Recently, US President Donald Trump imposed a 10% tariff on all goods imported from the United Kingdom into the United States. According to Trump, this move is in retaliation for UK tariffs on American goods. However, the implications could go far beyond simple tit-for-tat politics — potentially creating long-lasting economic challenges for businesses across the UK.
Trump has introduced various tariffs on countries that export goods to the US. Notably, though, he has excluded large parts of the fossil fuel sector from these measures. This exemption includes crude oil, liquefied natural gas (LNG), and certain petrochemical materials.
Since the announcement of these tariffs, US oil prices have dropped to their lowest level in nearly four years. This has raised concerns among analysts, who believe the tariffs could slow global economic growth, leading to reduced demand for energy.
Although this may initially seem like an issue isolated to the US, such developments can have ripple effects throughout the global energy market — and ultimately impact the prices UK businesses pay for their energy.
What should your business be aware of?
1. Price volatility
While a drop in oil or energy prices might appear beneficial at first glance, the reality could be more complex — and potentially problematic. Sharp declines or extreme fluctuations in the energy market make long-term financial planning more difficult, particularly for energy suppliers and large-scale consumers. Here's how this could affect your business:
- Higher energy renewal prices: Energy providers may increase prices to account for future uncertainty and risk in the market.
- Limited access to long-term contracts: With increased volatility, suppliers may hesitate to offer fixed long-term energy deals, making budgeting more challenging.
- Delays in clean energy investment: Volatile energy prices could discourage investment in renewable energy infrastructure, impacting the UK’s long-term sustainability goals.
- Reduced confidence in heavy industry: Key investors, particularly in sectors like manufacturing, may withdraw or delay investment due to the unpredictable cost landscape.
2. Supply chain disruptions
The UK still imports a significant portion of its oil and gas from abroad. Therefore, global price increases — especially in response to political trade conflicts — are likely to filter through to UK energy consumers. Research shows a strong link between supply chain shocks and energy market disruptions. Some of the knock-on effects could include:
- Supply and demand imbalance: If global supply drops due to tariffs and demand remains steady or increases, this mismatch could push prices higher.
- Increased energy renewal costs: Depending on how the UK government and energy providers react, renewal rates for commercial energy contracts could rise.
- Rising costs throughout the supply chain: Businesses that are highly energy-dependent, particularly in manufacturing and logistics, may pass on increased energy costs to their customers, contributing to overall inflation.
Next steps for your business
While the immediate impact of US trade policy might seem distant, the interconnected nature of global markets means UK businesses are not insulated from these developments. Monitoring energy market trends and reviewing your energy procurement strategy could be key to protecting your business from future price shocks.
If you're unsure how these changes might affect your business specifically, it may be worth consulting an energy broker or procurement specialist who can help you navigate the landscape with more confidence.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
