US distributor prepares for worst-case scenario after president-elect pledged 10% import tariffs
The astounding comeback that has put Donald Trump in the White House for a second term as the US president looks set to spark a global trade war and UK greeting card publishers who export could find themselves caught in the crossfire.
As part of the campaign which saw the divisive Republican Party candidate soundly defeat Democrat vice-president Kamala Harris in the election on Tuesday, 5 November, Trump pledged to impose 10% tariffs on all products imported into the US, and 60% on imports from China.
The move threatens to trigger a global trade war, pushing up inflation and damaging economic growth – the US is the UK’s largest trading partner and last year Britain exported £60billion worth of goods of all kinds, including greeting cards and giftwrap, across the Atlantic which would all be hit by the additional taxes.
Ohh Deer is one of the publishers which manages its own export system, regularly exhibiting at American shows to reach its customer base, and MD and co-founder Mark Callaby told PG Buzz: “We do all right in the US and, whatever Trump brings in, I’m sure we’ll be able to adapt to and make work.
“There are already tariffs in place that we’ve had to work with since his last presidency so additional tariffs are to be expected really.
“Ultimately. it’s likely that it will need to come out of our margins but, until we get a better picture on where the tariffs fall and how much they’re actually going to be in reality, we won’t really know the real outcome and whether we’ll need to consider a different strategy.”
However, over the pond a very disappointed Vanessa Harnik, who runs Maryland-based Notes & Queries with her dad Alan distributing greeting cards and wrap from UK publishers including Paper Salad, Alljoy Designs, Paper D’Art, Glick, Raspberry Blossom, Tache, Tracks, Paper Rose, Rachel Ellen, Bug Art, Caroline Gardner, Belly Button Designs, Brainbox Candy, Museums & Galleries, Abacus, Ling Design, GBCC, Dandelion Stationery, Laura Darrington Design, and Rosanna Rossi, admitted the team “are all reeling from the results”.
They’d prepared for the election by drawing up and distributing the N&Q Core Values, setting out the principles by which the company is run, as Vanessa explained: “This is the time when small companies rise to the challenge or fall by the wayside. Living and working by our values is critical to the success of our company and I have no desire to work with people who don’t understand that and are not looking for equally win-win profitable partnerships.
“I share that because, without our extraordinarily-talented publishers, Notes & Queries does not exist – we simply do not publish anything. We are also aware that all of our trading partners are all dealing with their own financial pressures within the UK, Europe and Israel. So, the only way in which we can move forward is to continually engage in really frank and open conversations about profitability, design, collaboration, success and pricing.
“As early as first thing on Wednesday morning, we had already contacted a few of our publishers to start these conversations about profitability and manufacturing. At the same time, we’re now scrutinising all of our overheads internally to determine where we can save money.
“It is impossible to understand if or when these tax rates will impact us. We are an extremely small cog in a much larger wheel of importing and there are other companies that will certainly put pressure on the new administration to resist the interest of a high import tax.
“We feel it is likely the new administration will put their initial focus on hate-filled policies over many segments of the American public so the focus on tariffs/taxes will likely not be first on their agenda.
“With that said, we are preparing for a worst-case scenario regarding the import tax by attempting to reduce expenses as much as we can to give us as much wiggle room if or when the tariffs are implemented.
“But the critical key is having frank, honest conversations with all of our trading partners about how we can work together profitably so none of us are surprised when the worst does come up.”
As it became clear on Wednesday Trump was once again the president-elect and Harris had finally conceded defeat, The Times reported The National Institute Of Economic & Social Research said it had calculated the impact would be a 0.8% drop in GDP growth for Britain next year amounting to a £21.5bn hole in chancellor Rachel Reeves’s tax and spending plans – however, she has insisted it is “too early” to start downgrading the country’s growth prospects.
The institute said the impact of the global tariffs would be inflationary, pushing up prices by between 2% and 3%, while the Bank Of England would be forced to keep interest rates higher.
And the newspaper reported The Centre For Inclusive Trade Policy (CITP) believes these policies could see total UK goods and services exports to the US fall by between £19bn and £34bn, a 4% drop in total British global exports at the highest level.
In the wake of the election, American multinational investment bank and financial services company Goldman Sachs cut its UK growth forecast from 1.6% to 1.4%, blaming the anticipated negative impact of the tariffs.
Following her first budget last week, which was roundly condemned by the greeting card industry as anti-High Street and anti-small businesses short-term extreme measures, the chancellor spoke to MPs in parliament on Wednesday saying it was “too early to start making changes” to economic forecasts, such as raising tax further or to scale back spending commitments in areas like the NHS.
The Times reported that she said: “We’re not just a passive actor in this. It’s a trade relationship with the United States and we will make strong representations about the importance of free and open trade, not just between ourselves and the United States, but globally.
“The US also benefits from that access to free and open trade with us and other countries around the world, and it’s what makes us richer as societies to benefit from that.”
However, Alan Winters, emeritus economics professor at the University Of Sussex and founder of the CITP, told the paper domestic pressure might mean such tariffs were not “inevitable” but there was little sign Trump would heed the economic warnings as his primary objective is to restore manufacturing jobs to the US.
He added the greatest danger was a global tit-for-tat tariff war with countries seeking to protect their own domestic industries by putting up barriers to imports.
