Trump’s tariffs on the EU – how could they affect UK businesses?

US President Donald Trump has today introduced global tariffs on imports of steel and aluminium.

This means that companies in the United States that import British steel and aluminium will need to pay a 25 per cent levy, which could lead to lower orders or cancelled contracts for UK suppliers.

It’s estimated that the tariffs could affect over £2 billion (five per cent) worth of the UK’s annual exports to the US.

Read on to find out how Trump’s tariffs will work, the potential impact on small businesses, plus how the UK and EU governments have reacted.

What are tariffs and how do they impact businesses?

A tariff is a tax a government places on goods or services imported from another country. Tariffs are used to make imported goods more expensive to encourage consumers to buy domestically.

Tariffs can lead to fewer imports and increased domestic production. But they can also lead to higher prices for consumers, as well as counter tariffs from the affected countries.

Trump tariff plan – how could it affect UK businesses?

US businesses that import steel or aluminium from the UK (and the EU) will now need to pay a 25 per cent levy. The US government’s aim is to encourage businesses to buy metal domestically to boost its own economy.

According to the Aluminium Federation, the UK exports £474 million of steel and £225 million of aluminium to the US each year. Trump’s tariffs also apply to products made with steel and aluminium, which equates to around £2.2 billion (five per cent) of UK to US exports.

The BBC reports that, according to industry body UK Steel, some contracts between UK steel companies and American buyers have already been put on hold or cancelled.

If tariffs are successful in boosting the US economy, President Trump could introduce them on imports of other products. This would impact a higher number of UK businesses that export to the US and have a knock-on effect for the UK economy.

What a trade war could mean for the UK economy

Analysis by the National Institute of Economic and Social Research suggested a 10 per cent tariff on all US imports could see UK sterling lose 10-15 per cent of its value against the dollar. This could see inflation rise significantly.

Another fear is that Trump’s tariffs could start a global trade war as other countries retaliate against the US sanctions. In 2022, the Office for Budget Responsibility (OBR) forecast that a global trade war could damage UK Gross Domestic Product (GDP) by five per cent.

Trump’s tariffs on EU – US hit with counter tariffs

The US government’s tariffs on steel and aluminium imports have no exemptions for any country so also apply to the European Union (EU).

EU countries have responded by saying they’ll impose counter tariffs on products imported from the US. It’s been reported that around £22 billion of EU imports from the US, including products such as boats, bourbon, and motorbikes, are at threat of having a tariff imposed on them.

The EU tariffs are set to be partially introduced from 1 April 2025 and fully introduced on 13 April 2025.

In the UK, Prime Minister Sir Kier Starmer has said that he’s still hopeful of securing a trade deal with the US. If this can be achieved, Trump’s tariffs wouldn’t apply to US imports from the UK.

Why is Trump putting tariffs on imports to the US?

Ever since he won the US election in November, Trump has claimed he would place tariffs on imported goods. Going as far as to say that tariff is “the most beautiful word in the dictionary”.

The President hopes that tariffs will encourage domestic production of things like metal, and subsequently improve the US economy.

However, many commentators have said that strict tariffs could lead to higher prices for US consumers, with fears of a recession growing.

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