A tariff is a tax charged on goods when they cross an international border and is usually paid by the importer. Governments use tariffs to raise revenue, protect domestic industries or apply pressure during political disputes. Regardless of the intention, tariffs feed through into higher prices, tighter margins and greater administrative burdens for businesses.

Since April 2025, global tariff policy has changed rapidly. The U.S. has imposed sweeping import taxes on a wide range of countries, while the EU has scrapped its de minimis duty exemption for low-value parcels. In October 2028, the UK will follow the EU by scrapping its own £135 parcel de minimis threshold.

This guide highlights the latest global tariff changes, and the steps small UK businesses can take to mitigate them. At DS Burge & Co we offer business tax advice to provide greater certainty and help improve the profitability of your small business.

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Recent Tariff Changes Explained

There have been several recent tariff changes that have impacted small UK businesses, most notably the direct and indirect impact of global U.S. tariffs. You do not need to trade directly with U.S. companies to be affected. A rise in suppliers’ costs, a fall in demand from overseas customers, and a shift in global pricing can all impact your business without a single transaction of your own crossing through U.S. customs.

Where your goods do cross a border, the tariff position is rarely as simple as one headline rate. Ordinary customs duty, sector-specific trade tariffs and country-level surcharges can all apply to the same shipment at once, creating a stacking effect. But an exclusion attached to one measure can just as easily prevent it applying alongside another, so it is a mistake to simply add headline percentages together. The rate quoted in a news report rarely reflects the final figure payable.

Certain sectors have been significantly affected by recent tariff changes, including businesses that rely on or trade in steel, aluminium, copper and automotive goods. E-commerce businesses selling low-cost consumer goods directly to individuals are also being reshaped, by the removal of de minimis relief in several major markets.

U.S. Tariffs

As of 24 July 2026, U.S. importers buying goods from the UK, or from suppliers who trade with the US, now face a 10% duty on the value of those goods when they enter the US. Unlike previous measures, this tariff has no built-in expiry date. This is the third version of U.S. tariff policy in under eighteen months, and in practice the cost of these tariffs is rarely absorbed entirely by the U.S. buyer, so it affects the price UK exporters can competitively offer.

Broad “reciprocal” tariffs were announced by the U.S. government in April 2025 under emergency economic powers, before the U.S. Supreme Court ruled in February 2026 that these tariffs were illegally imposed. A temporary 10% surcharge followed, capped by law at a 150-day expiry period. From 24 July 2026, this has been replaced with a 10% tariff for UK exporters on a more permanent basis, with other countries facing a higher tier of 12.5%.

For small UK businesses, the key practical points are:

  • 10% baseline tariff rate for UK exporters: Placing the UK in the lower of the two tiers used by the U.S. government.
  • No expiry date: Unlike the temporary measures that preceded it, making it a more stable assumption to plan around.
  • Certain sectors are taxed separately: Steel, aluminium, copper, lumber and semiconductors face further duty under Section 232 measures, on top of the baseline rate.
  • UK vehicle exporters have their own rate: Under the 2025 Economic Prosperity Deal, the first 100,000 UK built vehicles exported to the U.S. each year benefit from a reduced 10% rate, with further reductions for UK steel and aluminium still being finalised.

Derivative Products and Product Origin

The imposed U.S. tariffs also apply to “derivative” products, meaning finished or semi-finished goods containing steel, aluminium or copper as a component. This now covers hundreds of product codes across machinery, vehicles, tools and electrical goods, capturing a broad range of products.

For UK businesses that operate with derivative products, it is important to consider:

  • Shipping origin: The country a product was sent from is not necessarily the country that determines its tariff treatment.
  • Metal origin must be reported separately.For steel and aluminium derivatives, the country where the metal was melted and poured, or smelted and cast, must be declared separately from the country the finished goods were shipped from.
  • Assembly location: A product assembled in one country from metal sourced elsewhere can still be tariffed based on that metal’s true origin.
  • Metal content is not treated uniformly. Treatment varies by HTS classification, product value or weight.

