The impact of a US-UK trade deal for retailers – February 2017


 
 
 


Upper Clash held a roundtable breakfast meeting on Wednesday 22nd February (central London) for retail and brand directors to share ideas and challenges relating to the US market and the impending trade deal.


This event came as the UK and the US governments seek to put together a trade deal. The UK is the most favoured overseas destination for US online shoppers, and the US is our largest export country.

Two things have brought about potential for a deal. The EU referendum, and the subsequent government strategy to exit the single market, gives us the ability to strike bilateral trade deals. And the new US administration is favourable to the UK, unlike the previous.

The potential trade deal has its critics, with some suggesting already low tariffs means there is little to be gained in comparison with out current set up with the EU. There is also criticism that the US president is protectionist, though others argue the administration is welcoming to free economies which are open to US imports, which the very much UK is.

Although the political will is there to produce a deal, these agreements are nothing without business. For the retail industry, opening up a US office could be made easier, the US could become a sourcing/manufacturing destination, and new rules could make the movement of key employees between both countries smoother.

On Wednesday 22nd February fifteen guests, including retail directors and our four partners, took part in an informal discussion over breakfast. Here are some brief notes from part of the discussion:

  • Because of it’s sheer size the US is already the largest market, or anticipated largest market, for many in the room.
  • US expansion was in sight for most long before the EU referendum or the election of Donald Trump, though for the reason above (market size of the US) a trade deal is welcome. Tactics on the market are higher on the agenda.
  • Much discussion centred around how much businesses should ‘wait to see what deal comes to fruition’ before making investment (time and financial) decisions. It was commented that doing nothing now is a dangerous tactic, and regardless of not knowing what a deal may look like, it’s worth evaluating the supply chain and overall opportunity under potential scenarios.
  • One retailer’s strategy is to ‘outsource uncertainty’ to partners (such as those around the table) who should come up with solutions to any trading issues which may arise from international trading changes.
  • It is thought a trade deal could help with setting up a US operation. This is relevant where retailers want to fulfil from the US, where it is cost beneficial to do so, and due to regulatory issues present in some business models/product types.
  • Protectionism was a concern amongst some. If the US can manufacture competitively customers may choose domestic goods over imports, though the luxury sector can rely on selling ‘British heritage’ to justify any price premiums.
  • Others were not concerned about protectionism or barriers, stating western democracies will not return to the days of high tariffs, saying there was little need to ‘panic’ over the US President’s reported rhetoric.

Upper Clash