US President Donald Trump has introduced sweeping global tariffs on imports into the United States. A 10 per cent tariff has been imposed on the UK while other key trade partners, such as the EU and China, received much higher rates.
The President has made it his goal to increase domestic production whilst responding to what he considers unfair trade policies placed on America by the rest of the world.
Read on to find out how Trump’s tariffs will work, the potential impact on small businesses, plus how the UK and EU governments have reacted.
What nations will be affected by Trump’s tariffs?
Every nation will be affected by Trump’s tariffs but the rates vary for each country. There’s a base 10 per cent tariff on all countries but more substantial charges for nations Trump calls the ‘worst offenders’.
By this, he means countries that have imposed higher tariffs on the US while placing ‘non-tariff barriers’ to trade. The countries that have received the highest rates against them are:
- China – 54 per cent
- The European Union – 20 per cent
- South Africa – 30 per cent
- Japan – 24 per cent
- Taiwan – 32 per cent
- Cambodia – 49 per cent
- Vietnam – 46 per cent
- Thailand – 36 per cent
This doesn’t include the import fees already implemented, like the additional 20 per cent on all Chinese imports and the 10 per cent tariff on energy imports from Canada.
Plus, Mexico and Canada, two of the US biggest trade partners, avoided additional tariffs.
Trump’s tariffs – how could they affect UK businesses?
The way your business will be affected by tariffs depends on how much you export to the US. If the US market is a key part of your customer base, you’ll be hit with higher taxes.
Many businesses may choose to pass on higher exporting fees to the consumer by raising prices for customers in those markets. While others could front the cost to keep their prices competitive.
Certain industries will be hit harder than others. The automotive industry is the UK’s largest export to the US and has been hit by the highest tariff (25 per cent).
While these products follow close behind:
- medicinal and pharmaceutical products – £6.6bn exported to US in 2024
- mechanical power generators – £4.6bn exported to US in 2024
- scientific instruments – £2.4bn exported to US in 2024
- aircrafts – £2.2bn exported to US in 2024
All of those industries will be exposed to the 10 per cent tariff placed on the UK.
And as the last few years have proved, economic instability tends to impact businesses and borrowing rates stay high and consumer spending becomes more cautious.
Trump’s tariff on steel and aluminium still stands
On 12 March 2025, the US announced a global tariff on imports of steel and aluminium.
Companies in the United States that import British steel and aluminium need to pay a 25 per cent levy, which is reported to have caused lower orders or cancelled contracts for UK suppliers.
It’s estimated that the tariffs could affect over £2 billion (five per cent) worth of the UK’s annual exports to the US.
What do Trump’s tariffs mean for the UK economy?
The direct impact of these tariffs on the UK is likely to be complicated. As the dynamic of world trade shifts, the UK market could benefit from more investment that would have otherwise gone to the US.
But in the OBR’s forecast before the Spring Statement, they analysed the potential impact on the UK’s growth, predicting a one per cent decrease in growth. But that was based on a predicted tariff of 20 per cent, rather than the actual 10 per cent that’s been placed on the UK.
A knock-on effect of the economic uncertainty is that interest rates could stay higher for longer. The Bank of England (BoE) indicated the US tariffs were part of their reasoning for not reducing interest rates in March.
And with the governor of the BoE, Andrew Bailey, saying they’re “looking very closely” at the tariffs, any economic fallout could have a direct impact on our interest rates.
Read more: CPI rates – how inflation affects your business
How will the UK respond to Trump’s tariffs?
The UK has two options – accept the tariff or retaliate with a counter tariff. Before the extent of the tariffs were announced, The Prime Minister, Sir Keir Starmer, said: “I really do think it is not sensible to say the first response should be to jump into a trade war with the US”. This appears to suggest that the first option is the most likely.
But there’s speculation that the UK could work towards a unique trade deal with the US, that could lead to lower tariffs across the board or just for certain industries.
The BBC reported the deal could focus on technology exports as well as elements of the goods and services trade plus agriculture.
And Chancellor Rachel Reeves has suggested the UK might revisit the digital services tax levy for American tech companies that was introduced in 2020.
Why is Trump putting tariffs on imports to the US?
Ever since he won the US election in November, Trump has claimed he would place tariffs on imported goods. Going as far as to say that tariff is “the most beautiful word in the dictionary”.
The President hopes that tariffs will encourage domestic production of things like metal, and subsequently improve the US economy.
However, many commentators have said that strict tariffs could lead to higher prices for US consumers, with fears of a recession growing.
What is ‘liberation day’?
‘Liberation day’ is the day (2 April 2025) Donald Trump announced his global tariffs. He coined the term to express the US’s change in strategy to global trade and no longer accepting being ‘ripped off’ by the rest of the world.
Before announcing the global tariffs, President Trump said: “This is one of the most important days, in my opinion, in American history. It’s our declaration of economic independence. For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper.”
Will there be a global trade war?
With China, South Korea, and the EU planning to retaliate to the fresh tariffs, a global trade war could be on the horizon. But there’s a sense that some nations would rather negotiate than escalate matters with a like-for-like approach.
European Commission President Ursula von der Leyen condemned the tariffs, saying they’re a ‘major blow’ for the world economy. And if the EU is unable to negotiate, they’ll introduce their own countermeasures.
And China, who have been hit hardest by an additional 34 per cent tariff on top of the existing 20 per cent, have said they’ll “resolutely take countermeasures to safeguard its own rights and interests.”
The outcome of the negotiations and the way other countries choose to respond to the tariffs will decide if there’ll be a global trade war.
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- What is business strategy? Ultimate guide to growing your business
- EU to UK imports: new rules announced for UK businesses
- International shipping from UK: a guide for small businesses
- Commodity code checker for businesses
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