshape global supply chains.
  • Regulatory Risks: Tariffs on alcohol highlight the dangers of using non-related industries as bargaining chips in trade disputes.

Competitive Dynamics

  • UK vs. EU: The UK may gain a competitive edge in certain markets (e.g., Canada) due to U.S. tariffs, while the EU faces significant losses from retaliatory measures.
  • Strategic Partnerships: The pragmatic approach of the UK and EU to secure trade deals with the U.S. will shape future market dynamics.

Conclusion

The ongoing tariff war underscores the importance of adaptability and contingency planning for businesses operating in global markets. While there are opportunities for some industries (e.g., UK alcohol producers), the long-term risks of supply chain disruptions, economic losses, and regulatory instability cannot be ignored. Businesses must adopt a proactive approach to navigate this volatile environment effectively.