Throughout his 2024 campaign, President Donald Trump vowed that if re-elected, he would address unfair trade practices, rebalance trade relationships, and fund other economic proposals through new and expanded tariffs. With his return to the White House, the world is grappling with a complex web of international trade risks and potential opportunities in 2025.

President Trump’s first term offered only a small preview of what we can expect on trade policy over the next four years. If executed, his campaign promises represent a transformational restructuring of US tariff policy, a manifestation and acceleration of the broader evolution of how the United States – and the world – approaches trade and economic policy.

His remarks, as well as long-standing proposals developed by his closest trade advisers, will present challenging scenarios for businesses that rely on global supply chains, exports and investments across virtually every industry. Tariff actions implemented (like those applied against goods from China and steel and aluminum generally) as well as threatened (such as those proposed against numerous trading partners in response to digital services taxes) during his first term are discrete examples of what could follow, but the stakes are much higher, and the scope much wider, today. There is no one point in time where companies must respond – President Trump has already pledged new tariffs on Mexico, Canada and China, and the playing field will remain dynamic as the administration debates, proposes and implements new trade policies.

But what does all this mean for UK businesses?

For those companies that export to the US, President Trump’s proposed universal tariff will be of immediate concern. President Trump has proposed a 10%-20% universal tariff on all imports. To remain competitive in the US, suppliers from the UK must either absorb the cost or increase the price of its products – likely reducing demand. Either way, the impact will squeeze financial margins, particularly for those companies that rely heavily on exports to the US.

Although only Congress can permanently increase regular tariffs. Congress has given President Trump certain authorities that he may invoke to unilaterally increase tariffs – which could make his actions difficult to predict.

In addition to the universal tariff, significant tariff increases on goods supplied to the US from China – 50 or 60% – is also concerning. This could particularly affect those UK companies that have Chinese components in their products – increased costs may be passed on – but also because the UK could be used as a “dumping ground” for cheap Chinese goods that would otherwise have been sent to the US. 

How this might play out is not clear – but for UK companies that have navigated post Brexit supply chain difficulties, it is likely there is more disruption to come. In addition to whatever actions the US might take, UK companies must also prepare for the impact of retaliatory action which other jurisdictions could take in response to the imposition of US tariffs – the EU and China in particular would be likely to retaliate, raising risks of further distortions to global trading patterns. It is not clear whether the UK would also impose retaliatory tariffs, further inhibiting trans-Atlantic trade, or would refrain from doing so, leaving the UK open to imports from jurisdictions whose exports to the US were affected.

Although many companies will have sought to de-risk their supply chains (pre or post Brexit) now may be an opportune time to review the risk areas again.