Today marks a pivotal moment for UK businesses as a new era of US tariffs takes effect. The 10% baseline duty on most UK exports — coupled with tough sector-specific quotas and legal uncertainty — signals a historic break with decades of near-frictionless transatlantic trade. For British business leaders, the need for immediate strategic reassessment is inescapable.
The new US tariff regime, introduced following President Trump’s “Liberation Day” proclamation, has upended the established framework for UK–US commerce. Under the new policy, a 10% baseline tariff now applies to almost all UK goods exported to the United States, up sharply from an average of 2.2% before 2025. Higher, sector-specific duties also affect key UK industries, including automotive, steel, aluminium, and agriculture, while the promised relief under the UK–US Economic Prosperity Deal (EPD) is partial, conditional, and still unfolding.
For UK exporters, especially in goods, this is a fundamental shift. The EPD, negotiated at pace to prevent even harsher tariffs, did secure concessions for certain sectors. Automotive exports — worth £9 billion to the US in 2024 — are now subject to a 10% tariff, but only on an annual quota of 100,000 vehicles. Above this threshold, the risk of higher tariffs or delays looms. The UK steel and aluminium sectors were promised eventual exemption from the steepest tariffs, replaced by a tariff-rate quota, yet complex rules and administrative hurdles have delayed implementation, leaving exporters with little immediate relief.
A region under siege
The West Midlands, the heart of UK car manufacturing, is on the frontline. With more than half of all UK automotive exports to the US originating in the region, the new quota system introduces significant uncertainty. A University of Birmingham analysis projects a £6.2 billion loss in GDP for the West Midlands by 2030 as a result of the tariffs, potentially endangering 137,000 jobs across the sector’s supply chain. According to the West Midlands Combined Authority, over half of local businesses expect to downgrade profit forecasts, and more than 60% of manufacturers anticipate a fall in turnover.
Automotive giants such as Jaguar Land Rover temporarily halted shipments to the US earlier this year, citing severe margin pressure and the “structural risk” posed to the regional economy. The quota’s first-come, first-served administration has led to a race among exporters, amplifying logistical complexity and cost.
Other affected sectors are facing their own unique challenges. For UK steel and aluminium producers, the EPD’s promise of tariff relief remains just that — a promise. The US requires that steel be “melted and poured” in the UK to qualify for reduced rates, a compliance hurdle that has delayed any tangible benefit. In the meantime, a 25% tariff continues to apply, costing UK exporters millions. Other iconic UK goods, including Scotch whisky, are not covered by sector-specific deals and now face the flat 10% baseline tariff. For many, this means absorbing the duty or passing the cost on to US consumers, eroding competitiveness in a key market.
The legal status of the baseline tariffs is also in question, with ongoing court challenges creating additional uncertainty for exporters trying to plan and price shipments. For many, the operational challenge is not only about paying the tariffs, but about managing the unpredictability of trade policy itself. Routine shipping, pricing, and supply chain decisions now require contingency planning — and sometimes, last-minute changes — to avoid costly errors.
A two-speed economy
In contrast, the UK’s world-leading services sector remains largely insulated from the direct impact of these tariffs. Services exports to the US reached £137 billion in the year to Q4 2024 — more than double the value of goods exports — and generated a surplus of nearly £76 billion. While goods exporters in regions like the West Midlands face severe disruption, London and the South East, with their concentration of services, are better shielded from the trade headwinds.
The wider economic impact is already being felt. Inflationary pressures are building on both sides of the Atlantic. In the US, duties imposed on UK imports are raising costs for businesses and consumers alike, with analysts estimating the tariffs could add $2,400 to the average American household’s annual expenses. In the UK, the Consumer Prices Index rose to 3.6% in the year to June 2025, and while several factors are at play, many firms cite the tariffs and associated supply chain adjustments as key contributors.
The shift underway is not only about cost, but about predictability. The new US approach, built on executive authority and rapidly changing rules, introduces a level of political and regulatory risk rarely seen in recent decades. The EPD, while providing some sectoral relief, is not a legally binding treaty. Its provisions are being implemented piecemeal, and unresolved disputes — such as over the UK’s Digital Services Tax — continue to cast a shadow over the relationship.
Macroeconomic forecasts reflect this uncertainty. While a surge in exports and investment in early 2025 temporarily lifted UK GDP growth projections, most forecasters expect the tariffs to weigh on investment and slow overall growth in 2026. A recent survey by the Centre for Economic Policy Research found that nearly a quarter of UK firms now plan to reduce investment over the next year as a direct result of the tariffs. The long-term cost of US market access now includes not just price and quality, but the ability to navigate a web of quotas, compliance audits, and politically motivated regulations.
This evolving trade landscape leaves little room for strategies based solely on cost optimisation. Resilience is now paramount. UK companies are increasingly reassessing their supply chains, investing in trade compliance expertise, and targeting high-value or niche markets where tariff impacts may be easier to absorb. The ongoing legal and political flux demands real-time operational agility.
Industry-wide advocacy remains essential. As recent negotiations have shown, collective action through bodies such as the CBI and sector trade groups has proved critical in securing concessions and pushing for clarity on rules. With policy liable to shift with little notice, continued lobbying, data-driven case-making, and coordination will be central to shaping future access to the US market. Business leaders who take a proactive stance — building coalitions, sharing intelligence, and engaging policymakers directly — will be better positioned to adapt as the rules continue to evolve.
The new tariff era marks a decisive end to frictionless transatlantic trade for UK goods exporters. While services retain their advantage, the operational and strategic challenge for UK PLC is stark: adapt rapidly or risk being left behind in a world where market access is managed, uncertain, and always subject to the next policy shift.
