From "Special Treatment" to the Biggest Loser? The UK Could Become the Biggest Victim of Trump's New Tariffs

Media reports indicate that after months of high-profile promotion of a favorable trade agreement with U.S. President Donald Trump, the UK now faces the risk of becoming the biggest loser following the U.S. Supreme Court’s decision to reject its global tariff policy.

Previously, the UK enjoyed a relatively low 10% reciprocal tariff rate, giving it a competitive advantage over other countries. However, Trump promised to raise tariffs on all countries to 15%, meaning businesses may now face higher tax burdens. According to data from the Global Trade Alert, the UK faces the largest increase in tariffs, followed by Italy and Singapore.

Sam Lowe, a trade expert at London-based strategic consulting firm Flint Global, said:

“We are still unsure whether the previously agreed 10% tariff will be honored — but until the U.S. makes an explicit statement, we can only assume the rate will be 15%.”

UK officials are currently anxious to persuade the U.S. government to exclude the UK from the higher tariff rates. The British Chamber of Commerce estimates that this adjustment could increase UK exports to the U.S. by up to 3 billion pounds (about 4 billion USD) and impact 40,000 UK businesses.

Cabinet Minister Bridget Phillipson admitted to the media on Sunday that this indeed creates “uncertainty” for UK businesses:

“We are engaging at the highest levels to ensure that our positions, which we believe serve the national interest, are clearly communicated to the U.S. side.”

Trump’s new tariff system is implemented under Section 122 of the Trade Act of 1974 and can be enforced for up to 150 days unless Congress extends it. Previously, the UK and the U.S. reached an agreement to exempt tariffs on steel, pharmaceuticals, and automobiles, and these exemptions are expected to continue, allowing the UK to retain favorable treatment in these key areas.

UK: Still Hopeful for Special UK-US Relationship

The UK government stated that the “superior” trade status negotiated last year under the so-called Economic Prosperity Deal with the U.S. will “continue under any circumstances.”

Tom Wells, a spokesperson for Prime Minister Rishi Sunak, told reporters on Monday:

“The situation is changing rapidly.”

“We do not believe that this ruling will affect most of the trade under the Economic Prosperity Deal, including the tariff arrangements we have already agreed upon.”

However, former UK chief trade negotiator Crawford Falconer said that UK companies exporting other products to the U.S. will now face higher tariffs,

“equivalent to the levels previously faced by the EU,”

“On the surface, Australia and the UK are most affected: everyone will want to get clear answers quickly, even to try to lower the rates.”

Before the Supreme Court ruling, Australia also applied a 10% tariff rate.

The UK has already invested significant diplomatic resources to secure favorable treatment from the White House. Last month, Sunak helped persuade Trump to abandon threats of higher tariffs on Europe due to support for Denmark and Greenland.

Fraser Smeaton, co-founder of the cosmetics exporter MorphCostumes, which exports to the U.S., said Trump’s announced new tariff rate is “the latest twist in a rollercoaster year.”

Smeaton told the media on Monday:

“We have experienced a lot of turbulence and uncertainty. What we really want is certainty and the ability to predict future costs, because that is exactly what is making our operations very difficult right now.”

Wells, the UK Prime Minister’s spokesperson, stated that although “no options are currently ruled out” in response measures,

“industry does not want to see a trade war, with both sides escalating the situation. That’s why our focus is on constructive engagement with the U.S. to preserve the UK’s competitive edge.”

Former UK chief trade negotiator Falconer noted that countries like India and Indonesia, which will now be subject to lower tariffs, mean that the U.S. “has already lost a significant portion of its tariff revenue,” and Trump and his team may be distracted by this.

“In the next five months, they will be busy seeking other ways to fill the gap. Finding time to address the UK’s special issues will be quite difficult.”

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