On 2nd April 2025, US president Donald Trump announced that US tariffs will be implemented for countries all over the world, adding additional costs to businesses when importing goods into the US. It currently presents an opportunity for UK businesses to expand their trade with the US whilst the tariffs are lower for the UK compared to other countries. Our VAT and Indirect Tax Partner Gavin West explains what these tariffs are and the impact they could have on UK businesses.
What are the tariffs?
The US tariffs were first mentioned during Trump’s recent electoral campaign in which he expressed he would intend to implement tariffs to boost US government revenue. The new tariffs have now been introduced under the US International Emergency Economic Powers Act.
Changes have already been made, with an announcement of a baseline 10% global US tariff on non-US origin goods from 5th April 2025. At the moment, the UK will remain at the 10% rate whilst other countries and trading blocs, including the EU, faced a further increase after 9th April 2025.
What does this mean for UK exporters?
The US is the UK’s largest export market for goods, totalling 15.5% of the total value of UK exports in the four quarters leading up to Q3 2024. Among these, cars are the UK’s most valuable export to the US, and with the 10% baseline and a new 25% car and 25% steel and aluminium tariff, the UK faces a major impact on manufacturing and existing supply chains. The new tariffs could cause cancelled orders, higher prices and complicated new rules, and it is important for UK exporters to reassess their business models.
Compared to other major trading partners of the US, the UK is subject to global rates and will not be affected by the higher tariffs that now apply to the EU and other countries. This means the US businesses that currently rely on EU suppliers could begin to explore the UK as a cheaper alternative.
What can UK exporters do to prepare for future changes?
There are a range of actions UK businesses can take to prepare for potential extra costs. These include:
- Establish the impact of products lines by mapping country of origin and duty rates
- Identify where products appear in the different US trade measures
- Gather more product information regarding country and material composition
- Consider the origin of goods that are resold and how it may now be tariffed by the US
- Review pricing agreements and contracts
- Stay informed of measures and rules implemented by other countries
- Explore new markets and opportunities that are available in through the existing free trade agreements
At the time of writing, there has been no UK retaliatory measures implemented on US origin imports, but a list of potential commodity codes that could be subject to UK retaliatory tariffs has been created. If you import from US suppliers, we recommend you view the list and contribute to the UK Government’s request for input on how tariffs on US goods could impact your business if implemented. You can find details and respond to the Government’s request here: https://www.gov.uk/government/publications/request-for-input-on-potential-uk-measures-in-response-to-us-tariffs/how-to-input-on-potential-uk-tariff-measures-in-response-to-us-tariffs
How can we help?
If you have export arrangements with the US, now is the time to review them. Our VAT and Indirect Taxes team can support you the process and assist you in making the best decision for your business today. Get in touch with our team today to see how we can help.
