The key question for UK businesses is what action should they be taking now. In light of the volatility of the situation, our advice is not make any immediate knee-jerk decisions.

A change to US tariffs seems to be an almost daily occurrence of late. If there was any doubt about how Indirect Taxes (in this case Customs Duty) can impact and shape economic policy, that doubt has likely now vanished.

The key question for UK businesses is what action should they be taking now. In light of the volatility of the situation, our advice is not make any immediate knee-jerk decisions.

As of early April 2025, businesses were faced with the prospect of 10% tariffs on most UK goods going to the US, 20% on EU goods and 54% on Chinese goods. A few days later, it became a 10% tariff on goods originating from anywhere except China for the next 90 days, with some Chinese Origin goods being subject to a significant 145% tariff. China retaliated by imposing a 125% tariff on goods with US Origin. Latest news is that smart phones and related items from China are now exempt. 

Never could a situation have more clearly demonstrated the truth of the phrase “business hates uncertainty." 

What action could/should UK businesses take now?

1. In this time of uncertainty, the most important message must be – don’t panic and don’t make rash decisions. The position is changing daily so a decision that might seem the right one today could be the wrong one by tomorrow.
2. Monitor the position continuously – Businesses will need to be fully up to speed on the position in the coming weeks to inform short and longer term actions. Consider creating a dedicated team to do this and report back.
3. It will be more important than ever to understand the country of origin of goods. Businesses need to fully understand their supply chain so they can assess the potential impact of any decisions made by the US and any retaliatory measure by other countries. Remember, it’s the Origin of the goods that is important, not where they were sourced from. So, goods originating from China which are on-sold by a UK business with no substantial transformation in the UK will still be Chinese goods.
4. Ensuring correct tariff classification will be equally important, particularly for those sectors such as car manufacturers which are subject to additional sector specific tariffs.
5. Prepare for potential delays in delivery times and customer queries as customs officials, clearance agents and customers in the US get used to the changes.
6. It’s critical to understand which party will be responsible for paying any additional tariffs. Businesses therefore need to understand the Inco-Terms (delivery terms) under which they are supplying goods.
7. Prepare for customer requests to absorb some of the additional costs of goods being imported. Have a consistent approach in this area.
8. Businesses should look to maximise savings. For example, is now a good time to introduce inward processing or a customs warehouse on goods coming into the UK? Can the way in which goods are being valued for import be reconsidered?
9. Make use of low value import reliefs where available.

We are here to help
The Azets VAT team is here to help clients navigate through these turbulent times. Please get in touch with one of our VAT specialists if you would like to discuss your situation and how to manage any impact.

Information correct as at 14 April 2025. Please get advice before taking or refraining from taking any action based on the contents of this article.