If your business makes, assembles or sells products containing steel, aluminium or copper, you must check where the metal itself originated, not just where the finished product was made or shipped from.

Indirect Exposure

A UK business does not need to trade directly with U.S. companies to be impacted by the effects of U.S. tariffs. Indirect exposure can arise when:

  • A supplier is affected: Higher import costs are passed on to UK businesses.
  • A customer is affected: A reduction in demand for a UK made component, because of imposed U.S. tariffs.
  • Global prices shift: A rise in the price of goods affected by U.S. tariffs, indirectly shifts prices for other goods in the market.

Duty Drawback

Duty drawback enables a UK business to reclaim up to 99% of U.S. duty already paid, if the imported goods are later exported again or destroyed rather than being sold in the U.S. This policy is relevant to UK businesses that bring goods into the U.S. through a subsidiary or fulfilment partner, and later export them to their final destination.

Successful claims depend on the specific drawback category of the goods, and records linking the original import to the export will need to be kept for several years. Not every duty qualifies for drawback, and it is important to seek specialist advice, particularly when importing large volumes of goods through the US.

De Minimis Removal

De minimis relief enables low-value parcels to enter a country without customs duty, and usually without full customs paperwork, provided their value falls below a set threshold. All three of the UK’s major markets, the US, the EU and the UK itself, are now removing or scaling back this relief.

United States:
  • No de minimis relief: Every commercial shipment, whatever its value or origin, now needs a full customs entry, HTS classification and duty payment.
  • Permanent change: Confirmed by CBP regulation in June 2026.
  • Impact for UK sellers: Higher landed costs, more documentation, and in some cases longer delivery times and more parcel refusals.
European Union:
  • Removal of €150 import duty exemption: Since 1 July 2026, a flat rate duty of €3 per item applies, pending a revised system once new EU customs infrastructure is ready.
  • VAT separated: Import One Stop Shop Scheme (IOSS) is a VAT scheme only, it does not cover the new customs duty.
  • Impact for UK sellers: Both VAT and customs duty now need managing together, with more detailed item level data required.
United Kingdom:
  • The £135 exemption still applies: Import VAT still applies.
  • Removal confirmed: Following the Autumn Budget 2025.
  • Timing: October 2028, having been brought forward from March 2029.

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What UK Small Business Owners Should Know

Commodity Code (or Tariff Code)

A commodity code classifies goods for customs purposes and determines customs duty, import VAT, and any quotas or restrictions that apply.

It is the responsibility of the importer to:

  • Use the correct code: Even where a supplier has provided one.
  • Correctly classify goods: Incorrect classification can result in duty being under or overpaid, causing border delays or penalties.
  • Record keeping: Keep records for how each code has been determined and review the code whenever a product or its components change.

Rules of Origin

Customs origin is not the same as the country a product was shipped from. It is a separate legal test that determines where a product is treated as originating from for tariff purposes.

If your product contains imported components, you will need evidence to support its origin. In practice, this means keeping:

  • Supplier declarations: Confirming where components were made.
  • Bills of materials: Showing what each product contains.
  • Manufacturing records: Showing where meaningful production took place.

A product is not classed as UK origin simply because limited work or final assembly has occurred in the UK.

Incoterms

Incoterms are a set of internationally recognised rules, maintained by the International Chamber of Commerce, allocating responsibility between a buyer and seller: who arranges transport, who handles export and import formalities, how costs are split, and when risk transfers.

Incoterms do not decide who legally owns the goods, the payment terms, the applicable tariff rate, VAT registration requirements, or whether import VAT can be recovered.

DDP and PDDP

DDP, or Delivered Duty Paid, is an Incoterm under which the seller takes full responsibility for delivering goods to the buyer, including transport, export and import clearance, and paying any customs duty and import VAT along the way. The buyer receives the goods with nothing further to pay.

