How can UK businesses prepare for Trump's US tariffs?

Please note that the situation regarding Trump’s tariffs is continuously evolving. As a result, the information provided below may be subject to change.

Last updated: 17 April (11am BST)

Now is the time for UK businesses to consider the impacts and opportunities of the new trading landscape. The 2 April 2025 US tariff announcements add additional costs when goods are imported into the US but also represent a real opportunity for UK businesses to expand trade with the US, where other countries / trading blocs are subject to significantly higher tariff rates. UK businesses may also wish to explore new markets and make use of the UK’s existing free trade agreements – available when exporting UK origin goods to 72 partners, including the EU and Canada.

As the dust settles, the customs team at PKF Francis Clark have updated our article to reflect the changes and analyse where this leaves UK businesses.

What are Trump’s tariffs?

During the 2024 presidential campaign, Donald Trump made it clear that he would seek to use tariffs to boost government revenue. The US administration is now delivering on this policy and surpassing the commitments made during the election campaign. The new tariffs have been invoked under the US International Emergency Economic Powers Act.

Major changes have already taken place. The most important of which includes an announcement of a baseline 10% global US tariff on non-US origin goods, which starts on 05 April 2025. The UK will remain at this 10% rate, while a range of other countries and trading blocs, such as the EU, will be subject to further increases on 09 April 2025.

These further increases are effectively based on the level of trade deficit that exists between the US and each country, with the potential for significant duty rates to be applied. This is not a simple match to the duty and/or VAT rate applied in each country on US goods.

New 25% tariffs are already applying to UK origin aluminium and steel goods (including derivative items), along with cars and certain car parts. These will be exempt from the base line and reciprocal tariff measures.

Action points for UK businesses

There are a range of actions that UK exporters can take to prepare for future changes. For example:

Mapping country of origin and duty rates to establish the impact on your product lines
Confirming whether your goods are UK origin and exploring the potential for new US customers seeking alternatives to goods subject to higher reciprocal rates
Identifying where your products appear in the different US trade measures, including whether any products are “derivative” articles for the purposes of the steel and aluminium controls
Gathering additional product information regarding country of origin and material composition, including for components within bills of materials
Considering the origin of your factored product (goods you resell) and how this may now be tariffed in the US
Reviewing Incoterms®
Reviewing pricing agreements and contractual arrangements
Keeping up to date with retaliatory measures and rules implemented by other countries
Considering wider customs compliance processes
Explore new markets and the opportunities available via existing free trade agreements
Consider contributing to the UK Government’s request for business input on potential UK retaliatory tariffs

US Tariffs – announcements

For UK businesses, the key dates are as follows:

Cars and parts

03 April 2025 – 12:01 a.m. EDT – A new global 25% tariff on passenger vehicles, light trucks and certain automobile parts (engines, transmissions, powertrain parts, and electrical components)

Global reciprocal baseline tariff (10%) – Including UK origin goods

05 April 2025 – 12:01 a.m. EDT – A global 10% tariff on imports to the US

Individual reciprocal tariffs – Further tariff increases depending on the country of origin

09 April 2025 – 12:01 a.m. EDT – Individual tariffs for a range of countries raising the existing 10% to an individual higher level. For example, EU origin goods will be subject to 20% duty from this date. While other factors such as non-trade barriers and VAT systems are cited, these further increases are particularly targeted at countries with which the US maintains a trade (in goods) deficit. UK origin goods will not be subject to this further rise and will remain at the 10% baseline rate. For Chinese goods, the originally announced 34% reciprocal tariff was amended to 84% at the time of implementation.

10 April 2025 – 12:01 a.m. EDT – Suspension of most “reciprocal” tariffs for 90 days (Until 9 July 2025). China and Hong Kong are still subject to the reciprocal rate, which is upped from 84% to 125%. When combined with an existing 20% duty – most Chinese origin goods imported into the US are now subject to 145% tariff rates.

11 April 2025 – A further Presidential Memorandum is published which clarifies that “semiconductors” and certain associated devices are exempt from the reciprocal tariff measures. Various products coded in Chapters 84 and 85 of the tariff are included in the exemption including certain smartphones, solid state drives, monitors and electronic integrated circuits. Chinese and Hong Kong goods that meet the definitions also fall under the exemption – but are still subject to the pre-existing 20% Chinese goods tariff.

US tariffs – The changes already implemented

The 2 April announcements are in addition to a range of tariffs that have already been implemented including:

Chinese origin tariffs: A 20% additional tariff on all Chinese (and Hong Kong) origin goods imported into the US. This is an additional tariff that combines with the 125% “reciprocal tariff” to create an effective duty rate of at least 145% when importing Chinese origin goods into the US
Canadian and mexican origin tariffs: A 25% tariff on all goods of Canadian and Mexican origin, unless the goods qualify for the US-Mexico-Canada (USMCA) free trade agreement. *The global / reciprocal tariff arrangements and rates will not apply to these goods.
Global steel and aluminium tariffs: A blanket new 25% tariff on almost all steel and aluminium imports into the US. *The global / reciprocal tariff arrangements and rates will not apply to these goods.
Global steel and aluminium derivative item tariffs: The value of steel and/or aluminium content in certain “derivative” articles is also subject to the new 25% tariff measure. Examples include: Screws, metal furniture, certain machinery, pipes, exercise equipment etc. Exemptions can apply where it can be proven the steel or aluminium content is of sufficient US origin. It is expected the list of derivative articles will grow in the coming months and years. *The global / reciprocal tariff arrangements and rates will not apply to these goods.

