A new wave of US trade tariffs is about to take effect — and British businesses will not be exempt. From luxury carmakers to steel producers and food exporters, many UK sectors could soon face higher costs, weaker demand and fresh uncertainty in their largest non-EU export market.
With the United States imposing a blanket 10 per cent levy on all imports — and steeper charges on key industries — business leaders need to understand what’s changing, who’s most exposed, and what steps they can take to protect growth in an already challenging economic environment.
Here’s what you need to know.
What’s happened?
The White House has confirmed a 10 per cent universal tariff on all goods imported into the United States, effective from 5 April 2025. While this is lower than the 20 per cent tariff now facing the European Union, it will still deal a significant blow to British exporters.
Speaking on behalf of thousands of UK businesses, Shevaun Haviland, director-general of the British Chambers of Commerce, said the measures would weaken demand and further disrupt supply chains already under pressure from rising costs.
“Orders will drop, prices will rise, and global economic demand will be weaker as a result,” she warned. “This is a lose-lose situation for everyone.”
Who’s most exposed?
Several sectors are expected to feel the impact almost immediately:
- Automotive: The UK’s car industry, particularly high-end manufacturers like JLR, Bentley and McLaren, could be among the hardest hit. Although most British cars are shipped to Europe, one in six goes to the US, which remains the largest market for UK luxury cars. The 25 per cent tariff on vehicle imports adds further pressure.“These tariff costs cannot be absorbed by manufacturers,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders. “US consumers may face additional costs and a reduced choice of iconic British brands, while UK producers may have to review output in the face of constrained demand.”
- Steel: There was some initial relief for the UK’s embattled steel sector after the US chose not to increase the existing 25 per cent steel tariff, but industry bodies have flagged the knock-on effects. If UK carmakers reduce production, demand for domestic steel — which is already struggling — could drop further. The auto sector alone accounts for 14 per cent of UK steel demand.
- General manufacturing and exports: Whether it’s machinery, food and drink, or pharmaceuticals, a 10 per cent levy makes British goods less competitive in the US market. Smaller firms in particular will find it difficult to absorb the added costs or reconfigure their supply chains quickly.
What can businesses do?
With tariffs in place, UK companies will need to:
- Review export exposure: Understand which products and markets are most vulnerable.
- Explore other markets: The US remains key, but now may be the time to scale up trade with Asia-Pacific or fast-growing Commonwealth markets.
- Engage with policymakers: Business groups are already urging the UK government to negotiate exemptions or reliefs where possible — though any such talks are expected to be slow-moving.
What does this mean for the UK economy?
The UK government has been banking on exports and manufacturing to help power its post-pandemic recovery, but Trump’s tariff policy adds fresh headwinds to those ambitions. Rising costs, inflationary pressures, and weakening international demand could squeeze growth just as the UK economy starts to regain momentum.
What’s next?
With tariffs now in force, UK businesses are assessing their options — from re-evaluating supply chains to exploring growth in other international markets. But broader political negotiations may yet prove crucial.
Business associations are urging the UK government not to give up on talks toward a long-term trade agreement with the US, something Labour leader Sir Keir Starmer has indicated could lead to the elimination of tariffs altogether. While such a deal is likely to be years in the making, businesses say it’s vital to keep that door open.
