Trade agreements have long been seen as a means to alleviate the financial and logistical burdens created by tariffs. While lowering or eliminating certain duties can provide temporary relief and facilitate access to new markets, they fall short of delivering long-term certainty and stability or addressing the deeper structural issues businesses face in a volatile global economy, says GlobalData, a leading data and analytics company.
This point was brought into focus recently by Andrew Bailey, Governor of the Bank of England, who warned that ongoing geopolitical tensions, including tariffs and conflict in the Middle East—are clouding the UK’s economic outlook. Speaking to the House of Lords Economic Affairs Committee, Bailey noted, about global tariff policy, that “…it is very unpredictable where this is all going to end up…”.
His comments came as the US administration’s 90-day window for renegotiating trade terms approaches. So far, only a single agreement between the US and the UK has been reached, which came into effect at 5.01am, Monday 30th June and includes auto tariffs at 10%, and steel and aluminum rates of 25%.
Prerana Manral, Senior Consumer Insights Analyst at GlobalData, comments: “Despite diplomatic progress, many businesses continue to experience significant uncertainty, cost pressures, and operational challenges tied directly to tariffs.”
A recent macro poll conducted by GlobalData, asked respondents to highlight the main challenges faced by their company as a result of the current tariff environment. The poll highlighted the breadth of these challenges, confirming that the effects of tariffs reach far beyond just pricing, by influencing other key commercial areas such as planning, input costs, regulatory complexity, and overall demand.
Planning uncertainty slows investment
With 57% of businesses citing uncertainty in long-term planning as a key challenge, it is evident that fluctuating trade rules are discouraging strategic investments. Without a clear understanding of future tariffs, companies are delaying decisions on capital expenditure, pricing strategy, and global supply chain design. Ford Motor Company expressed their concerns in meetings with US legislators earlier in the year about the company’s ability to make long-term production and supply chain decisions in the face of tariff ambiguity.
Rising input costs squeeze margins
Just over half of poll respondents (53%) identified higher input costs as a major pain point. These increases are particularly hard-felt in sectors reliant on metals, semiconductors, or intermediate goods sourced globally. In their February earnings call Coca-Cola noted that the company might need to increase its dependence on plastic bottles in the US due to the rising costs of aluminum driven by the US administration’s proposed tariffs.
Regulatory complexity adds an administrative burden
Navigating an evolving web of exemptions, bilateral trade rules, and shifting customs protocols is proving difficult for many firms, especially small and medium-sized enterprises (SMEs) with limited legal or compliance resources. This was the third most cited concern, with 32% of respondents flagging increased regulatory complexity as a significant issue.
Declining international demand
Nearly one-third of businesses (29%) reported falling demand from overseas buyers, a trend largely driven by the cost implications of retaliatory tariffs and shifting customer loyalty in global markets. UK whisky producers have been hit hard by prior US tariffs on single malt products. While recent UK–US trade talks have rolled back some of these duties, the damage has already been done. According to the Scotch Whisky Association, from figures collated by HMRC, Scotch whisky exports to the US dropped by 18% in the first half of 2024 compared to the same period in 2023, with some smaller distilleries scaling back production due to falling orders. The sector now faces the additional challenge of rebuilding brand presence in its most valuable international market.
Manral adds: “Trade agreements can provide important relief, but they do not offer a complete shield against the wider disruptions caused by tariffs. The business impacts, ranging from financial to operational, are far-reaching and cannot be solved solely through diplomatic negotiation. To remain competitive in this uncertain environment, businesses must prioritize flexibility, resilience, and proactive scenario planning. This includes diversifying supply chains, investing in real-time trade monitoring capabilities, and building internal capacity to handle regulatory and cost shocks.”
