Tit-for-tat tariff battles are generally a net negative for the global economy. But even bad ideas can produce pockets of good. Some UK retailers provide a clue as to how this trend can play out.
Last week, sofa specialist DFS Furniture said its full-year profit was going to be higher than analysts had been forecasting. Analysts at Panmure Liberum think its gross margin — what it makes in revenue minus the cost of what it sells — will rise by 1 percentage point in the full year.
There are lots of reasons why gross margins can go up, including steeper prices and customers choosing more profitable goods and services. But DFS may also be benefiting from US-China trade tensions and the rerouting of goods into Europe. While Chinese shipments to the US fell by a fifth in 2025, exports to Europe rose by 8.4 per cent, according to China’s General Administration of Customs.