Trump’s Tariffs: Key considerations for the UK manufacturing Sector
Chris Barlow · Posted on: May 2nd 2025 · read
With the announcement of new US tariffs earlier this month, and the subsequent rapid updates and clarifications, global manufacturers – particularly those exporting into the US, are facing an increasingly complex and volatile trade environment.
President Trump’s original announcement on 2nd April 2025, dubbed ‘Liberation Day’, set in motion a wide-reaching series of tariff increases designed to encourage domestic manufacturing in the US. These included a 10% baseline tariff and the threat of reciprocal tariffs up to 50%, later escalating dramatically in the case of China to 125%, and then, as clarified on 10th April, a combined total of 145% when including existing measures.
Although reciprocal tariffs have now been paused for most countries (excluding China, Mexico, and Canada), the landscape remains highly uncertain, and manufacturers cannot afford to wait and see. These are not temporary disruptions; they reflect a significant shift in US trade policy with long-term implications.
So, what should UK manufacturers be thinking about?
Supply chain visibility and risk
The first step for any manufacturing business should be a detailed review of the supply chain. As tariffs are calculated based on the origin of goods, rather than their point of export, manufacturers must have absolute clarity on where each component of their product originates. This is especially important for products assembled from parts sourced globally, where the final country of assembly may not be the country of origin under US customs rules.
Without this visibility, both exporters and their US partners are exposed to miscalculations in landed costs — and, potentially, non-compliance.
Origin of component parts
Many manufacturers will already be familiar with rules of origin under trade agreements like the UK-EU TCA or USMCA. However, under these new tariffs, the stakes are higher. Origin determination can now make the difference between a commercially viable export and an uncompetitive price point. The complexity of tracing and verifying component origins cannot be underestimated. Where products contain parts sourced from China, this risk is significantly amplified.
For products with mixed origin, now is the time to evaluate whether sourcing strategies need to change and whether alternative supply chains might reduce tariff exposure.
US importer engagement
For businesses trading into the US, strong relationships with American importers will be critical. Given that the US importer is responsible for tariff compliance and payment, open and proactive dialogue is essential.
Discussions should focus not just on pricing, but also on how both parties can work together to minimise the impact of the tariffs. This might include reviewing transaction structures, shipping routes, or documentation, with the goal of managing risk and protecting profitability on both sides.
The first sale rule
"One area where opportunities may exist is the ‘First Sale Rule’. This long-standing provision in US customs law allows the declared value for duty purposes to be based on the price paid in the first sale of goods destined for export to the US — provided that certain conditions are met, including direct shipment from the manufacturer."
For manufacturers who sell through intermediaries, this could significantly reduce the customs value and therefore the tariff liability. However, the evidential burden is high, and businesses must ensure full documentation and audit trails are in place if this route is to be used.
Production efficiency and technology
In cases where tariff mitigation is not possible, manufacturers must look internally to offset the cost impact. This includes reviewing operational efficiency, reducing wastage, and accelerating investment in automation and smart technologies.
Artificial intelligence, in particular, offers new possibilities across the manufacturing cycle from predictive maintenance and real-time supply chain monitoring to enhanced demand forecasting. Not only can this help reduce costs, but it also supports greater agility at a time when responsiveness to change is a competitive advantage.
Looking ahead
With a 90-day pause now in place for most reciprocal tariffs — and ongoing uncertainty around Chinese goods, USMCA compliance, and potential further Executive Orders — manufacturers must remain vigilant.
The tariff environment is now part of a broader geopolitical strategy, and changes can be announced and implemented with very little notice. Businesses that succeed will be those that combine agility with strong data, robust supply chain insight and a willingness to act decisively.
Now, more than ever, manufacturers need to be all in, building strong global partnerships and investing in resilience.
We’re here to support you in navigating the complexity, identifying opportunities and planning confidently for what comes next — now, for tomorrow.
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