How to deal with the impact of tariffs on your business

US President Donald Trump’s introduction of new tariffs on imports of goods into the US from around the world has placed renewed focus on tariffs and international trade.  

Although the UK has many international trade agreements which means that tariffs do not apply in many circumstances, it is vital that small companies doing business overseas understand tariffs, how to manage them and what they can do to reduce the impact of tariffs.  

What are tariffs? 

Tariffs are taxes imposed on imports of goods from foreign countries. Tariffs are typically used by governments to raise revenue and protect their domestic industries.  

When a business imports goods, they pay the charge to the customs authority of the country that is imposing it.  

Tariffs are usually charged as a proportion of the goods’ value, although some agricultural tariffs are based on weight.  

What are trade agreements? 

When countries reach trade agreements, most tariffs are typically reduced or removed. Your imports will be covered if they qualify under the rules of origin test outlined in the agreement. These rules determine where a product is considered to have originated. 

The UK has trade agreements with more than 80 countries and trading blocks. This includes the post-Brexit deal with the European Union known as the Trade and Cooperation Agreement (TCA), as well as free trade agreements with Australia, New Zealand, a joint agreement with Iceland, Liechtenstein and Norway, and deals with various countries as part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

In May 2025, the UK concluded a trade deal with India. Full implementation is likely to begin in early 2026.  

You can check customs procedures for exporting goods to specific countries on the government website here. 

Key ways tariffs impact small businesses 

Import tariffs impact small businesses in several ways, including: 

Increased costs 

Tariffs add extra costs for businesses both in terms of the tariffs they need to pay on their imports, and the tariffs suppliers need to pay, which can increase the cost of sourcing materials for the businesses they supply.  

Uncertainty and risk 

Tariffs can increase uncertainty and risk for small businesses, especially due to their unpredictability, as we have seen with Trump’s recent tariffs and the subsequent changes he has made to them. 

Businesses can be forced to delay expansion due to that uncertainty or tempted to overstock ahead of tariffs coming into force. This can lead to reduced sales, deviation from business strategies or budgets, and inefficiencies. 

Pricing strategies 

Tariffs can mean that small businesses have to review the pricing of their products because they need to decide whether to absorb the extra costs or pass them on to their customers.  

Administrative burdens 

Tariffs mean businesses must deal with additional administration such as increased paperwork, complex calculations and application of rules, and customs declarations.  

Small businesses often do not have dedicated employees to deal with trade regulations, which means tariffs typically add time consuming work and take business owners or employees away from their day-to-day work. A lack of knowledge about tariffs may lead to errors.  

New US tariffs 

US President Trump has announced import tariffs on all countries with the aim of protecting US manufacturing and correcting what he claims are unfair trade balances used by countries to take advantage of the US.  

In March, he imposed a global 25% tariff on cars imported into the US. For the UK, this was reduced in June to 10% for up to 100,000 cars a year as part of the Economic Prosperity Deal agreed between the UK and US which came into effect on 30th June.  

On 2nd April 2025, dubbed by President Trump as “Liberation Day”, he announced all his global tariffs. It included a 10% tariff on UK goods and 20% on EU goods, except those with separate product-specific tariffs. 

The new tariffs impose new costs on affected UK businesses exporting goods to the US.  

How small businesses can reduce the impact of tariffs 

Key ways small businesses can reduce the impact of tariffs include:  

Source alternatives 

If you are sourcing goods from markets where tariffs are causing an increase to costs, look for products from alternative countries with which the UK has more favourable trade agreements.  

Review pricing models 

To reduce the impact of tariffs, you might consider raising your prices for customers.  

Good communication with customers is vital when increasing prices. Be transparent and clearly explain the reasons for maintaining their trust and loyalty.  

Focus on products least sensitive to price changes to help reduce any impact on sales, and if a product becomes too expensive due to tariffs, consider providing a lower-cost version or redesigning it. 

Inventory planning 

You can reduce the costs of tariffs by focusing on inventory planning. This involves optimising the amount of stock you need to have in place to meet customer demand. By analysing and accurately predicting demand you can minimise the costs associated with storing inventory.  

Embrace digital tools 

Using digital technology for inventory planning, supply chain management, customs declarations and compliance helps to improve efficiency and reduce errors. 

Talk to experts 

Speaking to experts can help you deal with the impact of tariffs on your small business.    

You can also speak to customs brokers, freight forwarders, and trade consultants. There’s a register of customs agents and express operators on the Government website, and information about freight forwarders on the British International Freight Association and Institute of Export websites. 

Trade associations and business groups may also be able to provide advice.  

Use Government guidance  

The Government provides regularly updated importing and exporting advice on its website and via UK Export Academy.  

The Government publishes the latest information about the US tariffs here. 

It also has general information on exports from the UK to the US in its US market guide. 

Last updated 2 Jul 2025 | First published 2 Jul 2025

Share

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

---