What impact will Trump’s win have on the British fashion economy?
After Trump’s win yesterday, British brands and retailers were left wondering what this means for them. During his campaign, Trump raised the prospect of a 10% tariff on important goods, which could pose a threat to British brands and their sales overseas.
Despite Wall Street revelling from the announcement of a Trump presidency 2.0, stock markets in the UK and across Europe wavered due to the uncertainty of the market.
The FTSE 100, London’s Index, opened higher, but its gains soon fell, closing lower at the end of trading amid concerns over volatility in the market. The index was just 0.07% lower at the end of trading on Wednesday. Elsewhere in Europe, the German Dax index was down 1.1% and the French Cac 40 was down 0.5%.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, said: “Fresh nervousness has been sweeping financial markets after Donald Trump’s triumphant win.
“His policies look set to increase inflationary pressures and swell the US deficit even further, with knock-on effects expected for the UK economy.”
During his campaign, Trump said he wanted to increase the tariffs on important goods by 10% up to 60% on goods from China. The US is a huge export market for British luxury brands, for example, representing 24% of all exports (approximately £13 billion). So, this poses a threaten to the success of British brands overseas.
Walpole, the official sector body for the UK, is “currently working to assess the potential impact of these tariffs, and is engaging with the UK Government and other industry stakeholders to ensure that the interests of its 250+ member businesses are represented”, according to its CEO Helen Brockleback.
The British government is also faced with navigating Trump’s expectation that the UK aligns with his trade policies that target China. There is a risk that the UK could end up in a trade war between three of its biggest export markets, the US, EU and China.
Brockleback added: “Whilst it remains to be seen if Mr Trump will govern as he has campaigned, it’s my belief that no one wins a trade war, with customers and workforce bearing the brunt of the damage”.
The implementation of trade tariffs could strengthen the US dollar. Samuel Tombs, Chief US Economist for Pantheon Macroeconomics, said it was raising its forecast for US inflation under the expectation that Trump will introduce higher tariffs on all imports next year.
Higher US import tariffs would reduce global economic growth by about one percentage point over the next two years, according to analysis from the National Institute of Economic and Social Research (Niesr).
For the UK, Niesr estimates that economic growth would slow to 0.4% in 2025, down from a forecast of 1.2%.
Ahmet Kaya, Principal Economist for Niesr, said the UK economy could be “one of the countries most affected” with the proposed tariffs coming as “yet another shock” to the country.
Once seated firmly in the White House, it is hoped that President Trump will rethink his proposed tariff increases and take a pragmatic approach.
