Foreign Affairs
Donald Trump became president again on January 20th, and it has felt like everything has been on fast forward since then. His policies have had a profound impact on global dynamics, including in procurement and bidding within the UK.
Defence Spending and Procurement Opportunities
Take Ukraine, for example. The ongoing conflict has resulted in Europe realising it needs to take care of its own security, rather than relying upon the USA. In the UK, this quickly led to the Prime Minister announcing defence spending increases – to 2.5% by 2027, and 3% at the next parliament.
In our world of procurement and bidding, we should naturally assume this will lead to increased procurements and opportunities in defence. This surge in defence spending is likely to open up numerous contracts for suppliers, ranging from advanced weaponry to cybersecurity solutions. Companies involved in these sectors should prepare to navigate the competitive tendering process, ensuring they meet the stringent requirements set forth by the government.
Impact of Tariffs on Supply Chains
Another significant development has been the tariffs Trump has imposed on the entire world. Although the UK only faces a 10% tariff, the wider context includes the rest of the world also having 10% tariffs, with China facing even higher ones, and reciprocal tariffs in return from China on the USA. This is going to significantly affect and change supply chains. The imposition of these tariffs is expected to lead to increased costs for imported goods, prompting businesses to reconsider their sourcing strategies. Companies may need to explore nearshoring or onshoring options to mitigate the impact of these tariffs. This shift could lead to a more resilient and flexible supply chain, but it will require significant adjustments in procurement practices.
Encouragement to Buy British
Also in the wake of Donald Trump's presidency and the subsequent global economic shifts, there is a growing possibility that the UK government may place greater emphasis on "buying British." This concept extends beyond consumer behaviour and delves into the realm of public sector procurement. The idea is that UK-owned companies could gain a significant advantage when bidding for public sector contracts, ranging from national government projects to local council initiatives.
This potential shift could be driven by a desire to bolster the domestic economy, ensure supply chain resilience, and promote national security. By prioritising UK-owned companies, the government could stimulate local industries, create jobs, and reduce dependency on foreign suppliers. This approach aligns with the broader trend of economic nationalism observed in various parts of the world, including in the UK with the recent intervention by the government to save British Steel.
Moreover, this emphasis on buying British could also lead to a greater focus on social value in procurement decisions. Non-UK-owned companies bidding for public sector contracts might be required to demonstrate substantial social value commitments to compete effectively. This could include initiatives such as local employment, community engagement, environmental sustainability, and contributions to social welfare programs.
While this scenario is hypothetical, it is not beyond the realms of possibility. The UK government has previously shown interest in incorporating social value into procurement processes, as evidenced by the Social Value Act of 2012. Expanding this approach to favour UK-owned companies could be seen as a natural progression in the current geopolitical and economic climate.
Conclusion
In conclusion, the impact of Donald Trump's policies on procurement and bidding in the UK could be profound, it not already. As we navigate through 2025, several key takeaways emerge:
Increased Defence Spending and Opportunities: The UK's commitment to increasing defence spending in response to the ongoing conflict in Ukraine presents significant opportunities for suppliers in the defence sector. Companies should prepare to meet the stringent requirements of government contracts and leverage this surge in procurement to expand their market presence.
Tariffs and Supply Chain Resilience: The imposition of global tariffs by Trump's administration has disrupted traditional supply chains, prompting businesses to reconsider their sourcing strategies. Companies may need to explore nearshoring or onshoring options to mitigate the impact of these tariffs, leading to more resilient and flexible supply chains. This shift will require significant adjustments in procurement practices and a focus on cost management.
Emphasis on Buying British and Social Value: Although only a hypothetical at the moment, there is a possibility that the UK government may prioritise "buying British" in public sector procurement. This could give UK-owned companies a competitive edge in bidding for public contracts. Additionally, non-UK-owned companies may need to demonstrate substantial social value commitments to compete effectively. This emphasis on social value aligns with the broader trend of economic nationalism and the UK's efforts to bolster its domestic economy.