Reciprocal trade tariffs force UK small firms to quit US market

Small importers have warned that reciprocal tariffs on the US market would ‘wreck’ their business plans, research by the Federation of Small Businesses (FSB) shows.

The UK’s largest business group has today published data showing that one in three (33%) would scale back orders if the UK Government struck back and taxed goods headed from the US for UK customers.

This comes after President Donald Trump imposed 10 per cent tariffs on almost all UK goods and massive 25 per cent tariffs on steel and cars, sparking fears the UK Government could respond with tariffs of its own.

If reciprocal tariffs go ahead, small importers say they will raise prices to cover higher costs (61%) and also absorb the extra costs themselves (34%). Importers will also face supply chain disruption (43%) and will halt all imports from the US (13%).

It would also force a major rethink of their import strategies, with 33% continuing to import from the US, but at lower levels and 41% seeking non-US suppliers for affected products.

For those currently exporting to the US, the impact of the tariffs has already been chaotic, with 21 per cent saying they had stopped or may stop exporting there altogether.

Small exporters to the USA are also dealing with a falling demand for their goods (38%) and have had to cut their range (16%). They have seen the impact on UK SME exporters from US importer clients pausing trade, and do not want to see that duplicated in the UK.

Although the UK Government’s expanded trade finance package allows small businesses to secure loans of up to £2 million through the British Business Bank’s Growth Guarantee Scheme, more will need to be done if the UK introduces tariffs on imports.

FSB has been in the USA this week with the UK Government’s Department for Business and Trade to take forward a new UK-US SME Dialogue, in partnership with the US Commerce Department and US Trade Authority, to strengthen small business trade between our countries.

With tariffs on the rise and a clear potential for damage to the US economy, a US-UK economic prosperity deal centred on small firms has never been more important.

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said “These figures confirm what many have been feeling since the US tariffs were announced tariffs can wreck their trading ambitions.

“Tariffs might sound technical, but their impact is painfully real. They raise costs, squeeze margins, and make our goods less competitive. For small businesses already navigating tough climates, it’s one blow too many.

“Small exporters do not have armies of trade lawyers or entire departments handling compliance, they usually have one person wearing ten hats. So, when new rules drive up the cost of doing business overnight, both the admin burden and financial pressure can force them to pull back.

“Businesses that successfully export can then use that to be more productive and more likely to grow during tough economic times. That translates into stronger job creation and higher levels of small business confidence.

“Exporting and importing also helps firms diversify their customer base, spread risk, and tap into fast-growing markets abroad, making them less vulnerable to domestic downturns.

“We are asking policymakers in the US to recognise what’s at stake and work with UK counterparts to ensure US/UK SME trade is protected, against both tariffs and the removal of low value exemptions that disproportionately help small businesses on both sides of the Atlantic.”