Business leaders are adopting a ‘wait and see ‘approach to Trump’s tariffs

A snap poll of 562 Institute of Directors members following President Trump’s tariffs announcement has found that over a third (37%) of business leaders expect to be impacted by the tariffs and of those, over two-thirds (70%) expect their profits to decrease as a result.

In response to the tariffs, 35% of members will be reviewing their business strategy, 17% will be reviewing supply chain locations and 13% will be reviewing export markets. Additionally, whilst 42% of members believe the UK government should maintain good relations with all of its trading partners, 34% would like to see closer alignment with the EU.

Anna Leach, Chief Economist at the Institute of Directors, said “70% of respondents to the IoD’s snap poll who are affected by this latest set of tariffs expect their profits to be negatively affected. Meanwhile, the bulk of business leaders are satisfied with the government’s measured and balanced approach to trade negotiations globally. But a sizeable chunk would support greater alignment with the EU. The EU as a whole is the UK’s largest export market, accounting for £356 billion of exports in 2023, compared with £187 billion going to the United States.

“At this point, most business leaders are adopting a “wait and see” approach to the tariffs. Others are looking to re-locate activity to the States or to trade more with other markets. With so much uncertainty surrounding the ultimate end point for tariffs as the UK progresses its own negotiations with the US, it is understandable that businesses will be reluctant to sink time and money into responses which are costly and difficult to reverse. But this will only add to the sluggishness in activity we have seen in the run-up to and since the October Budget announcements, and will further undermine growth.

“The hit to profits from tariffs adds to a difficult operating environment for UK businesses and adds further urgency to the UK government’s growth agenda. Action to remove blockers to growth needs to accelerate. De-regulation, planning reform and infrastructure delivery can help reinforce the UK’s resilience to shocks and set us up for better growth.”

Do you expect to be impacted by these tariffs? Please select all that apply.

Yes, the 25% tariff on all foreign made automobiles	7.1%
Yes, the 10% on all US imports from the UK	30.1%
No	57.7%
Don’t know	12.5%

To what extent do you expect your profit to be affected by these tariffs?

Significantly increase	3.4%
Slightly increase	6.3%
No impact	11.9%
Slightly decrease	55.1%
Significantly decrease	15.3%
Don’t know	8.0%

Will your organisation respond in any of the following ways?        

None	42.3%
Unsure yet, but we will be reviewing our business strategy	35.2%
Reviewing supply chain locations/diversifying suppliers	17.3%
Reviewing export markets	13.3%
Other	7.5%
Cutting the price of exported goods to the US	2.1%
Investing in supply chain analytics	2.0%

The government has taken the approach of maintaining good relations with all of the UK’s trading partners. Do you believe that they should move to align more closely with the US or the EU?                    

No, they should continue to approach all trading partners equally	42.3%
Yes, the EU	33.5%
Yes, the US	9.3%
No, they should focus more on other international partners (e.g. Pacific tilt/Canada/Australia etc)	7.7%
Other	5.5%
Don’t know	1.8%