US trade tariffs

Since taking office on 20 January 2025, President Trump has introduced wide-ranging tariffs on goods imported into the US, including from the UK. Tariffs are taxes on imports, which are paid by importing businesses in the country where they apply.

This, together with increasing threats of retaliation by trading partners, risks a global trade war. While the UK has not retaliated so far, Treasury Minister Darren Jones has said that the era of globalisation has ended.

Details of the tariffs

The following tariffs affect UK industries: 

• On 12 March 2025, President Trump imposed a 25% tariff on all aluminium, steel and derivative goods imports.
• From 3 April, a 25% tariff on all passenger vehicles and light trucks. Tariffs of 25% on automobile parts are due to be implemented no later than 3 May.
• From 5 April 2025, a 10% baseline tariff on imports from the UK, affecting most goods.

Goods already subject to steel, aluminium and automobile duties in the US are exempted from the 10% tariff. For now, the tariff does not apply to copper, pharmaceuticals, semiconductors, timber, energy, energy products and minerals not available in the US. President Trump has indicated that tariffs on semiconductors and pharmaceuticals may be coming and there are investigations into tariffs on copper and timber.

The tariff on US imports from the UK was due to be lower than the “reciprocal tariffs” announced on 2 April. For example, imports from the EU were due to be subject to a 20% tariff (PDF) and imports from Japan and Switzerland to tariffs of 24% and 31% respectively. On 9 April, President Trump announced that the reciprocal tariffs would be paused for 90 days for all countries except China. All countries except China, Canada and Mexico will face a 10% “baseline” tariff.

Before these announcements, US tariffs were generally very low, averaging 2.2% (PDF), although tariffs on some individual products (such as certain agricultural goods) were much higher.

Legal and economic rationale behind the tariffs

The US has two main legal grounds to justify the announced tariffs according to its domestic law:

• National security concerns under section 232 of the Trade Expansion Act of 1962: the US Department of Commerce reported that imports of steel, aluminium, automobiles and automobile parts posed a threat to US national security, allowing the President to implement tariffs.
• National emergency under the International Emergency Economic Powers Act (IEEPA): Mr Trump declared a national emergency to address multiple issues, including fighting illegal immigration and drugs, increasing US competitiveness, protecting the country’s sovereignty and strengthening its economic and national security.

The Trump administration has identified different economic reasons to support the imposition of tariffs:

• Increase jobs in the US manufacturing sector and protect US industries: this idea underpins the America First Trade Policy aiming to benefit “American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses”.
• Attract companies to invest and set up factories in the US to increase US manufacturing.
• Raise revenue that can finance tax cuts: in his inaugural address, President Trump stated his goal of imposing tariffs and taxes on foreign countries to enrich US citizens.
• Reduce the trade deficit in goods. The Trump administration affirms that the US has a “large and persistent annual trade deficits in goods”, which it says has economic and national security implications.
• Address unfairness of global trading system: the Trump administration argues that the deficit in goods results from a lack of reciprocity that creates an unfair trading system where the US opens its markets to foreign products while its trading partners keep theirs closed for US exports. The “reciprocal tariffs” would be a way to rebalance US trade relations.
• Agree on trade deals with the most affected countries to decrease their tariffs and other regulations on American imports.

UK trade with the US

The UK exports more to the US than to any other single country. In 2024, UK exports to the US were worth more than £59 billion, 16% of all UK goods exports. The next largest market is Germany which accounted for £32 billion of goods exports (9% of the total). The UK exported £174 billion of goods to the EU as a whole in 2024 (48% of the total).

The top five UK goods exports to the US (PDF) over the year to September 2024 were:

• cars (£8.3 billion)
• medicinal and pharmaceutical products (£7.2 billion)
• mechanical power generators, intermediate (£5.2 billion)
• scientific instruments, capital (£2.4 billion)
• aircraft (£2.2 billion).

In addition to goods directly exported to the US, the UK exports components to other countries for goods eventually exported to the US market. The Bank of England estimated that these exports could amount to £20 billion.

The US imports more goods than it exports, leading to a trade deficit. This is one of the reasons behind President Trump’s tariffs. The UK government has emphasised that UK–US trade in goods is balanced. In 2024, the UK exported £59.3 billion of goods to the US and imported £57.1 billion.

While UK exports of goods to the US are large, exports of services are much larger. In 2023, UK exports of services to the US were £119 billion, almost twice as large as goods exports.

