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How US tariffs are already costing Britain

Sky News logo Sky News 4 days ago
Donald Trump © Reuters Donald Trump

There's a widespread assumption in economic circles that Donald Trump's bark is considerably worse than his bite.

That for all the threats of tariffs and protectionism, the actual havoc wreaked by the US president is likely to be limited.

Try telling that to Samson Folkes.

Mr Folkes is the managing director of Somers Forge, one of the world's leading advanced steel forges.

Donald and Melania Trump set off for Europe © Reuters Donald and Melania Trump set off for Europe

You might not have realised that Britain was a world leader in advanced die forged steel - the tough, dense military-grade metal used to make submarines and nuclear reactor parts.

But from its base in Halesowen, just south of Birmingham, Somers Forge has been producing and exporting die steel around the world for more than a century and a half. They forged the anchors on the Titanic - as well as countless ships that didn't sink.

Now, for the first time in decades, the company is having to imagine the unimaginable: pulling out of the US altogether.

Aluminium and steel were the first major imports into the US to have president Trump's tariffs imposed on them. When the border taxes came into action, Mr Folkes said he noticed the impact overnight.

U.S. President Donald Trump checks time prior to a dinner at the Art and History Museum at the Parc du Cinquantenaire during the NATO Summit in Brussels, Belgium July 11, 2018. Geert Vanden Wijngaert/Pool via REUTERS © Reuters U.S. President Donald Trump checks time prior to a dinner at the Art and History Museum at the Parc du Cinquantenaire during the NATO Summit in Brussels, Belgium July 11, 2018. Geert Vanden Wijngaert/Pool via REUTERS

"We've had to pay hundreds of thousands of pounds of tariffs to the US government," he says, as a 45 tonne ingot - the weight of four double decker buses - emerges from a giant oven behind us. It is destined for the US. But it may end up costing the company rather than making it money.

"Our margins in the US are extremely thin - very low. So having a 25% tariff on top of that completely kills the market for us in America. Out of the 50 countries we deal with, America is our greatest concern.

"If it's a long-term tariff we may have to completely pull out of the US, after over 60 years. That would mean redundancies and closing our plant."

U.S. President Donald Trump talks to Turkish President Recep Tayyip Erdogan as they arrive for a dinner at the Art and History Museum at the Parc du Cinquantenaire during the NATO Summit in Brussels, Belgium July 11, 2018. Geert Vanden Wijngaert/Pool via REUTERS © Reuters U.S. President Donald Trump talks to Turkish President Recep Tayyip Erdogan as they arrive for a dinner at the Art and History Museum at the Parc du Cinquantenaire during the NATO Summit in Brussels, Belgium July 11, 2018. Geert Vanden Wijngaert/Pool via REUTERS

The timing of the move is particularly unfortunate, coinciding with a major push from the company to rebrand and seek out new customers.

For those who assume Mr Trump's trade battle is all playing out through Twitter, the experience of Somers Forge is an important rejoinder. The steel and aluminium tariffs affect a comparatively small sector, but the White House has plenty of other, bigger tariffs coming through the pipeline.

Last week, the US formally imposed tariffs on $34bn of Chinese industrial goods, prompting tit-for-tat barriers from China on US exports, particularly agricultural produce.

U.S. President Donald Trump and Britain's Prime Minister Theresa May talk as NATO leaders pose for a family photo at the start of the NATO summit in Brussels, Belgium July 11, 2018.   REUTERS/Yves Herman © Reuters U.S. President Donald Trump and Britain's Prime Minister Theresa May talk as NATO leaders pose for a family photo at the start of the NATO summit in Brussels, Belgium July 11, 2018. REUTERS/Yves Herman

The US has threatened a further $200bn of tariffs on China and published a list of the targeting items, which include some consumer products such as handbags and electronics. China has vowed to retaliate.

The president, who arrives for his UK visit on Thursday, has also pledged to impose tariffs on imports from the EU, most prominently on the car industry. The EU has vowed to retaliate with like-for-like measures.

Some of those threats have prompted Harley Davidson, the motorbike manufacturer, to announce plans to move some of its manufacturing to Europe.

US tariffs on $34B worth of Chinese goods take effect: Provided by Newsy

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Oddly, however, the UK car manufacturing lobby group, the SMMT, has been silent about the risks posed by tariffs.

However, cars are one of the biggest goods exports this country sends to the US - from the Honda Civic to the Jaguar F-Type. A 25% tariff would be a dramatic blow for the car industry.

And as Somers Forge discovered two months ago, Mr Trump seems to be following his tweets with actions.

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