What do the recent US tariffs mean for UK SMBs?

On April 2, 2025, the US government imposed a blanket 10% tariff on all imports, with some countries facing even higher tariffs–hitting traditional allies like the UK as well as rivals like China, whose goods now face tariffs of up to 145%. 

The move, dubbed “Liberation Day” by President Trump’s, has sent shockwaves through global supply chains and raised costs across the board. For UK small and medium-sized businesses (SMBs), this means pricier materials, tougher export conditions, and fresh pressure on already tight margins.

This article examines the impact of tariffs on UK SMBs, outlining what’s changing, who’s affected, and offering strategies to protect your business amidst rising uncertainty.

What tariffs have been applied?

At the time of writing, UK SMBs that export goods to the US have been hit with a 10% tariff. While President Trump announced a 90-day pause on additional tariffs above the 10% baseline tariff on April 9, 2025 (excluding China), UK goods are still currently subject to the 10% blanket import tariff imposed via executive order.

However, the UK is far from the only country affected. The US has implemented evensteeper “reciprocal” tariffs on countries it views as having unfair trade surpluses. China bears the heaviest burden, with tariffs now reaching up to 145% on some categories of imports. These include electric vehicles, solar panels, and certain chemicals. 

It’s still unclear whether consumer electronics like smartphones and laptops will remain exempt.

Which UK SMBs are affected?

These tariffs affect a wide range of UK SMBs, either directly or indirectly. If you export to the US, import from suppliers with exposure to China, or simply rely on goods priced in US dollars, your business could feel the squeeze in multiple ways.

However, it’s worth noting that service-based businesses (e.g. consultancies) aren’t affected – tariffs only impact goods. 

UK exporters to the US

If your business sells goods to US customers – either directly or through distributors – you now face a 10% cost disadvantage. US buyers may pass over British products in favour of domestic or lower-tariff alternatives, reducing your competitiveness and putting downward pressure on sales.

Businesses reliant on US suppliers

Many UK SMBs source parts, packaging, or finished goods from US suppliers. If those suppliers import components from tariff-affected countries like China, they’re now facing higher input costs – which they’re likely to pass those costs on to you. This is especially relevant in sectors like:

• Electronics and tech hardware

• Machinery and tools

• Packaging and materials

• Consumer goods

Manufacturers with global supply chains

Even if you don't deal directly with the US or China, your tier 2 or tier 3 suppliers might be affected. Tariffs create upstream cost pressures that cascade down the chain. Expect volatility in pricing, availability issues, and extended lead times.

Service providers with physical goods dependencies

While service-led businesses – such as marketing agencies, software firms, or consultancies – aren’t subject to tariffs, they might be impacted by rising costs if they rely on hardware, printed materials, or merchandise sourced from tariff-exposed suppliers.

What does this mean for UK SMBs?

The immediate effect of the US tariffs is higher costs. However, costs are just one piece of the puzzle. The broader impact created a mix of operational, strategic, and financial challenges that UK SMBs can’t afford to ignore.

• Tighter margins: If you're importing from the US, or buying from UK suppliers with US or Chinese exposure, expect to pay more for the same goods. 

• Slower, more volatile supply chains: Suppliers affected by tariffs may scramble to find alternative sourcing. That can result in longer lead times, unpredictable deliveries, or sudden stock shortages. 

• Uncertainty in pricing and forecasting: Tariff levels – especially those on Chinese goods – are still evolving. This creates a volatile environment for pricing, procurement, and inventory planning.

• Potential drop in US demand: For exporters, the 10% import tariff has made British products more expensive in the US market. Buyers may reduce order volumes, negotiate harder on price, or switch to local alternatives. 

• Increased admin and complexity: Navigating new tariff codes, customs declarations, and origin rules may increase your admin load – especially if you handle logistics or compliance in-house.

How can UK SMBs respond?

While you can’t control global trade policy, you can take meaningful steps to protect your margins, stay competitive, and adapt to these new trading conditions. 

This situation is far from ideal. However, it will help you stress-test your business. It might even reveal opportunities to operate more efficiently and cost-effectively for when tariffs are (hopefully) removed.

1. Talk to your suppliers

Start by asking direct questions: How are the US and Chinese tariffs affecting them? Are they changing their sourcing strategy? Can they guarantee pricing or lead times for the next 3 - 6 months? The sooner you know, the more time you have to plan.

2. Stress-test your supply chain

Map out where your key inputs come from. If any are routed through the US or sourced from countries facing high tariffs, assess the cost and time impact. Consider building redundancy into your supply chain with backup suppliers in other regions.

3. Review your US customer relationships

If you export to the US, be proactive. Flag potential price changes early and look for ways to maintain a strong commercial relationship – even as costs rise.

One option is to explore joint cost-saving opportunities, such as:

• Consolidating shipments to reduce freight or customs fees

• Adjusting order volumes or frequency to unlock better pricing or reduce storage costs on their side

• Switching to alternative packaging or materials that are less affected by tariffs

• Shifting some final-stage production to the US (if viable), which could reduce tariff exposure and lower their landed cost

• Using local fulfilment centres to shorten delivery times and reduce cross-border friction

You can also explore whether changing the origin of certain components or modifying the bill of materials might lower the tariff category applied to your product.

Ultimately, treating the cost challenge as a shared problem – rather than just passing on a price increase – can help preserve customer loyalty and long-term contracts.

4. Revisit pricing and cash flow planning

With rising input costs, it's crucial to know where your margins are most vulnerable. Forecast different pricing scenarios and factor in potential delays, cost spikes, and customer churn. Having a clear view of your cash flow will provide greater flexibility when making decisions.

5. Stay informed

Tariff rules are changing fast. A product category that’s exempt today may not be next month. Stay up to date with the latest news or even consider working with a trade adviser to anticipate regulatory changes.

6. Use software for better visibility

Tools like QuickBooks Advanced can help you monitor costs, spot changes in profit margins, and model different scenarios before they impact your bottom line. When uncertainty runs high, visibility is crucial.

But cost visibility is just one part of the picture – currency volatility is another growing challenge for UK businesses trading globally. To reduce your exposure to FX risk, consider using forward contracts to lock in exchange rates  for future purchases or payments. Also, track rates in real time and exchange funds when the rate is favourable. Some platforms allow you to set alerts or automate conversions when rates reach specific targets.

Final thoughts

The new US tariffs signal a tougher, more unpredictable global trading environment. For UK SMBs, the effects may be direct or indirect, immediate or delayed. But the risk is real.

Now’s the time to get proactive. Whether that means reshaping your supply chain, rethinking your US strategy, or tightening your grip on cash flow management with tools like QuickBooks Advanced, the businesses that act early will be best positioned to adapt.

Want to learn how QuickBooks Advanced can help you keep a firm grip over your company’s cash flow? Book a demo today.

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