Trump’s tariffs and Hormuz risks: how UK business braces for global shocks

The UK’s business landscape is being reshaped by forces beyond its control. From Washington’s latest trade offensive to the spectre of a Middle Eastern shipping blockade, companies and policymakers are grappling with risks that could tip the economy into recession. Meanwhile, domestic pressures—from Glasgow’s post-Games reckoning to a £500 fine for a misplaced coffee cup—highlight the fragility of public trust in institutions. Here’s what’s at stake.

Trump’s tariffs: a protectionist gamble with global fallout

Donald Trump’s decision to escalate tariffs under the pretext of combating forced labour has sent shockwaves through global trade. The move, which Nobel laureate Joseph Stiglitz calls a "hypocritical ruse," mirrors the former president’s earlier trade wars but with a new justification: human rights. Yet the tariffs’ structure—targeting goods from China, Vietnam, and Mexico—closely aligns with his long-standing focus on bilateral trade deficits, raising questions about their true intent.

For UK businesses, the implications are twofold. First, supply chains already strained by Brexit and pandemic disruptions face renewed uncertainty. The British Chambers of Commerce warned last week that 62% of firms expect rising import costs if tariffs widen, with manufacturers in automotive and electronics sectors particularly exposed. Second, the UK’s ability to negotiate independent trade deals—once touted as a Brexit dividend—is now constrained by its alignment with US policy. The government’s silence on the tariffs suggests a delicate balancing act: avoiding direct criticism of Washington while seeking to shield domestic industries.

The tariffs also expose a broader tension. As Stiglitz argues, they offer an opportunity for the UK and EU to "fight back" by coordinating retaliatory measures or accelerating trade diversification. Yet with the EU itself divided over how to respond, the UK risks being caught in the crossfire—or left behind.

The Strait of Hormuz: a recession trigger for the UK?

The closure of the Strait of Hormuz, a chokepoint for 20% of the world’s oil supply, has sent energy markets into turmoil. EY’s latest warning—that the UK could slide into recession if the blockade persists—underscores the country’s vulnerability to geopolitical shocks. The consultancy’s modelling suggests GDP could contract by 0.7% in the second half of 2026 if shipping disruptions continue, with inflation spiking to 5.2% by year’s end.

The crisis has already reverberated through corporate Britain. Clarkson, the shipping broker, reported a "record first-half performance" driven by "exceptional volatility" in global trade, while easyJet’s takeover saga—now extended to 7 August—reflects investor unease over fuel costs and demand. The Bank of England’s next rate decision, due on 18 September, is now clouded by the prospect of stagflation: higher prices and weaker growth.

For consumers, the impact is immediate. Petrol prices have surged by 12p per litre since mid-July, according to the RAC, with analysts predicting further increases if the strait remains closed. The government’s contingency plans—including releasing strategic oil reserves—offer little comfort to businesses already struggling with high borrowing costs. As one energy trader told The Guardian, "This isn’t a blip. It’s a structural shift in how we source energy, and the UK is woefully unprepared."

Japan’s yen intervention: a puzzling lifeline from Trump

In an unexpected twist, the US has joined Japan in propping up the yen for the first time since 1998. The coordinated intervention, which saw the yen rebound from 40-year lows, has left economists scratching their heads. Japan’s reliance on imported energy and food makes a weak currency a double-edged sword: while it boosts exporters like Toyota, it inflates living costs for households. Yet the US’s motives are less clear. Trump’s administration has historically favoured a strong dollar, and its sudden pivot to supporting the yen has sparked speculation about a quid pro quo—perhaps linked to Japan’s defence spending or semiconductor supply chains.

For the UK, the yen’s volatility adds another layer of complexity. Japanese investors, long a source of capital for UK infrastructure and real estate, may pull back if the currency stabilises. Meanwhile, British exporters to Japan—particularly in pharmaceuticals and luxury goods—could face headwinds if the yen strengthens further. The Financial Times described the intervention as "Team America: Yen Police," a nod to the opaque geopolitical calculations at play.

Glasgow’s Games: a legacy of austerity and ambition

As the baton passes from Glasgow to Amdavad for the 2030 Commonwealth Games, the UK’s third-largest city is grappling with the aftermath of a scaled-back event. Glasgow 2026, originally billed as a "festival of sport," was stripped of its swimming and athletics venues due to budget cuts, leaving organisers to improvise with temporary facilities. Yet the event’s chief executive, David Grevemberg, insists the Games have "saved the movement" by proving that smaller host cities can deliver.

The legacy debate is fraught. On one hand, Glasgow’s ability to stage the event on a £300m budget—less than a third of Birmingham’s 2022 spend—has been hailed as a blueprint for future hosts. On the other, critics argue the cuts have diluted the Games’ impact, with fewer jobs created and limited long-term infrastructure benefits. A report by the University of Glasgow found that only 12% of local businesses saw a tangible boost from the event, compared to 35% in 2014.

The tension reflects a broader shift in how the UK funds major events. With public appetite for expensive spectacles waning, cities are increasingly reliant on private investment—a model that Glasgow’s organisers admit is "not without risks." As one council official put it, "We’ve shown we can do it cheaply. The question is whether we can do it well."

The £500 coffee cup: a symptom of enforcement overreach?

A £500 fine for placing a coffee cup in a rubbish bag next to a full bin at London Waterloo has sparked outrage over the UK’s enforcement culture. The incident, reported by The Guardian, has become a lightning rod for broader frustrations with penalty notices—from parking fines to environmental regulations—that disproportionately target low-income individuals.

The case highlights a growing trend: councils and private enforcement firms are increasingly using fines as revenue streams. Data from the Local Government Association shows that penalty notices issued by councils rose by 40% between 2020 and 2025, with environmental offences accounting for a third of the total. Yet critics argue the system is riddled with inconsistencies. In Manchester, a similar offence might incur a £150 fine, while in Westminster, the same action could cost £1,000.

The backlash has prompted calls for reform. Labour MP Stella Creasy has tabled an amendment to the Environmental Protection Act to cap fines at £200 and require councils to publish enforcement data. "This isn’t about littering," she said. "It’s about a system that punishes people for being poor." For businesses, the fallout is clear: public trust in enforcement is eroding, and companies that rely on compliance—from waste management to retail—face a growing reputational risk.

What to watch

1. The Hormuz countdown: EY’s recession warning hinges on the strait reopening by September. If it doesn’t, expect the Bank of England to delay rate cuts and the Treasury to face pressure for targeted support to energy-intensive industries.
2. Trump’s next move: The tariffs’ rollout will test the UK’s ability to navigate US protectionism. Watch for signals from the Department for Business and Trade on whether it will seek exemptions for key sectors.
3. Yen volatility: The US-Japan intervention’s sustainability is unclear. A yen rebound could ease import costs for UK manufacturers, but a renewed slide would fuel inflation.
4. Glasgow’s reckoning: The city’s post-Games audit, due in October, will reveal whether the event’s "lean" model can be replicated—or whether it’s a cautionary tale for future hosts.

The UK’s business environment is entering a phase of heightened uncertainty. The question is no longer whether shocks will come, but how many—and how deep their impact will be.