Bulletin: How Trump's 10% tariff could affect UK SMEs

In this special bulletin, David Smithson-Rudd explains the potential impact of Trump's tariff on UK SMEs

Donald Trump’s decision to introduce tariffs on all imports into the United States from 5th April 2025 is dominating today’s news cycle, and with good reason. The United States is the richest nation in the world, with an estimated 340 million consumers and over 33 million businesses, most of whom purchase goods and services from other nations. The impact on the global economy will be significant, as Trump pursues his protectionist approach, with President of the EU Commissioner von der Leyen stating it will “massively suffer”, as reported by the Financial Times.

So how will the UK’s Small-to-Medium-Enterprises (SMEs) be affected?

Tariffs explained

A tariff is a tax charged by a country when a good or service from another country is purchased from within it. Tariffs can target imports from a single country, a group, or all others. Their aim is to discourage domestic buyers from purchasing affected foreign goods and encourage them to buy locally, or from preferred trade partners.

In this case, Trump has announced a universal 10% import tax from this Saturday. The US government will charge this on all imports, in addition to existing tariffs (such as the 25% on imported cars). Worse still, from 9th April, increased tariffs will apply to many other countries, including the EU. The UK is not (currently) part of this group.

Who pays the tariff?

If a British good or service is purchased in the US, the American buyer pays the tariff, not the British producer or the UK government. A poll by the Hoover Institution at Stanford University found that only 35% of Americans surveyed understood this; 42% believed the foreign producer or government paid. This misconception likely influenced Trump’s decision; he knows it will land well with the American public, even though prices for Americans are likely rise.

Trump’s overall goal is to encourage Americans to buy US products and reduce the trade deficit (where imports exceed exports), which, at an estimated $918 billion, is the largest in the world (Trading Economics, 2025).

How will this affect UK SMEs?

The immediate impact on most UK SMEs will be limited, as only 12% of UK SMEs are direct exporters (gov.uk, 2021). However, the wider UK economy is likely to be significantly affected, as:

• The US is the largest destination for UK financial services exports (The City UK, 2024)

• Other services, such as legal, accounting, and consulting, have seen strong export growth to the US (The Inquiry, 2023)

This will cause a ripple effect across the economy: supply chain disruption, reduced bank lending appetite, and weaker consumer sentiment. The result is higher production costs, and therefore, higher prices.

Consumers have already faced months of negative economic news, and because so much of the economy is built on perception, if people feel the need to cut back, they will. The effects of the tariffs therefore spread to all UK SMEs, regardless of whether they export to the US or not.

The long and short of it is: we’re potentially in for a bumpy ride.

So what can UK SMEs do?

UK SMEs can’t control this situation, but they can look inward and mitigate some of the impact:

• Assess how potential price increases may affect customers:

  • Will they absorb it?

  • Will they stop purchasing beyond a certain point?

  • Can you plan to manage this now?

• Improve operational efficiency:

  • Boost productivity

  • Cut costs

• Support your employees:

  • They may be worried about the economy

  • Giving space to discuss concerns helps performance, which helps your business

If you’re a founder and need help with this, please get in touch. You’re not expected to buy a service immediately; initial calls are free, and talking things through can help.

What can the UK government do?

At time of writing, Sir Keir Starmer has released a statement confirming the UK is considering its response. This is a good sign; the Treasury likely has contingency plans in place. Reciprocal tariffs on the US are an option, with greater impact if coordinated with the EU. In the longer-term, closer economic alignment with other countries or trading blocs is an option. Again, the EU comes to mind, if all parties can move past the political scars left behind by Brexit.

At home, the government could introduce a support package for sectors most affected. That may be difficult, however, following Rachel Reeves’ statement that government spending is already severely constrained.

Final thoughts

While we can’t predict exactly how this will unfold, we can control how we respond. UK SMEs have weathered tougher times and carried on with typical British resolve. Stay focused, stay informed, and ask for support when needed. Businesses that adapt quickly can thrive, even in uncertain times.