UK Pays the Price for 'America First'

US President Donald Trump

The ripple effects of President Donald Trump’s sweeping tariffs continue to shake the foundations of global trade. What began as a “America First” dogwhistle in 2018 now casts a long shadow over UK exporters, automakers, and steelmakers.

Chancellor Rachel Reeves has called for exemptions on Section 232 duties, warning 25% tariffs on steel and aluminium, plus a potential 10% on all UK goods, could shave 0.5% off Britain’s GDP in 2025.

Cast your mind back to March 2018, when Trump slapped a 25% tariff on steel imports and 10% on aluminium under Section 232 of the Trade Expansion Act (an act passed in 1962 which allows the US President to impose import restrictions on goods that threaten to impair national security). Trump justified his action by citing risks posed by foreign over‑capacity, but allies, including the UK, argued that their steel and aluminium sectors posed no threat to American defence.

By June 2018, Washington had agreed temporary exemptions for the EU (which the UK was still a part of at the time), Canada, and Mexico. These were only allowed after high‑level talks in which trade representatives warned of lasting damage. By October of that year, those exemptions expired, leaving UK firms facing sudden price hikes on raw materials

Fast‑forward to May 2019, the White House threatened an additional 25% levy on imported vehicles and vehicle parts. This would have hit the UK’s prized Jaguar Land Rover and Nissan factories across the Midlands. Although the US ultimately delayed and then scaled back these vehicle tariffs, the threat spurred manufacturers to reconsider investment plans.

Meanwhile, Section 301 duties, aimed primarily at Chinese goods, have ballooned from 10% to 25% on $370bn of imports, affecting everything from electronics to furniture. UK retailers, sourcing from Asia, diverted supply chains, with some East Asian exporters redirecting goods to Europe, therefore undercutting British producers.

Here in the UK, the Confederation of British Industry (CBI) warns that small and medium‑sized exporters could see profit margins erode by up to 3%, with sectors like food and drink being the hardest hit. “Our members need clarity on whether they will face duties on everyday goods,” said CBI director Rain Newton‑Smith.

Across the Channel, the EU has responded by rolling out €26bn of retaliatory tariffs on iconic American products such as bourbon, denim, and motorcycles. The European Commission insists these measures are “fully compliant with World Trade Organisation rules,” leaving Britain caught between its largest trading partner and its most historic ally.

The UK high-street could see a boom in products imported from Asia.

For British shoppers, the outlook is mixed. Some of the largest high-street retailers anticipate price cuts as Asian exporters pivot away from a more-costly US market, flooding UK shelves. Others predict inflationary pressure. A recent Bank of England analysis forecasts inflation nudging up to 3.2% in late 2025 before easing in 2026.

The stock market hasn’t taken to the news lightly, with the US market seeing its worse trading days since 2020. The Dow Jones tumbled 3.9%, the Nasdaq plunged nearly 6% and the S&P 500 was down 5%.

So, where does that leave us? Trump seems to be realising the scale of his decisions, backtracking on tariffs that caused the markets to tumble. All countries now have a standard 10% tariff applied to them, except China who has been hit with a series of increasing tariffs after their government fought back on US tariffs with their own. China’s tariff now stands at a whopping 145%. In the meantime, UK negotiators will press for a more lenient deal of vehicles and metals, aiming to shield our biggest industries.

As post-Brexit Britain charts its own trade course, Trump’s tariffs serve as a reminder that economic sovereignty comes at a price. Whether this is resolved through targeted exemptions or a broader free‑trade agreement, the UK must navigate a complex web of allies, rivals, and global rules to keep our economy on track.