Trump’s New Tariffs: How They Impact UK Businesses & Strategies to Reduce Costs

The latest US tariffs imposed by Donald Trump could have a significant impact on UK businesses, particularly those that export to the United States. As one of the UK’s largest trading partners, increased tariffs may raise costs, disrupt supply chains, and make British goods less competitive in the American market.

Impact on the UK Steel Industry

Why UK Steel is at Risk?

One of the hardest-hit industries is the UK steel sector, which exports 10% of its products to the US. The 25% tariff on steel imports could lead to:

• Reduced demand for British steel in the US
• Lower revenues and profitability for UK steel producers
• Potential job losses in the sector

Government Support for the UK Steel Industry

To help UK steel manufacturers remain competitive, Business Secretary Jonathan Reynolds has confirmed that the UK government will provide a £2.5 billion support package to boost the UK steel industry and secure its long-term future.

According to Gareth Stace, Director General of UK Steel, these tariffs could:

• Weaken the UK’s position in the global steel market
• Increase competition from other nations looking to replace UK steel exports to the US
• Flood the UK market with cheaper steel imports from other countries, putting local manufacturers at risk

Stace has called for stronger trade protections, as the UK’s current steel safeguards expire in 2026.

 

Retail & Fashion Industry at Risk

The UK retail and fashion sector, which relies heavily on US consumers, is also vulnerable. Higher tariffs on British goods could:

• Increase costs for UK brands exporting to the US
• Reduce demand from US consumers due to higher prices
• Force companies to either absorb costs or pass them on to customers

Businesses Exploring US Expansion to Avoid Tariffs

A growing number of UK retailers, fashion brands, and manufacturers are looking to set up US-based entities to mitigate the impact of tariffs.

• British fashion brands are considering setting up US subsidiaries to avoid paying export tariffs and instead import goods at cost price.
• Manufacturers are looking at establishing US warehouses to distribute products locally rather than shipping from the UK.
• Luxury and mid-market UK retailers are expanding their US e-commerce operations, reducing their dependency on exports.

Financial Sector Uncertainty

The UK’s financial services industry is also at risk. If the US relaxes financial regulations, this could:

• Reduce investment flows into the UK
• Divert capital to the US market, affecting London’s financial hub status
• Increase competition for UK fintech and banking firms

How UK Financial Firms Can Respond

• Diversify investment strategies – UK firms should explore new markets beyond the US.
• Hedge against currency volatility – Financial instruments like forward contracts and options can help manage currency fluctuations.

 

Solutions for UK Businesses: Managing International Payments & Reducing Costs

With Trump’s tariffs increasing financial pressure on UK exporters, businesses must optimise international payments to reduce costs and improve cash flow.

1. Use Hedging Strategies to Manage Exchange Rate Risks

• Forward Contracts – Lock in an exchange rate for future transactions to avoid currency fluctuations.
• Options Contracts – Purchase the right (but not obligation) to exchange currency at a fixed rate.
• Multi-Currency Accounts – Hold and pay in multiple currencies to reduce conversion fees.

2. Optimise Payment Timing & Terms

• Negotiate Longer Payment Terms with Suppliers – Helps improve cash flow when exchange rates are unfavourable.
• Request Early Payments from US Customers – Receiving payments sooner can maximize revenue if the pound weakens.
• Batch International Payments – Consolidating payments into a single transaction can reduce bank fees.

3. Setting Up a US Entity to Reduce Tariff Exposure

More UK businesses are exploring the option of establishing a presence in the US to avoid tariffs and streamline operations.

Benefits of setting up a US-based entity:

• Import at cost price instead of export price, reducing tariff charges.
• Operate within the US to avoid costly cross-border transactions.

4. Leverage Trade Finance & Government Support

• Export Credit Schemes – The UK government, through UK Export Finance (UKEF), provides funding support to businesses facing financial strain.
• Supply Chain Financing – Working with financial institutions to extend payment terms while ensuring faster payments from buyers.

 

How Spartan FX Can Help UK Businesses Expand to the US

At Spartan FX, we specialise in helping UK businesses with:
✅ Transferring funds internationally to set up US entities
✅ Managing currency exchange rates when paying suppliers in USD
✅ Repatriating profits back to the UK efficiently and securely

1. Transferring Money to Set Up a US Entity

UK businesses need to move funds to the US to establish a company, lease premises, or hire staff. Our services help:

• Reduce transfer fees compared to high-street banks
• Ensure fast, secure transactions to US banks
• Mitigate exchange rate risks with forward contracts

2. Managing International Payments & Exchange Rates

To optimise costs, we provide:

• Forward Contracts – Lock in a favourable exchange rate for future USD transactions
• Options Contracts – Secure flexibility against currency fluctuations
• Multi-Currency Accounts – Hold USD and GBP to reduce unnecessary conversion fees

3. Repatriating Profits Back to the UK

Once your US business generates revenue, Spartan FX helps you repatriate profits to the UK efficiently:

• Secure the best exchange rates for USD to GBP transfers
• Batch payments to minimise costs
• Optimise cash flow by strategically timing transfers

 

Final Thoughts: How UK Businesses Can Stay Competitive Despite Tariffs

As trade tensions between the US and UK continue, British businesses must be proactive in managing risks and adapting their strategies. By setting up US entities, optimising international payments, and leveraging government support, UK exporters can maintain their competitiveness in the US market.

Need Help Managing Currency Exchange & International Payments?

At Spartan FX, we specialise in helping UK businesses with:

✅ Cross-border payments & foreign exchange risk management
✅ Reducing currency conversion costs
✅ Optimising international transactions

Get in touch today to see how we can help you manage costs. Don’t let tariffs hinder your growth—reach out today to optimise your payments and safeguard your bottom line.

+44(0)203 984 0440

info@spartanfx.co.uk