What Do the Recent US Tariffs Mean for UK SMBs?

On April 2, 2025, the U.S. government imposed a blanket 10% tariff on all imports, affecting traditional allies like the UK as well as rivals like China. Although a 90-day pause on additional tariffs above the 10% baseline was announced on April 9, UK goods remain subject to this blanket import tariff.

Impact on UK Small and Medium-Sized Businesses (SMBs)

The new tariffs have significant implications for UK SMBs, particularly those engaged in exporting to the U.S.

Increased Costs and Reduced Demand

The 10% tariff has led to higher costs for UK exporters, making their products less competitive in the U.S. market. This has resulted in reduced demand and, in some cases, forced businesses to cut back on their product ranges. The Federation of Small Businesses (FSB) reports that ongoing tariff barriers have turned potential growth into crisis management for many SMBs.

Sector-Specific Effects

Automotive and Manufacturing: The UK-US trade deal announced in May 2025 reduced U.S. tariffs on British cars from 27.5% to 10% for up to 100,000 vehicles annually and removed 25% tariffs on steel and aluminium. This has been beneficial for large manufacturers like Jaguar Land Rover and Rolls-Royce.
Agriculture: UK farmers have expressed concerns over increased imports of U.S. beef and ethanol, fearing potential harm to domestic agriculture.

Strategies for UK SMBs to Navigate the Tariffs

Financial Support and Planning

HSBC has introduced a financing service called TradePay for Import Duties to help businesses manage the rising costs of tariffs. This initiative allows businesses to access credit specifically for covering import duties, offering greater control over their working capital.

Diversifying Markets

SMBs are encouraged to explore alternative markets beyond the U.S. to mitigate the impact of tariffs. Diversifying export destinations can reduce reliance on a single market and spread risk.

Operational Efficiency

Improving operational efficiency can help offset increased costs due to tariffs. This includes optimizing supply chains, reducing waste, and investing in technology to streamline processes.

Looking Ahead

While the recent UK-US trade deal offers some relief by reducing certain tariffs, the broader impact of the 10% blanket tariff remains a challenge for UK SMBs. Businesses must stay informed about trade developments and adapt their strategies accordingly to navigate this complex landscape.

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