US tariff reset erodes UK’s advantage as exporters prepare for the next regime

The Trump administration has replaced the reciprocal tariffs regime that was struck down by the Supreme Court with a non-discriminatory tariff tool, shifting tariff risk to a more uncertain carve-out-driven framework. In this new regime, the UK’s prior relative advantage for non-exempt goods is no longer assured and outcomes depend on sector carve-outs, product mix and enforcement.

On Friday (20 February), the Court’s 6–3 ruling found that President Donald Trump lacked legal authority under the International Emergency Economic Powers Act (IEEPA) to impose the “Liberation Day” reciprocal tariffs. Almost immediately, the administration re-implemented tariffs under Section 122 of the 1974 Trade Act, imposing a uniform global rate.

Initially, Trump signalled a blanket 10% global tariff rate, then lifted it to 15% on Sunday (22 February), which reflects the statutory maximum, for up to 150 days unless Congress extends. In theory, the president could declare a new emergency upon expiry and restart the 150-day period. “This would create a de facto perpetual tariff instrument,” ING wrote.

However, given the prospect of legal challenges, this new tariff regime may function as a holding measure while the administration rebuilds the legal basis for longer-term trade restrictions, rather than a settled policy framework.

Crucially, the Court’s ruling does not resolve whether US importers – and, depending on contract terms, UK exporters – can seek rebates or refunds for the $130bn in tariff duties already collected under IEEPA, potentially triggering years of litigation, delays and bilateral brinkmanship.

Impact on UK exporters and importers

For the next 150 days – at least – the UK will no longer be subject to the preferential 10% rate, because the Section 122 statute does not allow differential country-level tariff levels. For now, the UK is caught up in a “one tariff level must fit all” legal framework, meaning any UK advantage would have to come via product carve-outs and exemptions, not a country rate.

The headline five-percentage-point rise will not apply uniformly to UK exporters. Exemptions and existing sector tariffs mean the real impact depends largely on products exported. For instance, multiple product categories are explicitly exempt – such as pharmaceuticals, electronics, aerospace/civil aircraft components, critical minerals and certain agricultural goods. Elsewhere, steel, aluminium and autos are subject to Section 232 tariffs, so the Section 122 surcharge does not stack on top of them.

The British Chambers of Commerce (BCC) estimates that the extra five-percentage-point increase in tariffs on a wide range of UK goods exports to the US could raise the cost of UK goods exports to the US by between £2bn and £3bn, except those covered under the Economic Prosperity Deal (EPD), which could impact 40,000 British companies. But UK lobbying efforts are likely to focus on positioning for whatever tariff regime follows the 150-day window, possibly on securing additional product-specific carve-outs under the Economic Prosperity Deal (EPD).

The near-term risk for UK exporters to the US is margin pressure and lost competitiveness versus peers, particularly EU firms, as UK treatment converges back toward EU-equivalent levels for non-exempt goods. For UK importers, the direct impact is more limited, but second-order effects may include FX volatility, supply chain re-routing and possible tightening in global financing conditions.

Planning implication

This episode highlights how trade agreements and frameworks can prove fragile when they lack formal congressional backing. The renewed uncertainty underscores the need for UK exporters and importers to increase operational resilience rather than trying to forecast the exact outcome. Unless US guidance changes, UK firms will need to plan on the working assumption that 15% is the baseline for non-exempt goods. FX volatility, sector carve-outs and last-minute changes should all be expected.

For UK exporters, the main risk is sustained uncertainty around market access, pricing, currency volatility and contract terms as US trade policy continues to oscillate. To navigate the risks ahead, businesses should focus on stress-testing cash flows across scenarios and prepare for potential demand shocks. 

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