British businesses are bracing for potential economic fallout as the global trading system faces renewed uncertainty, with new US tariffs raising fears of a wider trade war.
Although the UK is not directly targeted in escalating trade tensions, industry leaders warn that the knock-on effects could be severe. “We’re vulnerable at the moment,” says Fiona Conor, managing director of Trust Electric Heating, a Leeds-based radiator manufacturer considering expansion into the US market.
The unpredictability of Donald Trump’s second term as US president has raised concerns among UK firms, particularly after Washington announced a 25% tariff on steel and aluminium imports—including those from Britain—set to take effect in early March. Business leaders fear this could be the first of many measures disrupting global trade.
For Conor, who has been traveling frequently between Leeds and New York to build business connections, the uncertainty is unsettling. “Now with this tariff threat, I’m hoping Keir Starmer steps up with strong negotiating skills. I’d be getting over there, looking Trump in the eye, shaking his hand, and getting this deal done,” she says.
The United States remains the UK’s largest single-country trading partner, with a relationship valued at nearly £300bn annually. The majority of this trade involves financial and legal services, which are not subject to tariffs. However, UK goods exports—including cars, pharmaceuticals, and machinery—amounted to £58bn in the year leading up to September 2024. Imports from the US, led by oil and power generators, were worth slightly less at £56bn.
In an effort to maintain stability, Starmer’s government has been working to strengthen ties with both Washington and Brussels. The prime minister is expected to visit Trump later this month, and UK officials recently aligned with the US by opting out of an artificial intelligence agreement at a major summit in Paris.
While some economists believe Britain’s post-Brexit independence could offer room for strategic negotiations, others argue that the country is in a weaker position outside the EU. “The UK’s economy is highly exposed to trade, but its ability to retaliate against US tariffs in a meaningful way is limited,” says Rhys Davies, a former government trade adviser now at consultancy firm Flint Global.
Unlike China, Canada, or Mexico, which have significant trade surpluses with the US, Britain maintains a more balanced relationship. However, the risk remains that the UK could still suffer from broader trade disruptions. Research by the British Chambers of Commerce indicates that 63% of manufacturers expect US tariffs to impact exports.
Among those at risk is Essex-based Europlaz Technologies, a key supplier of precision components for the medical devices industry. The US is the largest destination for UK scientific instrument exports, worth nearly £3bn in 2023. Rory O’Keeffe, the company’s commercial director, warns that Trump’s aggressive approach to trade could have serious consequences.
“Three of our biggest clients have a major presence in the US, and many UK-based firms rely on American sales. Tariffs mean higher costs, which ultimately makes us less competitive,” he explains.
Political pressure is mounting for Britain to push back against US trade barriers. Liberal Democrat leader Ed Davey has called for retaliatory measures, suggesting that the UK should impose counter-tariffs on American firms like Tesla if Trump moves ahead with his plans.
“Sitting back and hoping Trump won’t hurt us isn’t an option. The UK needs to negotiate from a position of strength and show that we won’t be pushed around,” Davey said.
Even if Britain avoids direct tariffs, a slowdown in global trade could still have damaging effects. Supply chain disruptions mean that US tariffs on other countries, such as Mexico or the EU, could indirectly impact UK businesses reliant on international components.
“The broader downturn in global trade might be even more damaging for the UK than the tariffs themselves,” says Anthony O’Brien, head of market strategy at Phoenix Group.
Economic analysts warn that uncertainty in trade relations could lead to a decline in business investment, while the Bank of England has cautioned that any disruption to global commerce could stifle economic growth.
John Glen, chief economist at the Chartered Institute of Procurement and Supply, believes Britain faces a difficult balancing act. “Post-Brexit, we have the opportunity to negotiate a standalone trade agreement with Trump, but the question is whether we have the leverage to secure a favorable deal. Acting as a mediator between the US and EU may be our best bet,” he suggests.
With trade tensions escalating and the global economy in flux, UK businesses are left hoping for diplomatic solutions that will prevent a full-scale trade war.
Stay tuned to London Pulse News for further updates on the evolving trade tensions and their impact on British businesses.
