As the global economy grapples with geopolitical shifts and protectionist policies, UK businesses are again under additional stress as the Trump administration unveils a sweeping 10% tariff on most UK imports. A separate 25% tariff has been introduced on steel, aluminium, and vehicles—sectors often caught in the crossfire of transatlantic trade tensions.
While the headlines highlight the steel and automotive industries, these tariffs may also affect many other sectors. This situation could create immediate challenges and raise critical long-term questions for the UK’s SMES.
Some products, including pharmaceuticals, semiconductors, copper, and lumber, are exempt. Energy-related imports, particularly those not readily available in the U.S., are also unaffected. However, the sudden rise in trade costs has become a significant concern for most UK exporters.
A snap poll by the British Chambers of Commerce of more than 600 businesses has revealed the extent to which UK firms expect to be hit by US tariffs. According to a recent British Chambers of Commerce (BCC) survey, UK SMES trading with the US believe these tariffs will negatively affect their operations. Many businesses that have long relied on U.S. markets as a stable and profitable channel are now reviewing their options.
“We export components to SE Asia, our customers export to the USA. We will be hit with a loss of export business and reduced margins”. – micro manufacturer.
“These tariffs now mean trade is more difficult with America, one of the largest markets we were pushed to take advantage of post-Brexit. If trade is now going to be ultimately more difficult with the EU and America, I fail to see how British businesses are at any sort of advantage. Of course, if some sort of trade deal with America did emerge, I would change my views immediately. I struggle to be particularly optimistic about the idea that we might secure a trade deal that doesn’t involve the UK sacrificing certain standards or relationships with other countries.” – medium manufacturer.
Raising prices: About one-third of affected companies have indicated they will pass the added costs onto consumers or clients.
Supply chain adjustments: Around 15% explore alternative suppliers or production shifts to avoid tariff-heavy products.
Absorbing the cost: A smaller group (13%) plans to absorb the increase, which could significantly squeeze profit margins.
These tariffs add another layer of complexity for companies already navigating inflationary pressures and supply chain disruptions.
Short-Term Effects
In the immediate term, businesses will likely see increased costs, reduced competitiveness, and, in some cases, cancelled orders or delayed shipments. Cash flow disruptions may also become a reality for firms reliant on predictable U.S. revenues.
While currency fluctuations could potentially offer a slight relief if the pound weakens, making UK exports marginally more affordable, it's important to remember that these fluctuations also bring about increased costs, reduced competitiveness, and potential disruptions in cash flow.
Long-Term Considerations
In the long term, UK businesses may completely reassess their strategies in the U.S. They might place greater importance on diversifying into other international markets, such as the EU, Asia, or Australia.
Additionally, companies may adopt a stronger "Buy British" approach, emphasising regional supply chains to reduce the impact of political and tariff-related disruptions.
While some view the tariffs as a temporary political manoeuvre, they could be part of a broader protectionist U.S. trade policy under Trump’s renewed leadership.
For UK businesses, it’s crucial to remain agile, informed, and prepared to adapt. Trade associations like the British Chambers of Commerce (BCC) and the Institute of Export & International Trade recommend that companies consider:
1. Review All Business Relationships in the U.S.
Conduct a comprehensive review of all U.S.-based clients, suppliers, and distributors:
By segmenting partners based on strategic importance and tariff exposure, you can prioritise where to maintain, renegotiate, or even exit relationships.
2. Check Credit Scores and the Financial Health of U.S. Partners
Economic uncertainty and rising costs may strain the financial stability of your U.S. business partners. Conducting credit checks and reviewing payment histories can help you gauge risk more accurately. Consider:
Due diligence is essential for safeguarding cash flow and preventing potential defaults or disruptions. It enables you to manage credit decisions effectively throughout global supply chains and customer networks.
3. Explore Partners and Their Links to Other Affected Countries
In a global supply chain, indirect exposure can be as risky as direct tariffs. Some partners may get materials or parts from countries facing U.S. trade restrictions or retaliatory tariffs. It's essential to look into these connections:
Understanding these connections helps you anticipate secondary disruptions and make informed decisions about alternative suppliers or logistics routes.
UK businesses that take the time to reassess and reinforce their U.S. relationships will be far better positioned to maintain resilience and profitability in the face of ongoing trade shifts.
The impact will vary by sector and business size. However, one message is clear: UK companies need to reevaluate their international strategies. This involves reviewing current business relationships, exploring new opportunities, building resilience, and preparing for a more unpredictable global trade environment.
With over 20 years of expertise and a reputation for delivering high-quality, competitively priced business credit reports, CoCredo, recent winners of the “Technology Development" award at the CICM British Credit Awards in 2025, empowers companies of all sizes to make smarter credit decisions. Whether you're doing business in the UK, Ireland, or internationally, our online company credit checks give you the insights you need to reduce risk and grow with confidence.
Additionally, business credit monitoring is included in many of our UK and international reports, allowing you to track changes of your customers and suppliers without having to check their company reports regularly.
Add them to your monitoring watchlist to receive (daily or weekly) email notifications for any company changes, including positive and negative impacts on your business.
If you would like to learn how CoCredo can help your business navigate these challenges, we can provide in-depth insights into the financial health and stability of your U.S. trading partners or potential new business partnerships. Take advantage of our free business credit check trial offer, or register with us today.
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