US-China tariffs: A deeper dive into how they could reshape UK retail in 2025

Global trade policy has entered its most volatile phase in decades. The rapid escalation of US tariffs on imports from China, the EU, and beyond (and the equally swift retaliations) have created a volatile landscape for UK retailers.

Following an initial 30-day pause, the tariff disputes have developed into a full-scale tit-for-tat confrontation. Each move by the United States has prompted a retaliatory response, primarily from China but also increasingly from the European Union and other trading partners. Given the pace and scale of these developments, this update builds on our previous analysis to provide clarity on the most recent changes and their implications for UK businesses.

So, let's look at the timeline:

Tariff timeline: A quick escalation in 2025

February 2025: Initial tariffs announced

• 1st February 2025: USA → China: The US imposes a 10% tariff on Chinese imports, citing China's role in the synthetic opioid supply chain (e.g., fentanyl production). Tariffs on Mexico and Canada are also imposed at 25%, citing the same reason.

• 3rd February 2025: USA: 30-day pause on the tariffs on Mexico and Canada.

• 4th February 2025: China → USA: 15% tariffs announced on US coal and liquified natural gas, 10% on crude oil and agricultural machinery, large displacement cars and pickup trucks, effective 10th February.

March 2025: Escalatation

• 4th March 2025: USA → Canada, Mexico: The US ends a temporary pause on tariffs for Canada and Mexico. 

• 4th March 2025: USA → China: Tariffs increased by 10% to 20% tariff on Chinese goods.

• 12th March 2025: USA → Global (including EU, China): The US imposes 25% tariffs on all steel, aluminium, and derivative products from all foreign sources, increasing the average US tariff on global goods from 3.0% to 3.8%. This affects the EU and China but is separate from country-specific tariffs.

• 24th March 2025: USA → Venezuela's Trading Partners (including China): The US imposes a 25% tariff on nations purchasing Venezuelan oil at the Secretary of State's discretion. (This indirectly affects China, which bought 68% of Venezuela's oil exports in 2023.)

April 2025: Retaliation

• 2nd April 2025: USA → Global (including EU, China; excluding Canada, Mexico): The US announces a 10% baseline tariff on almost all foreign imports, effective 5th April. Canada and Mexico are exempt due to prior implemented tariffs. The EU faces a 20% reciprocal tariff, and China faces an additional 34% tariff on top of the 20% tariff from March. This makes the tariffs on China 54%. Certain goods (steel, aluminium, autos, copper, pharmaceuticals, semiconductors, lumber, energy, and critical minerals) are excluded as they face separate tariffs.

• 4th April 2025: China → USA: China announces a 34% retaliatory tariff on all US imports, effective 10th April, in response to US tariffs.

• 9th April 2025: USA → China: The US increases tariffs on Chinese goods to 104% (20% from March + 34% from 2nd April + an additional 50%) in response to China's retaliation. 

• 9th April 2025: USA → EU, Others: The US pauses higher country-specific tariffs (e.g., 20% for the EU) for 90 days, applying a universal 10% tariff to most countries except China, Hong Kong, and Macau. The EU benefited from this pause as its retaliatory tariffs were not yet effective. The UK is unaffected by this pause, as it is already subject to the 10% baseline tariff.

• 10th April 2025: China → USA: China raises its tariffs on US goods from 34% to 84% in response to the US's 104% tariff.

• 10th April 2025: EU → USA: The EU approves retaliatory tariffs on over $22 billion in US products (e.g., soybeans, motorcycles, beauty products), set to take effect on 15th April, but these are paused as the US caps EU tariffs at 10%.

• 11th April 2025: China → USA: China further increases tariffs on US imports from 84% to 125%, stating this may be its final tariff hike due to market constraints. China also signals other countermeasures may follow.

• 11th April 2025: USA → China: The US raises tariffs on Chinese goods to 145% (replacing the 104% rate) in response to China's escalation. This applies to goods from China, Hong Kong, and Macau.

Hope for the best. Prepare for the worst.

The speed and scale of these changes have left many retailers, manufacturers, and logistics providers facing difficult decisions with limited information. Strategic planning is now essential, but the options are far from straightforward:

• Should goods be shipped now, despite the risk of tariffs increasing mid-transit?
  
  
• Is warehousing stock a viable hedge against future cost surges?
  
  
• Do you ship to another region and hope they can sell the items?
  
  
• Do you ship to another region and then to the US in the hopes of lower tariffs? (unlikely as its tariffs on the country of manufacture, not the shipping country, but it has been suggested).

These are no longer hypothetical questions but the daily reality for many UK businesses.

What is the outlook for UK retailers?

Looking beyond the US and China

UK retailers are already beginning to adapt by diversifying their supply chains:

• EU and Asia-Pacific suppliers are increasingly favoured, especially for products previously sourced from the US or China.
  
  
• Local and regional suppliers in the UK are gaining traction, as buyers prioritise tariff-free goods and more reliable logistics.

In sectors such as board games and hobby goods, American firms with Chinese manufacturing are now shifting distribution to non-US markets. This opens up new sourcing opportunities for UK retailers without the burden of tariff-related cost hikes.

The economic impact on UK consumers

The anticipated result of these trade tensions is a moderate rise in UK consumer prices - estimated between 1–2% in key sectors such as clothing, electronics, and food. Luxury goods may experience sharper increases, potentially dampening demand. 

This does lead to diversification however, as people shift to markets unaffected by these tariffs, such as EU, Asia or domestic items over imported. This could be very good for local sources, as people source from within the UK or EU, leaning on smaller companies to supply them, giving them growth. 

While this transition may lead to short-term price adjustments, it also marks the beginning of a broader transformation in how UK retailers source and distribute goods. Resilience, agility, and supplier diversification will be key to navigating the challenges ahead.

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