UK tech startups sound alarm over US tariffs
The UK’s small and medium-sized tech firms have raised concerns following President Donald Trump’s imposition of a 10 per cent tariff on British goods entering the United States.
As part of a sweeping trade shift dubbed ‘Liberation Day’ by the Trump administration, these new levies have injected uncertainty over UK-US economic relations, provoking anxiety among British exporters.
This seismic shift to border commerce will mainly thwart small businesses across the UK, which are already navigating a volatile global market.
Furthermore, tech startups are among the most vulnerable, as they lack the financial resilience of their larger counterparts.
What’s going on with Trump’s tariffs?
Trump’s move formed part of a wider trade standoff. After Trump initially imposed a raft of tariffs on Chinese imports, the situation quickly escalated to a tit-for-tat exchange between the world’s two largest economies.
The fallout has now extended across the Atlantic, with America’s traditional allies also targeted, causing a major economic shock in a matter of days.
While the UK’s tariff rate of 10 per cent is lower than those slapped on EU goods, the decision to include Britain in the first place has sparked criticism, as well as caution, among the UK business sector.
UK tech startups
Small Business Britain founder and UK trade adviser Michelle Ovens CBE said that while around 12 per cent of SMEs currently export, they in fact account for at least a quarter of UK exports to the US.
“This announcement is of course creating understandable concern for businesses across the UK”, she said.
This is especially true for the UK’s tech startups, which have long depended on frictionless access to American customers and capital.
Russ Shaw CBE, founder of Global Tech Advocates and Tech London Advocates, warned that even a 10 per cent tariff could be “disastrous” for young firms in the tech space.
He told City PM: “Startups certainly have the most to lose from ‘Liberation Day’ – in times of financial difficulty, small firms tend to be the first to go.”
Even minor cost increases could be critical for early-stage tech firms. Many are heavily reliant on exporting physical products like electronics, IoT devices, or high-spec hardware, all of which will be vulnerable to Trump’s tariffs.
Meanwhile, others depend on cross-border partnerships with US-based manufacturers or distributing platforms, which now face higher operating costs.
Compounding this is the uncertainty surrounding custom procedures, delays, and rising insurance premiums – all of which could dis-proportionally affect firms with limited cash flow.
The US is also a key destination for British software firms and app developers, many of which generate the majority of their revenue from American users.
While services aren’t yet subject to tariffs, broader trade tensions could chill cross-border deals and investments.
“Startups have far less bandwidth to absorb fiscal shocks than their larger counterparts”, Shaw added. “The most damaging part of the Trump administration from a business perspective has been the introduction of instability to global markets, with smaller firms most at risk.”
“While the US has been the land of opportunity for decades, now is the time for firms to look again at where their international trade and expansion efforts are best focused”, Shaw advised.
UK’s response
A list of 8,000 goods have been identified as potential targets for UK counter tariffs – including whiskey, for example – though ministers are being urged by industry leaders to exercise restraint.
The CBI warned: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.”
The British Retail Consortium echoed this sentiment, saying countermeasures should only come as a “last resort.”
Tina McKenzie, policy chair at the Federation of Small Businesses, said that the situation underscored the need for targeted support.
“Tariffs are a real challenge to SMEs, and we need to protect the UK economy at this time”, she said. “The UK-US economic partnership needs to focus on supporting small businesses if it’s going to drive growth for both countries.”