The government agency responsible for supporting UK exporters has warned that uncertainty created by Donald Trump’s rapidly shifting tariff policies is making it difficult to predict the financial fallout for British businesses.
Tim Reid, the chief executive of UK Export Finance (UKEF), said the US president’s escalating trade war posed a unprecedented challenge.
UKEF is no stranger to a crisis. It was established in 1919 to help firms hit by the submarine blockade after the first world war. A century later, it mobilised to get government-backed loans and financial support to companies whose revenues were upended by supply chain disruptions during the Covid pandemic.
“We’re clearly in a very changing world,” Reid, a former HSBC banker, told the Guardian.
He said the near-daily shifts in US trade policy made it difficult to estimate how many UK businesses, and what proportion of their exports, could be at risk. “We don’t have that yet … is the honest answer, because we don’t know exactly where this dialogue [on tariffs] is going to progress,” he said.
UK companies exporting goods to the US will face tariffs of at least 10%, while exporters of steel, aluminium and cars have been hit with a 25% rate.
But there will also be indirect impacts, including for those companies that rely on global supply chains passing through the EU, China and the US, with suppliers raising prices on parts and raw materials to recoup higher tariffs elsewhere. The US has so far applied a 145% tariff on Chinese goods, prompting a 125% retaliatory tariff by Beijing.
It is unclear whether the removal of a “de-minimis exemption”, meaning shipments from China worth less than $800 (£600) will no longer enter into the US duty-free, will apply to goods shipped via the UK.
Reid, who spent 34 years at HSBC before joining UKEF in 2022, said it had been easier to prepare for the fallout of the pandemic. “There was an immediate disruption to business models. That was very clear during Covid … there is still a lot of uncertainty right now in terms of the impact of this changing world.”
UKEF has deployed its 25 regional agents to support at-risk businesses even while it awaits further clarity on US trade policy.
Last week, UK ministers announced an extra £20bn of financing through UKEF, including state-backed loans programmes, in which the government promises to shoulder 80% of the losses if borrowers fail to repay their debts. It is meant to encourage banks to keep lending to businesses, even if tariffs make it more likely companies could default.
Ministers are hammering out the details of a “fast-track” scheme that will help get £10bn of that support to businesses hit by Trump tariffs. “There are levers we can pull” without sacrificing “high standards” around the amount of risk the government is willing to take, Reid said.
That could mean allocating more staff to sift through and approve applications, and generally removing red tape that could cut down wait times.
Trump has put on hold further planned increases to tariffs to most countries until July. But Reid said UKEF was pushing ahead. “We’re not waiting 90 days … we will be ready to work through this in pretty short order,” Reid said.
