Why The Tax Faculty Is Paying Attention

At The Tax Faculty, international tariffs might not be part of our day-to-day advisory work — but as a general tax and accountancy firm, we know how quickly global developments can impact local businesses. Here’s why this matters to us and to our clients:

• Many of our clients operate internationally, whether through exports, overseas investments, or cross-border services.

• We advise businesses in sectors like manufacturing, e-commerce, and professional services — all of which could feel the ripple effects of new tariffs.

• Our team includes frequent travellers to the US, and we have strong links with individuals and businesses across the Atlantic.

What might seem like a headline about international politics could soon translate into real financial consequences — from rising costs to supply chain disruption. That’s why we’re keeping a close eye on this one, so we’re ready to advise our clients on how best to respond.

What are Tariffs?

Donald Trump has made tariffs the cornerstone of his second term – and now, the UK is feeling the heat. With a blanket 10% tariff slapped on all UK imports to the US, and even steeper levies on cars and critical goods, businesses, travellers, and even shoppers here in Britain could be in for a bumpy ride.

But let’s take a step back. What exactly are tariffs, why is Trump imposing them again, and what impact will this have on everyday life in the UK?

Let’s break it down.

Tariffs are basically taxes on imported goods. In this case, it’s American companies that will pay the tariff when they import goods from other countries — including the UK. The idea? To make foreign products more expensive, so Americans buy local instead. It’s a bit of economic tough love, with the goal of protecting US jobs and industry.

But here’s the catch: the cost usually gets passed onto consumers, whether they’re in the US or here in the UK. Think more expensive British-made cars, pharmaceuticals, and even niche exports like whisky or fashion.

What Happened on 'Liberation Day'?

On April 2nd 2025, Trump announced sweeping new tariffs during a speech in the White House Rose Garden — calling the move “Liberation Day.” The message was loud and clear: the US is done playing nice on trade.

Here’s a snapshot of the new tariffs:

• 10% on all UK imports

• 20% on EU goods

• 34% on imports from China

• 25% on cars (UK included)

• Extra tariffs planned on pharmaceuticals, semiconductors, and critical minerals

While the EU and China have vowed to retaliate, the UK is trying to remain calm – but the economic impact is already raising eyebrows.

How Does This Affect the UK?

We might be an ocean away from Washington, but these tariffs have very real consequences for us in the UK — especially in sectors with deep US ties.

1. The Car Industry Takes a Hit

The US is the biggest market for UK-made cars, worth over £6.4 billion in 2023. But with a 25% tariff now slapped on all cars going to the States, British manufacturers are in trouble. Jobs could be lost. Output may be cut. And that could ripple across supply chains, from factories to transport to retail.

2. Pharmaceutical and Tech Exports Face Uncertainty

With further levies planned for pharmaceuticals and critical tech, UK-based innovation hubs — particularly in life sciences and semiconductor development — could find themselves priced out of the US market.

3. Prices Could Go Up — Over Here, Too

Even if you’re not exporting to the US, you’re not off the hook. A global tariff war means rising costs, higher inflation, and longer periods of high interest rates. In short: borrow more expensively, buy less affordably.

4. Global Instability Spills Over

Analysts say UK GDP could fall by up to 3% over five years due to the knock-on effects of higher interest rates and reduced global trade. Even mild tariff wars can slow investment and consumer confidence — which isn’t great news if you're running a UK business.

Why Is Trump Doing This?

Trump’s trade philosophy hasn’t changed much since his first term. He believes the US has been exploited through unfair trade deals and wants to rebalance global trade using tariffs.

He calls these taxes "reciprocal" — arguing that if other countries charge the US tariffs, the US should match or exceed them. Whether you agree or not, tariffs are now front and centre in US economic policy.

Final Thoughts: What can UK Businesses do?

The full impact of Trump’s tariffs is still playing out, but here’s what you can do right now:

✅ Stay Informed

Keep an eye on developments. Tariffs change quickly, and staying ahead gives you time to adapt.

✅ Reassess US Dependencies

If you rely heavily on US sales or suppliers, explore ways to diversify your trade — whether through the EU, Asia, or emerging markets.

✅ Get Specialist Support

From tax implications to pricing strategy, understanding how these changes affect your bottom line is essential. While it's too early to predict the full economic fallout, one thing is clear: these tariffs mark a shift in global trade dynamics that the UK can't ignore.

Whether you're a business owner, investor, or simply someone watching the headlines, staying informed is more important than ever.

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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