Britain facing £3bn blow from Trump tariffs

Tom Haynes

Mon, 23 February 2026 at 12:54 am GMT+9 5 min read

The deal Sir Keir Starmer and Donald Trump struck last year gave British exporters an advantage over other countries - Chris J Ratcliffe/EPA/Shutterstock

British companies face a hit of up to £3bn after Donald Trump raised tariffs on UK goods.

The British Chambers of Commerce (BCC) said exports to the US faced an additional cost of between £2bn and £3bn after the president raised tariffs on all foreign imports from 10pc to 15pc on Saturday.

While the change is not expected to affect UK industries with bespoke deals such as automotive and pharmaceuticals, some 40,000 businesses in other sectors will be hit.

William Bain, the head of trade policy at the BCC, said: “You’re talking about food and drink, clothing and textiles, electrical goods – all of them.”

US companies must pay the tariffs when importing British goods, but the increased burden threatens to dent sales by making British items more expensive.

Scotch whisky is one of the most vulnerable sectors as the US is the industry’s biggest overseas market. Exports fell by 15pc in 2025 following the imposition of Mr Trump’s initial levies last year.

Businesses have been left scrambling to work out where they stand after a frenetic few days that have seen the Supreme Court strike down much of the president’s tariffs, only for Mr Trump to introduce – then raise – new levies through other means.

New baseline 15pc global tariffs, which will take effect from Tuesday, will last for 150 days, after which time Mr Trump must seek approval from Congress to extend them. The president has signalled he is seeking to use separate legal means to impose more long-lasting, and potentially higher, tariffs on specific countries.

Mr Bain said trade with the US had moved to an “even more chaotic structure”.

“The tariffs are in place for 150 days. We don’t know whether Congress will extend them after that. If they don’t, what comes next?” he said.

“The risk is higher tariffs going forward and there’s uncertainty even about the tariffs that will take effect from Tuesday.”

The Supreme Court ruling applied only to the country-specific levies imposed by the president on “Liberation Day” last April.

The Society of Motor Traders said it was confident that the car trade was still covered by the separate US-UK trade deal struck last May, which allows British manufacturers to send 100,000 vehicles a year to the US at a reduced rate of 10pc.

However, asked whether previous deals still stood on Sunday, Bridget Phillipson, the education minister, failed to give a clear answer.

She told broadcasters there were “conversations right to the very, very highest levels” going on “to make sure that what we regard as being in our national interest is heard loud and clear”.

Story continues  

‘Pure tariff chaos from the US’

The Economic Prosperity deal, as the US-UK trade deal is officially known, included provisions stating that Britain must have preferential treatment compared with other nations regardless of future trade deals.

That clause may now prove valuable as Mr Trump prepares the groundwork for country-specific tariffs later in the year.

“Hold on to that deal,” Mr Bain said in a message to ministers.

Speaking to broadcasters, Ms Phillipson said: “We did secure a preferential deal … we would hope and expect that to continue, but these discussions are ongoing.”

She added: “This is an evolving situation. But, of course, we want to get the best possible deal for British businesses.”

Meanwhile, the European Union (EU) is preparing to suspend work on its deal with the US until it gains more clarity on the tariff situation.

Bernd Lange, the chairman of European Parliament’s trade committee, wrote on X: “Pure tariff chaos from the US administration. No one can make sense of it anymore – only open questions and growing uncertainty for the EU and other US trading partners.

“Clarity and legal certainty are needed before any further steps are taken.”

Mr Lange added: “At our extra meeting tomorrow, I will therefore propose to the [European Parliament] negotiating team putting legislative work on hold until we have a proper legal assessment and clear commitments from the US side.”

Jamieson Greer, the US trade representative and a key Trump supporter, said he had spoken with EU officials about the deal and would be ⁠speaking with ​officials from other countries.

“I haven’t ​heard anyone yet ‌come to ​me and ​say the ⁠deal ⁠is off,” he told CBS’s Face the ‌Nation programme on Sunday.

Jamieson Greer has said ‘most major trading partners’ would face ‘accelerated’ investigations covering ‘areas of concern’ - Kylie Cooper/Reuters

The City of London is braced for volatility when financial markets reopen on Monday morning. It will be investors’ first chance to react to the new 15pc global tariff the president has promised.

Neil Wilson, a strategist at investment platform Saxo UK, said he expected traders to dump riskier assets as “markets hate uncertainty”.

China has emerged as one of the main beneficiaries in recent days, with the Supreme Court ruling leading to a substantial fall in its tariff rate. Average tariffs on Chinese goods before the Supreme Court verdict had stood at 47.5pc, according to the Peterson Institute for International Economics.

However, Mr Wilson cautioned that Asian markets may not rally given Mr Trump’s vow to impose even larger tariffs despite the Supreme Court defeat.

“China looks way better but there are other levers to pull there for Trump,” he said.

Anan Menon, a professor of European politics and foreign affairs at King’s College London, said: “No one knows if he’s going to change his mind in the next few weeks. Everyone’s in a state of confusion.

“I don’t think you’re going to get the sort of market reaction you had around Liberation Day, when sort of everyone collectively thought, ‘Oh s—’.”

A UK government spokesman said: “Under any scenario, we expect our privileged trading position with the US to continue and will work with the administration to understand how the ruling will affect tariffs for the UK and the rest of the world.”

Terms and Privacy Policy

Privacy dashboard