How US Trade Tariffs Could Affect UK SMEs – and What to Do About It
You may have noticed headlines about the latest round of US trade tariffs – and the ripple effect they’re already having on markets across the globe. While it may feel like something that only affects big corporations or global investors, UK small and medium-sized businesses (SMEs) should also take note.
At Zyla Accountants, we want to help demystify what’s going on and offer some practical advice to help your business navigate these uncertain times.
What’s Actually Happening?
In a sudden twist, the US government introduced a fresh set of tariffs – essentially extra taxes on imported goods. Hours after these took effect, President Trump announced a 90-day pause for some countries, including the UK. This means the UK will now face a universal 10% tariff on goods sold to the US.
China, however, will see a much higher 125% tariff – and has hit back with its own tariffs of 84% on US imports. This tit-for-tat approach is what many are calling a “trade war”.
Markets reacted quickly. The FTSE 100, which tracks the UK’s biggest companies, dropped to its lowest level in a year. Similar instability has been seen across Asian and US markets too.
What Do Tariffs Actually Mean?
Tariffs are taxes placed on goods coming into a country. For example, if a UK business exports cars or steel to the US, they’ll now be hit with extra charges – 10% across the board, but up to 25% for certain products like aluminium and vehicles.
These costs usually get passed along the supply chain, often ending with the consumer. But they can also affect business profitability, pricing strategies, and global trade flows.
How Might This Impact UK SMEs?
You might not be trading directly with the US, but these changes could still affect your business in several ways:
Supply chain issues – If your suppliers are based overseas or rely on US imports, expect possible delays or price hikes.
Cost of goods – Fluctuations in currency and higher import costs can impact your bottom line.
Customer spending – Economic uncertainty often leads to cautious consumer behaviour, which could hit sales.
Investment slowdowns – Larger companies might hold back on investments or new projects, which could reduce opportunities for smaller businesses.
Cash flow pressures – With interest rates and borrowing costs potentially rising, managing day-to-day finances may become trickier.
What Can SMEs Do to Protect Themselves?
Here are a few practical steps to help weather the storm:
Review your supply chain – Can you diversify or find local alternatives to reduce risk?
Keep an eye on cash flow – Consider building a buffer, reviewing expenses, and planning for slower periods.
Strengthen customer relationships – Retaining loyal customers is vital during periods of uncertainty.
Look for new markets – Explore domestic or less affected international markets to open up new revenue streams.
Explore flexible financing – Having options in place could provide breathing space if needed.
Stay informed and seek advice – We’re here to help you make smart financial decisions as the situation evolves.
What’s the Government Doing?
The UK has been spared the worst of the US tariffs – at least for now – but global market shifts will still create challenges. Prime Minister Sir Keir Starmer has signalled that industrial policy and public-sector investment will be used to help protect British businesses.
While details are still to come, SMEs should keep an eye out for government announcements and support packages in the coming weeks.
Final Thoughts
The full impact of the US trade tariffs is yet to unfold. What’s clear is that UK businesses – big and small – are likely to feel the effects in one way or another. At Zyla Accountants, we believe staying informed, agile, and financially prepared is the best way forward.
If you’re unsure how this could impact your business or want help reviewing your financial strategy, get in touch. We’re here to support you every step of the way.