The United States has implemented a new round of tariffs affecting both the United Kingdom and the European Union, raising concerns about trade competitiveness and the impact on various sectors. The tariffs, announced by President Donald Trump on Thursday, impose a 10 percent duty on goods from 60 trading partners, including the UK and the EU, replacing previous levies that expired following a US Supreme Court ruling earlier this year. The move was justified by the US government as a measure to target countries that have not sufficiently banned products made using forced labor.

While both the UK and the EU face the same headline tariff rate of 10 percent, differences in how the tariffs apply have prompted debate among experts and business leaders. The EU’s tariffs are structured as an “all-inclusive” rate, meaning the 10 percent replaces the most favoured nation (MFN) tariffs set by the World Trade Organization (WTO), which average between 2.4 and 3.5 percent on non-agricultural food products. In contrast, UK businesses must pay the new 10 percent tariff in addition to existing WTO duties, effectively increasing the tariff burden on many British exports.

William Bain, head of trade policy at the British Chambers of Commerce, acknowledged that while the headline rate has not changed for the UK, the layered nature of the tariffs places British companies at a disadvantage compared to their EU counterparts. He pointed out that some sectors, such as clothing and gifts, could see significantly higher costs, reducing their competitiveness. For example, a British knitted jumper facing a 12.5 percent WTO tariff would now incur an additional 10 percent under the new rules, while an equivalent EU product would be subject to only the single 10 percent tariff.

The UK government defended the arrangements, emphasizing that there is no negative change to the tariff rates facing British businesses. A government spokesperson highlighted recent improvements in bilateral trade terms, specifically the removal of tariffs on UK whisky and medical technology exports to the US. The first shipment of tariff-free Scotch whisky was scheduled for departure within 48 hours of the announcement, a boost welcomed by officials including Scotland’s First Minister John Swinney and Business Secretary Jonathan Reynolds.

From the European side, a spokesperson confirmed the EU’s position that it did not agree with the US investigation into forced labor but has nevertheless adapted to the new tariff regime. The new EU deal includes tariff exemptions for certain goods such as cork, diamonds, aircraft parts, and pharmaceuticals. However, Trump’s administration has indicated more tariffs may be forthcoming, with potential targeted measures including 100 percent tariffs on pharmaceuticals, which would heavily affect countries such as Ireland, Germany, and Belgium.

The latest tariffs have drawn criticism from UK business and trade unions. The GMB union described the measures as “ill-judged” and potentially damaging to business, warning that they undermine the so-called “special relationship” between the UK and the US. Market analysts also view the tariffs as a tool for President Trump to address his perception of unfair competition contributing to the US trade deficit, while generating additional government revenue.

This round of tariffs continues to add uncertainty to transatlantic trade relations at a time when businesses in both the UK and the EU are adjusting to changing global trade dynamics, requiring firms to rapidly adapt to new cost structures and regulatory environments.