For smaller businesses, tariffs tend to hit harder than they do for big corporations. Unlike multinational companies, most SMEs don’t have deep cash reserves or flexible supply chains to cushion the impact. A 10% increase in import duties on raw materials or parts can eat into their profit margins. Tariffs can also make it tougher for British products to compete overseas, cutting off access to valuable markets. On top of the direct costs, many small UK businesses are left dealing with uncertainty when it comes to planning investments, setting prices, or hiring staff – especially since tariff rules can shift with political and trade negotiations.
Trump’s tariffs
According to a research briefing on the UK Parliament website, written by Ilze Jozepa, Ana Peres, and Dominic Webb, President Trump’s administration had several rationale for the tariffs. Firstly, there were two main legal grounds: that imports of steel, aluminium, automobiles and automobile parts may threaten national security; and the national emergency declared by Trump.
Then there were economic reasons, which included the aim to increase manufacturing jobs in the US, reflecting the America Trade First Policy; raising revenue to finance tax cuts; reducing the trade deficit in goods; and addressing the supposed unfair trading system.
The tariffs have a large impact on the UK, which exports more to the US than any other country. Last year UK exports were worth over £59 billion (16% of the total UK goods exports). These exports were largely (in order of value) cars, medical and pharmaceutical products, mechanical power generators, scientific instruments, and aircraft.
Then there were services exported to the US, which are much larger. The “other business services” category alone (which includes legal services, accounting and architecture) was worth £51.8 billion in 2023. Financial services were worth £25.8 billion; then there’s insurance and pensions; telecoms, computer and information services; and travel.
UK’s response to Trump’s tariffs
Unlike the EU, China, and Canada, the UK didn’t announce retaliatory measures. The Prime Minister and Trump started negotiations in February aiming to build on “shared strength and economic security”. The Secretary of State for Business and Trade, Jonathan Reynolds, made an April statement highlighting that the UK received the “lowest reciprocal tariff rate of 10%” (per parliament.uk). Reynolds said this was vindication of the government’s approach but regretted the fact that there was any imposition of tariffs.
Also in April, the government removed tariffs of various imports into the UK. The suspension will be effective until summer 2027, and will account for around £17 million worth of goods annually. The government export credit agency has received backing for an extra £20 billion in business finance, with the aim to mitigate new tariffs and economic uncertainty.
Other tariffs faced by the UK
While US tariffs have dominated headlines this year, the UK also faces duties in other markets. The EU, once Britain’s largest trading partner, applies tariffs on UK exports under World Trade Organization terms where no sector-specific deal exists. This particularly affects food and agricultural products; levies on dairy, meat, and certain processed foods are burdensome for small exporters. Beyond the EU, countries such as India and Brazil impose relatively high tariffs on spirits, pharmaceuticals, and machinery. Even within free trade agreements, “rules of origin” requirements can create tariff-like barriers, raising costs and limiting flexibility for British firms.
Last word
Tariffs often ripple through supply chains, alter business strategies, and reshape trade relationships. Solicitors at willans.co.uk can provide small businesses with advice on these issues, as well as corporate deals, commercial property, and employment. For the UK’s small businesses in particular, 2025 is a year of adjustment – resilience and adaptability may be as important as short-term market access.
