The recently agreed UK-US trade deal has been hailed by both Westminster and Wall Street as a ‘breakthrough’ for transatlantic commerce. Yet the announcement has raised significant concerns across British supply chains – and understandably so.
Looking a little closer
Underneath the congratulatory statements lies a problem: the universal, sustained 10% blanket tariff on most British exports to the US remains firmly in place, despite reductions in a handful of sectors. President Donald Trump has made it clear that, even after new agreements are reached, the baseline duty will endure across the board unless companies secure a limited number of exemptions.
This means an extra cost on British goods will be unavoidable, adding layers of complexity for UK exporters.
On one hand, a trade deal should simplify and strengthen bilateral economic ties. But President Trump’s tariffs cast a shadow over the potential benefits of the new pact. UK businesses cannot assume exemptions or goodwill will hold under an administration focused on protectionism.
There seems to be a contradiction in policy signals. For example, the UK-US trade deal promises reduced barriers and streamlined trade, yet maintaining the 10% tariff would surely override those gains, sowing confusion among exporters, manufacturers and investors.
The real impact of the UK-US “deal”
These tariffs will inevitably ripple throughout global supply networks. UK businesses, particularly those supplying components to US-based manufacturers or reliant on US demand, are right to be concerned. Although the tariffs are aimed at imports into the US, supply chains are undeniably interconnected. UK businesses that are part of US-focused supply chains could feel indirect pressure.
Not only that, but UK firms expecting growth from new US market access may face price disadvantages too, reducing the competitiveness of British goods in the American market. Also, UK firms that export components or finished goods to the US may face reduced demand if US firms pass higher costs down the chain or seek alternatives.
Take the automotive sector as an example. While the deal trims tariffs on up to 100,000 UK-build cars from 27.5% to 10%, the duty snaps back into force the moment that annual ceiling is met. That effect alone is enough to prompt American assemblers to rethink their sourcing strategies. UK manufacturers and logistics companies, already grappling with post-Brexit challenges, now face the prospect of competition from more favourable trade routes via Mexico and Canada.
The bigger picture
Tariff announcements often trigger foreign exchange fluctuations, and the pound wobbled on the news of the trade deal. A weaker pound might partially offset tariff costs for US buyers—it offsets part of the 10 percent duty—but increases import costs for UK firms relying on expensive, raw and overseas materials.
However, some global companies may look to move production away from US-involved routes, potentially presenting both challenges and opportunities for the UK. UK firms could benefit from ‘tariff-avoidance’ reshuffling if positioned strategically. But changes in trade rules may increase the compliance costs for UK businesses, especially SMEs, and uncertainty may delay investment or disrupt long-term supply relationships.
The changes may hit the UK’s automotive and aerospace industries hardest due to their deep ties with both US and EU supply chains. Pharmaceuticals and agriculture will certainly face regulatory hurdles in addition to cost increases.
With US trade policy becoming increasingly unpredictable, UK companies and multinational corporations may divert investment to less volatile markets. Some UK businesses may need to rethink supply chains in their entirety, either by reshoring production, sourcing alternative suppliers, creating mini-hubs stateside, or establishing US-based subsidiaries to bypass tariffs. This will require investment, but the prize is continuity of trad, rather than catastrophic or costly disruption.
And time is not necessarily on our side. British firms should immediately assess their exposure to US markets, hedge and build in resilience, not just for tariffs, but for broader policy volatility.
It’s “not all doom and gloom”
Yet not all is doom and gloom. The fact that the US administration was willing to strike a deal, however limited, signals a pragmatism and opportunity for wider negotiations.
At OCI, we have already begun advising clients on these scenarios and our message is clear: Businesses cannot afford to wait and see. The UK government, under Prime Minister Keir Starmer, must seek clarity on how the new trade deal would impact the British economy. Beyond tariffs and currencies, the deal’s narrow focus leaves many questions unanswered.
We must act now—with agility, foresight and a focus on supply chain resilience—lest this so-called ‘breakthrough’ deal prove more restricting than liberating.
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