Updated - What do the US tariffs mean for UK small businesses?

The US President, Donald Trump, has rewritten the playbook for businesses far and wide on trading with the US by imposing a universal tariff on all imports and reciprocal tariffs for selected countries. Small business owners in the UK actively trading in US markets will be hard hit as the cost of doing business skyrockets, at the same time, tax rises announced in the Autumn Budget come into force.

US tariffs – A summary for UK small business owners

Donald Trump took to the stage on what he called ‘Liberation Day’ (02 April) to unveil a new global trade policy that includes a blanket tariff on all imported foreign foods, including reciprocal tariffs for countries that impose additional duties on the US.

Here are the new and recent US tariffs:

-          10% universal tariff on all imported foreign goods from 5 April

            Update: electronics, computers and smartphones are temporarily exempt

-          Reciprocal tariffs tailored to selected countries from 9 April

-          25% tariff on imported vehicles from 3 April and auto parts from 2 May

-          25% tariff on aluminium and steel imports from 12 March

The sweeping tariffs have triggered a global trade war, as countries will see economic growth dramatically shrink.  While the UK is subject to the 10% universal tariff, which is the baseline, other countries are subject to higher rates.

Update: Countries that did not impose retaliatory tariffs on the US, such as the EU, are subject to a 90-day pause on higher US tariffs and therefore, face the 10% baseline tariff until July. 

While some countries are retaliating with counter-tariffs or promising to break trade relations with the US, the UK hopes to respond in a level-headed fashion to retain negotiating power and protect international trade relations with the US.  

The US President claims to impose these tariffs to restore the US manufacturing industry to its former glory, crack down on unfair trade policies, and raise higher tax revenues.

@realbusinessrescue With #US tariffs mean for UK businesses. All UK exports to the #US will be subject to a 10% universal tariff, which will impact most UK sectors. A 25% tariff will be applied to vehicle and auto part exports, along with a 25% tariff on aluminium and steel exports. As UK businesses must absorb this cost, this could mean higher prices, reduced sales, potential job losses and inevitable company insolvencies. Businesses that are affected must reassess their export strategy to mitigate the tariff impact. If your business requires expert help to navigate rising costs, contact Real Business Rescue today. :phone: 0800 644 6080 :e-mail: [email protected] :link: www.realbusinessrescue.co.uk #USTariffs #DonaldTrump #KeirStarmer #DirectorAdvice #DirectorSupport ♬ original sound - Real Business Rescue

What UK industries are the hardest hit by US tariffs?

Around 59% of UK small exporters sell goods to the US, making it a key international trading arena for UK businesses.  Tariffs imposed by the US will disrupt the growth of key UK industries, particularly automotive, manufacturing, and other export-heavy sectors, such as food and drink.

Automotive – The 25% tariff on imported vehicles and eventually auto parts will hit UK automotive exports to the US, which is worth around £6.5 billion. The UK is home to luxury car manufacturers Jaguar Land Rover and Aston Martin, for which a substantial proportion of their revenue comes from US markets.

Manufacturing – With aluminium and steel imports slapped with a 25% tariff, UK manufacturing companies, from stainless steel exporters to soft drink can suppliers, will face devastating effects. UK steel exports to the US are worth £400 million annually, making it the largest steel export market after the EU.

Food and drink – The 10% universal tariff on all imported foreign goods applies to food and drink, further tightening profit margins for UK food and beverage exports. Food producers and farmers will also be hard hit if the cost cascades down the supply chain.

UK businesses operating in US markets must immediately address their financial position as costs jump by a quarter. Other sectors blighted by the new US tariffs include retail, aerospace, and pharmaceuticals, however, the impact will be far wider.

What does this mean for UK businesses?

As the tariffs raise the price of doing business with the US, small businesses must choose whether to absorb the increase or pass it down to customers. At this point, customers may accept inevitably higher prices or choose an alternative way of doing business.

While some businesses may be able to soften the blow by restructuring, seeking business finance or exploring other international markets, this may be the final nail in the coffin for businesses approaching insolvency. Paired with the increase in Employers’ NIC, National Living Wage, and the cut in Business Rates Relief from April 2025, a storm is brewing for British businesses.

The new US tariffs will inevitably accelerate UK company insolvencies, however, businesses can fight back by getting their company debts in order and dealing with company creditors head-on. To arrange a free, confidential consultation with a licensed insolvency practitioner and business turnaround expert, please get in touch.