‘Absolutely draconian’: British brands brace for Trump’s tariffs

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UK expected to be hit hardest by Trumps latest tariffs after the 25% tax on $7.5bn of goods is set to start against the EU

There is a corner of Manhattan’s Greenwich Avenue that is forever England – and right now it’s bloody angry.

“This is absolutely draconian, ridiculous,” huffed Sean Kavanagh-Dowsett, co-owner of the restaurant, Tea & Sympathy, the adjoining general products store and its neighbor, A Salt & Battery, a fish and chip shop, that has been serving all things British to locals and expats for 29 years.

Behind a store front of Union Jack flags, a red phone box and other symbols of Britishness, Kavanagh-Dowsett is bracing for the impact of a 25% tariff on $7.5bn of UK goods that is set to start on 18 October , the latest salvo in the Trump administration’s trade war with the European Union.

Kavanagh-Dowsett went through the products that would be hit, including Jammie Dodgers, Scottish shortbread, clotted cream and Irish bacon. “It’s going to impact us, and as always it’s going to get passed on to customers.”

The latest tariffs follow a World Trade Organization (WTO) ruling that the European Union unfairly subsidized the aerospace giant Airbus but it is just the latest in a seemingly neverending spat over tariffs that started even before Donald Trump’s election.

Kavanagh-Dowsett had few kind words for Trump.

“I think because he lives in this rarified world where he’s never had to think about the cost of anything, because he doesn’t pay his bills, he’s detached from reality and doesn’t really understand the cost of anything,” he said.

The UK is the country expected to be hardest hit by Trump’s latest tariffs, even though the UK is still in the midst of a messy and protracted exit from the European Union. And it’s not just scones and cream that will be affected.

Among those speaking out against the tariffs have been textile and clothing makers, who face the raised duties on wool and cashmere.

The trade group Walpole, which represents more than 250 luxury British brands including Alexander McQueen, Burberry and Tanqueray gin, voiced “deep frustration” at Trump administration’s tariffs on goods including whisky, liqueur and wine; cashmere; bed linen and men and women’s clothing.

“It is of particular concern that these tariffs come at a time when there is already so much political and economic uncertainty,” said a spokesperson, noting that 24% of British luxury goods are destined for North America and that a majority of firms see it as the primary market for future growth.

According to the group, two-thirds of its members name the US as their priority export market.

“To penalize businesses that are in significant expansion phases, looking for new routes into the US and creating products American consumers desire – Johnston’s of Elgin cashmere, Peter Reed bed linen, Savile Row suits, English wine and numerous Scotch whiskies – will likely impact consumer choice as well as business growth.

Overall, the British luxury sector, which employs 160,000 workers, is bracing for new pressure from the tariffs on top of a projected loss of £6.8bn in revenue in the event of no-deal Brexit.

The fashion and textile sector, itself anticipating a £1bn-a-year loss in revenue from a no-deal Brexit, will see exports worth £35m affected by the tariffs, according to the UK Fashion and Textile Association (UKFT).

Savile Row’s tailors, a favorite of Wall Street bankers with several outposts in Manhattan, are expected to be especially badly hit, in part because French and Italian competitors are not affected by the additional levies. If UK manufacturers were hoping the US would provide a hedge against Brexit, the opposite is now true.

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London’s Savile Row tailors are expected to be hit hard by Trump’s latest tariffs Photograph: Dan Kitwood/Getty Images

The Department for International Trade in London, which is requesting an exception on British goods arguing that the Airbus trade infringements were not related to UK manufacturing, said in a statement:

“Resorting to tariffs is not in the interests of the UK, EU or US. The UK is working closely with the US, EU and European partners to support a negotiated settlement to the Airbus and Boeing disputes,” said a spokesman.

Another of the industries likely to feel the hit is the cashmere industry. The US imported $362m worth of cashmere sweaters last year. Bruce Gifford of the e-commerce brand Naked Cashmere told Women’s Wear Daily the cost of the tariffs would almost certainly be passed on to the consumer.

“I think anybody that in the long run says that they’re not going to be raising prices is just lying to you. You have to make a certain amount of money to stay in business,” he told trade paper Women’s Wear Daily.

But the US trade representative, Robert Lighthizer, has defended the measures, accusing Europe of “providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers”.

Now the row looks certain to escalate. The European commissioner for trade, Cecilia Malmström, warned the US countermeasures would be push “the EU into a situation where we will have no other option than to do the same”.

According to Ana Boata, European economist at trade credit insurer Euler Hermes, the countries hardest hit by US tariffs will be the UK, with annual losses of $1.4bn, followed by France, Germany, Spain and Ireland.

“We estimate the new sanctions will result in an $8.6bn annual export loss for the EU,” she wrote in a report. And Boata predicts the Europeans are unlikely to accept the tariffs passively. “We expect Brussels to retaliate with duties on up $20bn of goods and a decision from the WTO is expected next March,” she added.

Back at Tea & Sympathy, Kavanagh-Dowsett reeled off his favorite British brands that will be affected, including the shoemakers Grenson and John Lobb. Two years ago, the store initiated a PR war with Hershey’s after the confectioner insisted they sell US versions of its most popular UK chocolate bars.

In that instance, Kavanagh-Dowsett said, the chocolate maker backed down after receiving an avalanche of bad publicity. He said the store was gearing up for another campaign. “We’re British for a living at this stage. Just the hike in chocolate is going to impact so many people,” he said.

Read more: www.theguardian.com

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