US tariffs – future changes

De minimis changes: The US maintains a de minimis exemption that applies per person, per day, that allows goods to be imported duty-free, if the aggregate fair market value does not exceed $800. This de minimis was briefly removed for Chinese and Hong Kong imports on 4 February 2025, but then temporarily suspended, partly due to the disruption this caused to the US postal service. A further removal has been announced that will apply from 2 May 2025. This will significantly impact e-commerce businesses making B2C supplies to US customers, where the goods being sold are products of China or Hong Kong.

Regular shipments: Articles that are products of China (or Hong Kong), subject to the measure as defined in US law, will no longer be eligible for the de minimis and subject to all duties.

Postal shipments: All postal items valued under $800 that are products of China (or Hong Kong), subject to the measure as defined in US law, and are sent through the international postal network from China (or Hong Kong) will be subject to a duty rate of either:

120% of their value or
$100 per item, increasing to $200 per item on 1 June 2025. This is in lieu of other duties.

The 2 April presidential executive order also states that duty-free de minimis treatment for the rest of the world, including the UK, will end at a later date, once sufficient systems are in place. This could have a major impact on UK B2C exporters if and when this is implemented.

The US has also announced that it will be performing a series of reviews of whether to amend or impose further tariffs on the semiconductors, critical minerals, and pharmaceuticals sectors.

The importance of country of origin

It is more vital than ever for UK exporters to understand the different rules that govern country of origin.

The US interprets ‘non-preferential rules of origin’ in its trade law, which dictates how these tariffs are applied.

The country of origin, rather than the country of export, imposes tariffs. If a UK business purchases goods manufactured in China, repackages them and then exports to a US customer – they will be subject to the tariffs applied to Chinese origin goods at the time of import into the US.

Where does this leave UK exporters?

The US is the UK’s largest export market for goods, accounting for 15.5% of the value of all UK exports in the four quarters to Q3 2024. Cars provide the UK’s most valuable export good to the US. The 10% baseline and new 25% car and 25% steel and aluminium tariffs will have a major impact on the viability of existing global supply chains and UK manufacturing. These new tariffs risk cancelled orders, higher prices and complicated new rules – making it vital for UK exporters to reassess their business models.

The addition of at least a 10% customs duty on all UK origin imports will present an additional cost. Who ultimately pays the US tariff will depend on the agreed trade terms (Incoterm®) and whether the buyer is acting as US importer. For all terms apart from Delivered Duty Paid (DDP), the US customer (importer) will pay the duty. These tariffs will prompt US customers to seek domestic alternatives or request adjustments to Incoterms® or lower prices to maintain orders.

In comparison with the US’ other major trading partners, the UK is in a relatively advantageous position, being subject to global rates and having escaped the higher tariffs that will apply to the EU, Japan and South Korea etc. For example, US businesses that cannot or do not wish to source goods in the US and currently rely on EU suppliers may begin to explore UK alternatives to reduce their import duty bill.

The UK and global response

The response to these tariffs remains to be seen, however it is expected that some countries or trading blocs will opt to implement their own retaliatory tariffs on US origin goods. This may present administrative challenges if any of these retaliatory measures seek to tax US “content”, rather than the overall origin of the good. EU trade defence measures will lead to complications when sending goods to Northern Ireland.

Increased costs in global manufacturing chains are likely to be passed on to end consumers, regardless of their location. UK importers may see costs rise where the US has been involved in the supply chain.

At time of writing, there have been no UK retaliatory measures implemented on US origin imports. However, a long list of potential commodity codes that could be subject to UK retaliatory tariffs has been created. If you import goods from US suppliers, you may wish to review the list and contribute to the UK Government’s request for input on how tariffs on US goods could effect your business if implemented. This request for consultation will run until 11:59pm on 1 May 2025. Details are available here.

Some US administration spokespersons have described the 2 April announcements as a high-water mark and suggested that rates could be lowered in the future.

Negotiations for a US-UK Free Trade agreement have been ongoing since 2020 and were highlighted during the Prime Minister’s White House visit. If reached, a free trade agreement could reduce US tariffs on UK origin goods, but it is yet to confirmed or finalised and may not be available for some time.

How we can help

This is an opportune time to review your export arrangements with the US. We have a highly experienced customs team that are well positioned to support you with the required analysis and information that will allow you to make an informed strategic decision. If you have any queries or would like any support with the action points mentioned above, please get in touch.