This week, President Donald Trump instituted sweeping tariffs, including a 10% tariff on all US imports. President Trump has said the move will revitalise US manufacturing and reset America’s trade agenda.
Dubbing the announcement “Liberation Day,” Trump has proposed, in addition to the 10% flat rate on all imports, an array of steeper rates for some of the US’ major trade partners. The European Union faces higher rates of 20%, China 34% (on top of the 20% rate imposed earlier this year), Japan 24%, and Vietnam 46%. Also, the US has immediately implemented a 25% tariff on all foreign-made cars and auto parts.
The world responds
European Commission President Ursula von der Leyen called Trump’s decision a “major blow to the world economy,” adding that “The consequences will be dire for millions of people around the globe … hurting, in particular, the most vulnerable citizens.”
The tariffs, introduced on Wednesday, will be the highest placed in effect by the US for more than 100 years. Ireland’s public expenditure minister Jack Chambers observed that “the last time the scope or extent that this was tried globally in trading terms, was in the early around 1930 which led to the Great Depression.”
On Thursday, stocks around the world saw their worst one-day sell off since 2020, wiping approximately $2.5trn off the global economy. As world leaders respond to the unfolding situation, organisations in the UK and abroad are bracing for the potential impact of a worldwide trade war that promises to disrupt supply chains and reshape the balance of global trade to a degree not seen since the end of the Cold War.
The UK, while hit with the lowest possible base rate of 10%, still faces significant cost pressures to its auto-industry.
A whole new supply chain landscape
Across the supply chain and procurement space, experts are sounding the alarm in response to Trump’s new tariffs.
Ian Thompson, VP for Northern Europe at Ivalua — a spend management company working with some of the largest firms in the UK and across Europe (including Volkswagen, BAE Systems and Bulgari) to strengthen their resilience against supply chain disruption and enable stronger supplier relationships, warned SupplyChain Strategy that Trump’s tariffs “could deal a serious blow to UK industry, especially automakers.”
He points out that the UK exports one in five cars to the US, meaning these measures threaten to push up prices for consumers on both sides of the Atlantic as businesses pass on rising costs to their customers.
“The age of stable, predictable global trade is over” — Ian Thompson, VP Northern Europe, Ivalua
“But resilience isn’t just about where businesses buy; it’s about how quickly they can see and respond to change. Companies need deep, real-time visibility into spend and supplier networks,” he added. “That’s what enables businesses to be agile, rerouting orders, renegotiating contracts, and reallocating costs before disruption becomes a crisis. Tariffs are just one more sign that the age of stable, predictable global trade is over. Future success will hinge on businesses continuing to invest in smarter, more flexible supply chain operations”
Gambling with American economic hegemony
Economists have been quick to express a mixture of bemusement and frustration with the new tariffs. “This goes against every basic economic theory in the last hundred years,” Dan Ives, the global head of technology research at Wedbush Securities, observed in a recent interview. Ives pointed out in his discussion with the ‘Intelligencer’ that “uncertainty almost guarantees negative GDP growth for Q2 and raises the odds of a recession to likely over 50%”
Speaking to reporters aboard Air Force One earlier this week, President Trump said that the new tariff rollout is “going very well.” The President observed that he is open to “phenomenal” offers from countries to negotiate down the new rates.
Wielding US tariffs like a stick against the rest of the global economy could result in the negotiation of favourable trade deals with countries that depend on US imports. However, Bedassa Tadesse, Professor of Economics at the University of Minnesota Duluth, notes in a recent article for the Conversation that “the fanfare surrounding the announcement masks a much larger gamble.”
A resurgent US manufacturing sector and favourable trade agreements are the obvious unknowns here, but Tadesse argues that “what’s really at stake is trust – America’s long-standing reputation as a stable and predictable destination for global investment. And once that trust is lost, it’s incredibly hard to win back.”
- Risk & Resilience
