Trump’s new trade tariffs create a “mixed picture” for UK companies according to the British Chambers of Commerce.
William Bain, head of trade policy at the BCC, says:
For most firms exporting goods to the US it will remain business as usual today, they will see no change in the costs they are facing. There is also some good news with the removal of tariffs on whisky, one of the UK’s global export success stories.
The Economic Prosperity Deal with the US also means that automotives, pharmaceuticals, steel and aluminium are insulated from these changes and should not face further investigation.
However, there will be concerns about the loss of the UK’s competitive advantage over the EU and other countries which have secured a more favourable deal in other goods sectors.
The US is also carrying our further investigations over digital service taxes which could lead to further uncertainty for firms.
It is crucial that the UK continues negotiations to ensure our companies have the best possible long-term trading terms with the US. Expanding our goods and services exports is vital to the UK’s economic growth and the US is our largest single country trading partner.
But this is unlikely to be the end of the story on US tariffs for either the UK or the rest of the world. The government will need to keep a close eye on developments to keep the UK at the front of the pack.”
China warns 'trade wars not in interests of any party'
China has warned that trade wars are not in the interests of any party, after the US president Donald Trump announced a fresh wave of tariffs against more than 80 countries last night.
Chinese foreign ministry spokesman Lin Jian said in a statement:
We oppose all forms of unilateral tariff measures. Tariff wars and trade wars are not in the interests of any party.
The Chinese stock market fell sharply today, amid worries around the impact of the trade war, as well as higher oil prices. The SSE Composite dropped 1.6% and Hong Kong’s Hang Seng index fell by 1.1%.
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European stocks dip at the open
It is a mixed bag for European stock markets this morning – the Stoxx Europe 600 is down by 0.1%, led by losses in its energy sector.
But the UK’s blue chip FTSE 100 index has ticked up 0.2%, with the private equity company 3i Group its best performer, up 3.5%.
The fintech Wise is however falling sharply this morning, down 9% after it told investors it has been denied a US banking licence.
The London-based company, which just a few months ago switched its primary listing to New York, said the US Office of the Comptroller of the Currency rejected its application for a national trust bank charter.
Wise said the decision would not affect its normal operations in the US and that it will submit a new application.
UK retail sales unexpectedly rise in June
Some more upbeat news this morning – there was a strong rise in UK retail sales in June, helped by sunny weather and the World Cup.
The total volume of goods sold in stores and online rose 1% in June, according to the Office for National Statistics, following a 1.2% rise in May. However, it compared very favourably with expectations of a 0.3% decline.
More shopping also took place online, with the share of internet sales rising to its highest level since April 2021 at 29.4%.
And a survey by GfK found that consumer confidence in the UK economy and in their personal finances has recovered back to pre-Iran war levels.
However, Harvir Dhillon, lead economist at the British Retail Consortium, warns that the next few months look difficult for the industry.
While retailers have been enjoying the boost to sales, there are challenges ahead, particularly as hostilities in the Middle East resume.
Household budgets remain under pressure, consumer confidence is fragile, and retailers are facing rising operating costs.
To support growth and keep inflation under control, government should address the taxes and levies that increase businesses’ energy bills. Otherwise, rising costs will continue to constrain investment and make it harder for retailers to keep prices low for customers in the future.”
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Oil slipping back below $100
Oil prices are slipping this morning, with Brent crude down by about 0.9% to $99.8 a barrel.
But oil is still up by more than 10% over the course of the week, as renewed conflict in the Middle East has fed fears around the global supply.
Fears are growing around what could be a new front in the energy crisis, as Yemen’s Houthi militias take aim at Saudi oil exports via the Bab al-Mandab strait.
Trump's new tariffs creates 'uncertainty for world trade', Bank of France governor says
Trump’s fresh round of trade tariffs will add more uncertainty to the world economy, the Bank of France governor Emmanuel Moulin has said this morning.
Moulin said that while Trump should abide by the terms of the 2025 trade deal struck with the EU at Trump’s Turnberry golf course, the new levies could still disrupt the global economy.
He told the French BFM Business TV station:
For Europe, it ought not to change much because we have the Turnberry agreement which should be respected by Donald Trump. But obviously it creates more uncertainty for world trade and clearly it’s not favourable for growth.
Introduction: Asian stocks slide as Trump hits more than 80 countries with new tariffs
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Asian stock markets have taken a beating overnight as investors come to terms with Donald Trump imposing a fresh round of sweeping trade tariffs.
The US president announced a tariff of between 10% to 12.5% on dozens of countries, including the United Kingdom, Mexico, Canada, Australia, India, China and the 27 countries that make up the European Union.
It effectively replaces the blanket 10% tariff that Trump imposed in February, right after the US supreme court declared that many of his earlier tariffs were illegal.
The Japanese Nikkei 225 has shed 3.1% today, while the Chinese SSE Composite is down 1.4%. Hong Kong’s Hang Seng index has also dropped 11.4%, and the South Korean Kospi, which is heavily influenced by its huge chip companies, has taken a brutal 6.2% hit.
The new levies are expected to fall under section 301 of the Trade Act of 1974, which is aimed against countries that engage in forced labor. Trump had said his administration would investigate unfair trading practices to impose permanent tariffs as soon as the February supreme court decision was announced.
US trade representative Jamieson Greer said in a statement:
The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.
I am encouraged by the trading partners who have moved quickly to adopt forced labor import prohibitions, and look forward to ensuring their effective enforcement.”
No doubt a higher oil price is also not helping the Asian stock market, with Brent crude hitting $100 a barrel yesterday after a fresh escalation of the Middle East conflict threatened to compound disruption to global oil supplies.
Many investors too have likely been spooked by a sell-off in some major US tech names yesterday, amid worries about AI spending and after Tesla reported lower than expected profits.
The agenda
7am BST: ONS retail sales data
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