What US tariffs could mean for UK retailers

The world of global trade never stays still for long; things are shifting once again. With Donald Trump back in the White House as of early 2025, the US is taking a tougher stance on imports. True to his campaign promises, Trump has already announced new tariffs on goods coming in from China, Mexico, and Canada, ranging between 10% and 25%.

For UK retailers, you’ll most likely have a big question: are these tariffs going to hit us next? Well currently they are aimed mainly at supply chains with China. However, the natural knock on effects will already be felt. Suppliers are starting to shift prices and shipping costs are gradually crept up meaning businesses need to look again at who they trade with.

What are tariffs, and why are they being imposed?

Tariffs are essentially taxes placed on imported goods. The idea is to make foreign products more expensive, encouraging people to buy locally made alternatives instead. Theoretically, it's about protecting domestic jobs and boosting the home economy.

Here's what's been proposed so far:

• A 10% tariff on goods from China
• A 25% tariff on imports from Mexico and Canada

On paper, these measures are supposed to boost the US economy, but when you look closer to the details, Trump's push to create a trade war (especially with regards to fentanyl) leaves other leaders questioning his motives. Essentially, China ships the chemical ingredients of the drug, Mexico gangs move it across the border and then Canadian labs create it. 

Canada’s Prime Minister, Justin Trudeau has said that less than 1% of all fentanyl in the US comes from Canada - meaning a war of words is hotting up over what the real meaning behind the tariffs is. Putting politics aside for a moment, China, Mexico and Canada made up more than 40% of US imports, meaning products are about to get a bump in their price tag.

Will prices rise?

For anyone running an online store in the UK, you’re probably left wondering how all this political stuff will affect you. Good news is currently the UK isn’t caught up in any of this drama, however, the effects of the current trade war are being felt far and wide. 

HSBC, for example, asked over 1,500 brands and businesses what they will do about it with 40% responding that they had already raised their prices (just in case, of course). On top of that, half of them are already seeking newer markets where trade wars are a little less of an issue. 

As the US continues to be extremely unpredictable, the UK’s position is slightly up in the air. Most retailers are now starting to look closer to home or to our friends in Europe for solace. Suitable supply chains are in high demand but if your business relies on imported stock, then price rises could become an everyday normality sadly.

How could this affect UK retailers and eCommerce stores?

Even though we (the UK) aren’t caught up in any tariff right now, that doesn’t mean we aren’t susceptible to fluctuations - meaning there’s plenty that could bite you in the backside if you aren’t prepared. 

• Supply chains could take a hit: As lots of UK retailers get their stock from raw materials or from countries facing tariffs, this means that if a price goes up over there, it won’t take too long for your business to feel the effects.
• A time to rethink your suppliers? With the US being super unpredictable, most businesses are starting to look to friendly places. Businesses like steady ground and intensely dislike crazy price fluctuations meaning Europe could benefit from these trade wars.
• When prices go up… When costs of products and imports rise, spending ultimately will go down as customers start to feel the pinch in their pockets. Less spending has a knock on effect for your business meaning fewer sales and the pressure on already tight margins intensifies. 

If your eCommerce business relies heavily on international suppliers, it may be time to keep one eye on what’s happening further afield. One small shift in one of these affected countries could seriously impact your way of working so preparing a little wiggle room could really save your bacon. 

The Bank of England’s response: Slashing interest rates

As the money world is rattled, we’ve already seen the Bank of England cut interest rates again - this time by 0.25%. This is the third drop in six months (something that gives you a small window into how steady things are right now). 

On top, they also slashed the UK’s growth forecast for 2025. What was originally predicated to be 1.5% has now been cut to half that. The politicians are trying to stay positive but let’s see how we’ll fare further down the line in 2026 and 2027.

With all this, let’s remember that not everything is doom and gloom. Retailers can take advantage of lower interest rates (loans are slightly cheaper) meaning if you want to invest or grow, the option is there. For those you employ, lower interest rates should also equal lower mortgage rates - which should give your team that much needed breathing room.

How can UK retailers prepare for trade fluctuations?

With all of this uncertainty, it can be a tough time for those running online stores or retailer businesses. Let’s look at some ways we can improve the mood:

• Consider your options: One thing that is obvious is that if your business relies on China, Mexico or Canada for your products, it may be worth exploring other options. Diversification helps with risk and with Europe appearing more steady, that may be a safe bet for you right now.
• Keep one eye on pricing: As costs continue to creep up, be sure to be ready so your business is caught out. Think about analysing your margins on a regular basis.
• Keep on top of that sweet cash flow: if your cash flow is in good health, it could be worth bulking up your stock to ensure you avoid any unnecessary price rises.
• Take advantage of those lower interest rates: With the price of borrowing dropping, consider using it to your advantage. 

Plan ahead

While the UK hasn’t been directly targeted by US tariffs (yet), the effects are already being felt across industries. Rising prices, shifting supply chains, and trade uncertainties are pushing businesses to reassess their strategies.

Looking to supercharge your eCommerce strategy in 2025? Get in touch with our solution experts today and find out how Visualsoft can help you achieve long-term growth.