The latest tariff policies instituted by the U.S. have upended international trade. Most importantly, they are souring bilateral relations with close allies, including the United Kingdom, Mexico and Canada. On April 2, President Donald Trump declared his first round of tariffs. He decided to slap an import charge of 25 percent on all cars being shipped to America, in addition to steel and aluminum goods. This step seeks to build up domestic production capacity. Yet this historic action has drawn unprecedented backlash from our trade partners around the world.
For its part, the UK is among the worst offenders. It is up against a constant 25% tariff on imported cars. In 2016, the UK exported nearly $9 billion worth of automobiles to the US. That astounding number represented almost one out of every four cars exported from the UK. These tariffs have raised serious concerns. They might increase the cost of shipping, reducing their volume and making the impact felt most keenly in the UK’s substantial automotive sector.
In March 2018, the US slapped a 25% tariff on steel and aluminum imports to the US. This extends to manufactured products containing these metals as well as vehicles. In 2024, the UK exported $720 million worth of raw steel and aluminum to the US, according to United Nations data. These tariffs increasingly act as an insurmountable barrier for UK manufacturers seeking to enter the highly lucrative American market.
Furthermore, the US has extended its tariff policy to many imports from Mexico and Canada, imposing a 25% levy. This one-size-fits-all approach is a major departure in the U.S.’s trade relationship with its North American partners. The potential impacts of these tariffs are enormous. With profits squeezed from every side, companies will be forced to reconsider their supply chains as costs continue to rise.
UK’s lower tariff rate of 10% provides a strong pull factor. That way, more multinational companies might decide it’s worth increasing production in Britain. This presents a unique opportunity for the UK to attract significant investments. That still doesn’t fully mitigate the role US tariffs on other industries are playing.
In fact, on April 9 President Trump announced a 90-day tariff moratorium on a variety of tariffs. This historic decision sent the stock markets soaring in relief. This “pause” only applies to a limited subset of new tariffs rolled out on April 2. It does little to relieve the existing 25% tariffs on steel and aluminum imports from the UK or the no-discussion-just-implemented 25% tariff on UK car imports. The new minimum tariff rate of 10% is being phased in starting on April 5. This is significant because this rate now applies to goods coming from all countries, including the UK.
China continues to be one of the most disadvantaged countries under these new policies. In 2024, the US imported a record-setting $440 billion of goods from China. Looking forward, tariffs on these imports from China are set to increase significantly as well. The US is preparing to raise tariffs on Chinese imports to an incredible 125%. They’ll place an additional 20% tariff on any item associated with fentanyl. These recent global supply chain changes not just affect China, but are felt far beyond.
Vietnam and other countries will now be subject to a new minimum tariff rate of 10%. That’s especially biting as they once luxuriated behind a number of much lower levies. This shift in tariff structures is the most dramatic departure from the historical precedent of America’s trading relationship with the world. This promise could lead countries across the globe to reconsider their trade policies.
The entire function of global trade is changing as countries choose to retaliate against these new tariffs. Manufacturers and exporters are facing new challenges from inflated costs and changed market dynamics as a result of America’s heavy-handed tariff policy. As businesses navigate these changes, it remains critical for policymakers to consider both domestic economic growth and the potential consequences on international trade partnerships.
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