The United States has introduced a baseline 10% tariff on all imports, with higher rates of up to 50% applied to selected trading partners. The UK will face a 10% tariff on exports to the US. This percentage, while lower than initially feared, is expected to have a measurable impact on British businesses. Key industries including automotive, pharmaceuticals, and manufacturing will likely be the most affected. 

The announcement is part of a wider restructuring of US trade policy aimed at rebalancing import and export dynamics. The UK is relieved to have avoided the harsher 20% rate applied to the European Union. However, potential economic fallout remains to be a concern. All of these measures will negatively impact GDP and increase inflationary risks. It may also lead to a possible need for fiscal policy adjustments later in the year.

UK ministers have opted not to impose retaliatory measures while trade talks continue with the US. Officials are working to secure exemptions or carve-outs for British exporters, who currently sell over £60bn worth of goods to the US annually. Ongoing discussions with US counterparts are focused on securing a broader economic partnership that could mitigate the longer-term impact.

Industry leaders and business groups have expressed concern that the tariffs will erode competitiveness, reduce export margins, and potentially lead to job losses across affected sectors. The government is engaging with these sectors to assess risks and build contingency plans.

The Office for Budget Responsibility has already signaled that broader global tariff escalation could reduce UK GDP by up to 1% over the next year, depending on the scale and duration of international responses. Meanwhile, UK officials are also monitoring potential trade diversion effects. This includes an influx of low-cost goods from markets displaced by US restrictions.

Impact on current business landscape

Tariffs typically create wider supply chain shocks. UK firms sourcing components or raw materials from countries now facing steep US tariffs may encounter delays. They are also likely to grapple with cost increases, or even contract cancellations. This can destabilise balance sheets particularly for SMEs, pushing more into restructuring or liquidation scenarios.

The evolving trade landscape underscores the need for strategic agility and robust support for exporters navigating uncertain global conditions. Some sectors, like luxury vehicles and machinery, are already operating on tight profit margins. If they’re unable to absorb the added cost or pass it to consumers, cash flow problems could quickly follow, increasing the risk of financial distress.

As a result, UK businesses could find themselves more exposed to domestic economic weaknesses. In a market with fewer opportunities to diversify or grow internationally, distressed acquisitions can be a game changer. Find out more on Administration List.