DDP is a popular Incoterm for business to customer (B2C) sales and in many cases can be the only realistic way to make a sale, since many consumers refuse parcels with unexpected duty bills. To utilise DDP, UK sellers are required to:

  • Understand obligations as an importer of record: Including local VAT or registration requirements.
  • Accurately incorporate current tariff data into your pricing: Incorrectly pricing tariff data or failing to calculate up to date tariff movements could erode profit margin.
  • Correct customs data and valuations: To reduce delay and dispute risk.
  • A clear returns process: A separate duty reclaim is required for returns.

PDDP, or Postal Delivered Duty Paid, is a similar concept offered by postal operators and couriers for smaller parcels. Duty is collected upfront by the carrier, so that the buyer faces no charge upon delivery. PDDP is not an official ICC Incoterm unlike DDP, but can be a valuable service for sellers, particularly for lower value shipments.

DAP

DAP, or Delivered at Place, is an Incoterm under which the seller arranges and pays for transport to the agreed destination and handles export clearance, but the buyer takes over from that point, handling import clearance and paying any duty and VAT.

DAP is best suited for business-to-business sales (B2B) where the buyer can manage import formalities and handle VAT and duty through their internal accounts team. It is important that both seller and buyer have clear pre-sale communication about potential charges, and rising tariffs, to ensure transparency of the final price.

EXW

EXW, or Ex Works, is an Incoterm under which the seller’s only obligation is to make the goods available at their own premises. From that point, the buyer handles collection, transport, export and import formalities, and any duty and VAT, with risk transferring to the buyer at the earliest possible stage.

This gives the buyer maximum control over logistics but full exposure to any tariff changes. EXW can additionally create difficulties where export evidence is required to support the seller’s own VAT treatment, even though the seller has no involvement in the export itself. For further VAT guidance, read our article on VAT on international transactions.

How UK Small Businesses Can Adapt to Tariff Changes

Understand exposure

  • Identify exposure: Mapping out direct and indirect exposure, including the impact on key suppliers or customers.
  • Check commodity code and product origin: It is important not to rely on supplied codes without review.
  • Improve internal supplier and product data: Ensuring accurate origin, composition and valuation data, to reduce delays and the potential for incorrect duty payments.

Protect margins:

  • Model full landed costs: Including duty, VAT, carrier fees and admin charges, not just the headline rate.
  • Run tariff scenarios: Test the impact of tariff increases on profit margins, before potential changes take effect.
  • Review quotes and validity periods: Ensure that fixed quotes take into consideration potential tariff changes, to ensure goods don’t become unprofitable before shipping.

Manage risk:

  • Incoterms: Deliberately choose each Incoterm for each transaction and give clear instructions to your customs agent.
  • Diversify suppliers: Having a wide range of potential global suppliers to reduce reliance on a single country of origin.
  • Review available customs reliefs: Including duty drawback where volumes justify it.
  • Plan cash flow and returns processes: To ensure that duty is not being paid earlier or more often than required.
  • Assign internal responsibility: To ensure close monitoring of tariff developments and changes.

The above information is a small selection of potential steps that a small UK business can take to adapt to global tariff changes. We offer small business tax advice for tailored support in reviewing your exposure to tariffs and trading options available to you.

Conclusion

Recent global tariff changes have and will continue to have a significant impact on small UK businesses, both directly and indirectly. The U.S. has adjusted tariff rates three times in the past eighteen months, while the EU has removed de minimis for low-value parcels, with the UK due to follow suit in October 2028.

It is highly likely that there will be further changes to global tariff rates, requiring careful planning and consideration of suppliers, Incoterm responsibilities and profit margins. For small UK businesses it is important to take steps to minimise risk and ensure close internal monitoring, to remain compliant and maintain profitability.

 At DS Burge & Co, our team work closely to support small UK businesses in navigating global tariff changes. Speak to one of DS Burge & Co’s expert team today to mitigate tariff risks for your business.