Donald Trump’s new trade tariffs have come into effect at 10%, lower than the 15% rate he threatened over the weekend, offering some relief to UK firms but also “fresh uncertainty”, according to a business group.
The US president signed an executive order to impose new levies from February 24 after the Supreme Court in America overturned his previous import taxes policy in a ruling on Friday.
But the new rate is lower than feared, after Mr Trump declared on Saturday that he would increase sweeping global tariffs to 15%, up from the 10% he initially announced in the immediate hours following the ruling.
The 10% levy that has come into effect has been imposed for 150 days, until July 24, under section 122 of the Trade Act of 1974, which does not need approval from Congress.
It will apply on top of America’s most favoured nation duties.
The British Chambers of Commerce (BCC) said that while firms will be relieved, there are fears the higher 15% tariff rate could still be imposed at any time.
William Bain, head of trade policy at the BCC, said: “While a new 10% tariff rate, instead of the threatened 15%, will provide some relief, it shows how difficult it is for businesses to plan ahead.
“It is far from clear what will happen next and whether a higher tariff rate is still on the way.
“Despite the immediate reprieve, there is fresh uncertainty for UK firms exporting goods to the US.
“This makes it very difficult for firms to understand the prices and margins they will be able to secure for their goods, currently under production, for export in several months’ time. Inevitably this will have an impact on their sales and hit the economy.”
Mr Bain added: “The risk of further tariff pain to come is still real and the Government must do everything it can to prepare for the worst.”
Mr Trump signed an executive order on Friday night that enabled him to bypass Congress and impose a 10% tax on imports from around the world, after his “reciprocal tariffs”, introduced under an emergency powers law in April, were struck down by the US Supreme Court.
In a post on Truth Social on Saturday, he then said he would be raising this rate to 15%.
Downing Street said on Monday that “nothing is off the table” in the UK’s response to the tariff threats, leaving open the possibility that Britain could impose reciprocal trade levies on American goods and services.
But No 10 but insisted it was focused on “constructive engagement” with the Trump administration as a trade war would harm businesses.
At the higher level, it would mean an extra 5% increase in tariffs on a significant number of exports to America, except those covered under a transatlantic trade deal carved out between Sir Keir Starmer and Mr Trump.
Stock markets worldwide saw heightened volatility on Monday and the US dollar weakened , sending investors flocking once more to safe haven assets such as gold.
In London, the FTSE 100 index closed on Monday down just 2.15 points at 10,684.74, although the FTSE 250 was harder hit with a near 1% fall.
The FTSE 100 was 0.2% lower in early trading on Tuesday after heavy falls overnight on America’s stock market, with the Dow Jones tumbling 1.7%, although much of this was due to worries over the impact of artificial intelligence (AI) on data and IT consulting sectors.
Derren Nathan, head of equity research at Hargreaves Lansdown, said investors were “on edge as AI fear and tariff uncertainty hang thick in the air”.
