How will new US Tariffs impact UK businesses?
Andrew Thurston · Posted on: February 7th 2025 · read
Current Status
On Sunday 2nd February 2025, President Trump announced additional tariff measures on China, Canada and Mexico under the International Emergency Economic Powers Act (IEEPA).
The context for these emergency measures is due to the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl which constitutes a national emergency.
After urgent negotiations with President Trump, it was announced on 3rd February 2025 that the tariffs for Mexico and Canada have been postponed for at least 30 days. This will be a sigh of relief for many who were desperately preparing for the sudden introduction of 25% tariffs on their imported goods.
With respect to China, the additional 10% tariffs on ALL goods from China will be introduced. In response, China will be introducing additional tariffs of 15% on coal and liquified natural gas imported from the U.S. and 10% on US crude oil, agricultural machinery and certain cars, starting 10th February. Whether this is sufficient to initiate positive negotiations between Trump and Xi Jinping we will have to wait and see but it is expected that these may start as soon as next week.
China will be introducing additional tariffs of 15% on coal and liquified natural gas imported from the U.S.
Wider Impact
President Trump has previously made it clear that he intends to complete a widespread review of how the US imports goods and the potential imbalance, he feels, is causing US manufacturing to stagnate in a global market.
To put this into context, 2024 figures (see below) issued by the World Trade Organisation (WTO), show the average tariffs applicable on import of goods into the US is only 3.4%.
In comparison, many territories, such as the EU, have higher average tariffs (4.9%). China has average tariffs of 10%, making US exports less competitive than Chinese alternatives.
Average Tariff Rate (2024)
2024 figures issued by the World Trade Organisation (WTO), show the average tariffs applicable on import of goods into the US is only 3.4%.
Although additional tariffs have been in place for certain Chinese imports, Trump has issued the latest order to include ALL goods.
Another significant announcement within the Executive Order is that, for qualifying goods, the Section 321 duty-free de-minimis treatment (goods below $800) will be unavailable meaning all imports will be subject to import tariffs. This is targeting the e-commerce goods being removed from Canada into the US which originate in China.
What makes these new tariffs so damming is they do not target any specific commodities. Originally, only energy products (e.g. oil) from Canada had a reduced tariff but even this is at 10%.
Once President Trump has settled into the White House, and the review of global trade is complete, there is a significant risk that specific tariffs will be introduced with limited preparation time to allow businesses to review and alter supply chains.
What makes these new tariffs so damming is they do not target any specific commodities. Originally, only energy products (e.g. oil) from Canada had a reduced tariff but even this is at 10%.
How does this impact the UK?
For UK businesses who sell goods to the US, it may not be wholly obvious how these new tariffs will impact exports to the US.
The first question asked was – if the UK escape the tariffs could we route EU goods through the UK?
The key concept is to review the Origin of Goods, exported to the US as the new tariffs relate to the origin of the product, not where it was shipped from. This is also a common misconception and expensive mistake made by many importers post Brexit.
For a company selling Chinese origin goods to the US, there will now be an additional 10% tariff applied to those goods which will increase costs in the supply chain. We advise UK exporters to review the impact of these new measures and be very careful to identify the origin of the goods as statements about origin are required in the commercial paperwork accompanying any export/import transaction.
We found with Brexit that customers suddenly required the seller to act as importer. This may not be the case here but a sudden change to tariffs, where pricing is fixed, will no doubt have a significant impact on profit margins.
E-commerce sales to the US will not escape these new tariffs due to the new orders removing the duty-free de-minimis £800 limit, for in-scope products so sales could suddenly be affected as customers are exposed to the additional tariffs.
For companies purchasing goods from US suppliers, the likelihood of increased costs is real as many components included in US products are obtained from the Far East (and assembled in Mexico or Canada!) and will be impacted by these new tariffs. Special attention should be made to confirm the possible impact on the supply chain and alternatives to minimise the risk of increased costs.
E-commerce sales to the US will not escape these new tariffs due to the new orders removing the duty-free de-minimis £800 limit
What about the future?
Many see these new measures as a means for President Trump to influence how countries trade, especially with China. Another opinion is that Trump wants to build the US manufacturing sectors to become self-sufficient. If this is the reason, these (and many more) tariffs are likely to be introduced and in place for the long term.
We wait for the outcome of the US review of overseas territories to determine if additional tariffs will be introduced on other countries. The EU is part of this consideration as it has a trade credit with the EU, mainly due to the sales of vehicles to the US.
President Trump has suggested that the UK could also face additional tariffs but, as it is now outside the EU, it has a better chance of avoiding these and will have separate negotiations to help smooth over this possibility.
Our Customs specialists' thoughts
"We found with Brexit that customers suddenly required the seller to act as importer. This may not be the case here but a sudden change to tariffs, where pricing is fixed, will no doubt have a significant impact on profit margins."
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