It doesn’t take a degree in clairvoyance to see that the tariffs introduced by Donald Trump’s US administration will undoubtedly have serious repercussions on the industrial and manufacturing sectors in the UK.

Whilst a 10% levy on all UK imports is not as dramatic as the taxes imposed on other countries, it will certainly have an impact on the UK’s trading partners across the globe. The 25% levy imposed on the automotive industry, meanwhile, will have a very material impact, even though many of the UK’s exports to the US in this category are classified as high-value items already.

Fortunately, there are several ways that those involved in the UK industrial and manufacturing sectors can mitigate the effect of the tariffs. The first is diversifying their supply chains away from tariff-heavy locations. Manufacturers in the UK have always had the ability to be nimble and adapt their sourcing arrangements in this way and they are going to have to ramp efforts in this regard. This may result in enhanced trading relationships with suppliers in Europe, as well as Latin America and Southeast Asia.

Secondly, with the long industrial and manufacturing pedigree that exists in the UK, the tariffs represent the ideal opportunity and reason for enhanced investment in artificial intelligence, automation, industry 4.0 process tools, robotics and smart factory technologies. These investments will in turn lead to offset labour costs, reduced materials costs and, significantly, enhanced manufacturing flexibility and output.

Thirdly, UK companies will also be presented with the opportunity to reshore their operations from abroad in order to avoid trade uncertainties. As a result they will see the benefits of localised industrial and manufacturing activities which will include the benefits of shorter lead times and greater customer satisfaction. This move will also mitigate the risks of any further tariff measures that may emerge. Significantly, this will also mark the chance for an uplift in industrial and manufacturing activity in the UK, as a stark contrast to the impact of tariffs on China.

The UK’s industrial and manufacturing sectors have always experienced shocks to the system of some kind but have always had the ability to withstand the barrages and even come out fighting even stronger. As a result, it could be viewed that the tariffs actually present an excellent opportunity for UK businesses to demonstrate to the US President and the wider world that they are indeed best in class.

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Constantine Biller is a Partner - M&A at Shaw & Co.

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