Nearly four in 10 UK businesses are hiking prices in response to the threat of tariff hikes as fears grow over a global trade war kicked off by US President Donald Trump, according to a survey.
A poll of 1,500 businesses by banking giant HSBC found 39% are increasing prices in anticipation of higher tariffs.
It also revealed that half of firms are shifting their export markets to countries with lower trade barriers in an effort to side-step the worst of the hit from any trade war.
Firms are also planning to adapt their supply chains to weather the storm, with 41% saying they will diversify and almost a third (31%) looking to bring the chain back in-house, while 41% said they would expand the products and services they sell to help offset any hit.
The results of the survey, which was conducted in November for the bank’s going global for growth report, comes as Mr Trump fired his opening shots over the weekend by slapping 25% trade tariffs against Canada and Mexico, and 10% on Chinese imports.
Canada was quick to announce plans for retaliation, though Mr Trump announced a month-long pause before the tariffs on imports from Canada and Mexico come into effect.
But with no sign of a truce with China, the trade war between the pair has since begun in earnest, with Beijing responding with a broad package of economic measures targeting the US.
Mr Trump also warned the European Union would be next, sending stock markets sharply lower on Monday.
He said a deal “can be worked out” with Britain, despite claiming the UK was “out of line”.
A number of firms and manufacturers are bracing for a financial hit from the trade war.
Johnnie Walker and Guinness maker Diageo cautioned earlier this week that Mr Trump’s proposed US tariffs could deal a 200 million US dollar (£161 million) blow to profits.
The London-listed spirits giant also scrapped a key sales target because of growing uncertainty linked to the tariffs and volatile consumer demand.
Beauty firm Estee Lauder also this week revealed it is ramping up job cuts – to as many as 7,000 worldwide – to save more in costs, which it said is partly down to concerns over possible tariff increases.
While firms are hiking prices and taking action ahead of a tariff impact, the HSBC survey showed only 15% said they would reduce their overseas trading activity.
Stuart Tait, head of commercial banking at HSBC UK, said: “Far from retreating to more cautious positions, our report highlights how growing businesses remain as ambitious as ever and are adapting to changes as they arise.
“Businesses are finding creative ways to ensure they continue to trade overseas successfully, whether that’s looking to different international markets or diversifying their supply chains.”
The survey showed that despite Brexit, the EU remains the most popular for UK firms to buy and sell goods and services overseas, targeted by 72% of international companies, although this is down from 84% in 2023.
The US is next, where 57% of UK-based international businesses are active, followed by Canada (40%), China (34%) and the Middle East and North Africa (28%).
Minister for services, small business and exports Gareth Thomas said: “It’s great to see so many British businesses trading internationally and seeking out new markets, with more aspiring to.
“We are committed to doing everything we can to help them grow and increase their footprint around the world by removing barriers to trade and striking deals with global trading partners.”