The top five services exports to the US in 2023 were:

• other business services, including legal services, accounting and architecture (£51.8 billion)
• financial services (£25.8 billion)
• insurance and pensions (£10.5 billion)
• telecoms, computer and information services (£9.6 billion)
• travel (£7.3 billion)

While tariffs are not imposed on services, some services exports may be linked to exports of goods.

The UK is a relatively open economy. International trade (exports plus imports of goods and services) was equivalent to 62% of GDP in 2024. Disruption to global trade and supply chains is likely to affect the UK more than other, less open, economies.

The government has said that the impact of the US tariffs on the UK economy will partly depend on the effect of US policies on the broader global trading system and other countries’ responses to the “reciprocal tariffs”.

UK Government reaction

Unlike other US trading partners, such as the EU, China and Canada, the UK has not announced any retaliatory measures.

Following the February 2025 meeting between the UK Prime Minister and President Trump, the US and UK started negotiations for an economic prosperity deal that builds on “shared strength and economic security”.

President Trump’s consecutive tariff announcements on steel, aluminium and the automotive industry prompted the Prime Minister and government ministers to express their disappointment. The Chancellor, Rachel Reeves, stated that tariffs would be “bad” for both the UK and the US.

The government wants to continue to engage with its US counterparts “in a constructive and mature dialogue” to address the situation. Keir Starmer said on 2 April:

We are taking a calm, pragmatic approach and keeping our feet on the ground. Constructive talks are ongoing on a wider economic prosperity deal with the US.

At the same time, the government says “nothing is off the table”, meaning it is considering retaliatory measures such as tariffs on some US imports.

Continued negotiations with the US

On 3 April 2025, Jonathan Reynolds, the Secretary of State for Business and Trade, made a statement to the House of Commons following the US President’s announcement of 10% tariffs on UK goods. Jonathan Reynolds highlighted that while no country secured an exemption from the US tariffs, the UK received the lowest reciprocal tariff rate of 10%. He said this was a vindication of the government’s “pragmatic approach” to negotiations with the US but acknowledged that any imposition of tariffs was “deeply regrettable”.

As noted above, on 9 April President Trump announced a 90 day pause in reciprocal tariffs meaning the UK will face the same tariff rate (10%) as many of the US’s other trading partners.

Mr Reynolds confirmed that trade negotiations with the US will continue, covering subjects pertinent to trade agreements, such as trade in goods, services and the regulation of professional bodies. The UK’s objectives include avoiding significant tariffs and deepening economic relations in areas of synergy, such as defence, economic security, financial services, machinery and technology.

Press reports indicate that the government may offer concessions on its digital services tax in exchange for lower tariffs.

Possible trade defence

While negotiating with the US, the government is also considering trade defence mechanisms if no deal is reached. Jonathan Reynolds summarised the UK’s approach as “to deal where we can, and to respond when we must”:

This Government will strive for a deal that supports our industries and the well-paid jobs that come with them, while preparing our trade defences and keeping all options on the table. This is the right approach to defend the UK’s domestic industries from the direct and indirect impacts of US tariffs in a way that is both measured and proportionate while respecting the rules-based international trading system.

The government has invited businesses to submit views on the possible effects of UK retaliatory tariffs. The indicative list of goods prepared by the Department for Business and Trade covers just over a quarter of UK imports of US goods or over 8,000 product categories (PDF). The Secretary of State said that if the UK and US Governments were to reach an agreement, the consultation would be paused and any retaliation lifted.

The UK has a safeguard measure in place to protect the UK steel industry from surges in imports. The Trade Remedies Authority has started an urgent review of this trade defence mechanism. The government is also considering whether protection may be needed for other sectors of the economy.

Other steps to support businesses

As part of a wider move to protect businesses in a “new era of global trade”, on 13 April, the government removed tariffs from a range of imports into the UK. The tariff suspension, effective until July 2027, covers 89 types of goods ranging from pasta, fruit juices, spices, plastics, plywood and gardening supplies, and covers around £17 million worth of goods per year.

Further, UK Export Finance, the government export credit agency, has received government backing to provide an additional £20 billion in business finance. The government says that these and further UKEF initiatives will help “to mitigate the impact of new tariffs and associated economic uncertainty”.    

Further information

Peterson Institute for International Economics, Trump’s trade war timeline 2.0: An up-to-date guide

Department for Business and Trade, Trade and Investment Factsheets: United States (PDF), 7 April 2025