In a significant development for international trade, the United States has implemented new tariffs that will affect various countries, including the United Kingdom. In particular, on April 5, 2024 the US would ensure that they maintain a 25% import tariff on cars. Moreover, it has recently introduced a loading of at least 10% on all products imported from all countries. In fact, all of the UK’s raw exports of steel and aluminum to the US as of 2024 were valued at just $720 million. This dynamic is illustrative of how the new tariffs would dramatically shift bilateral trade.
The UK’s automotive sector faces particular challenges, as approximately $9 billion in cars were exported to the US last year, accounting for around a quarter of the UK’s total car exports. The new tariffs now loom over this busy and vital trade route, and the automotive industry is preparing for a painful hit. In addition, UK exports of metal products caught up in these tariffs totaled $2.9 billion in 2024.
These tariffs are undoubtedly going to have a huge effect on non-goods. It’s worth recalling that the majority of UK exports to the US consist of services, which will not be covered by this latest round of tariffs. This simple distinction would serve the UK economy well. It will certainly support the growth of service-based exports, even as goods face increasing obstacles.
The UK has one of the most competitive tariff rates at only 10%. This comparative openness gives it the edge to be competitive against regions such as the EU, which faces a painful 20% tariff on exports to the US. This price difference should provide plenty of incentive for multinationals to expand production in Britain. In doing so, the UK’s manufacturing sector will be injected with a massive stimulus.
The UK is now experiencing US tariff barriers as countries across the world have long suffered. Her situation raises key questions about what these recent developments mean for the future of trade relations between the two countries. The next day, April 2, Donald Trump floated his “reciprocal tariffs.” This unilateral move sent a ripple effect through global financial markets and trading systems.
In the bigger picture Beyond the UK, the new tariffs have chilling consequences. As a case in point, Vietnam is on the extreme end of vulnerability, with its exports to the US totaling 30% of its economy. The South East Asian nation had been worried that a shocking 46% tariff would force it into a recession. These warning sounds show how connected today’s world of trade is, and what far-reaching ripple effects a US tariff decision could have.
Official data show the US imported $440 billion worth of goods from China in 2024. Continuing to raise tariffs on Chinese imports, increasing them from 104% to 125%. This action has confused trade relations even more with one of its biggest trading partners. Plus, a new 20% tariff related to fentanyl concerns has been tacked on to imports from China.