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Since taking office, President Trump has imposed significant tariffs on a wide range of goods imported into the US. These actions sharply reverse historic US trade policy which had been one of continuous reduction in tariff rates. As a result of President Trump's actions, average US tariff rates are now estimated to be at their highest level since the 1930s.
While the legality of some tariffs may be in doubt (the US Supreme Court will start hearing legal argument on this question in November) the UK Government has taken steps to mitigate the impact for UK businesses exporting to the US. An agreed US – UK Economic Prosperity Deal, confirms that the US intends to reduce tariff rates on UK goods in industrial sectors that are of importance to the UK. In June 2025, this resulted in agreement for an annual quota of 100,000 car exports to the US to be subject to a tariff rate of 10% (reduced from 27.5%) and a similarly reduced 10% rate for automotive parts. US tariffs on exports of aerospace goods will also return to preferential, most favoured nation, rates.
Negotiations for tariff reductions in other sectors are ongoing. This means that UK businesses exporting goods to the US are likely to feel the effects of higher tariffs for some time. Read our note about how US tariffs will interact with UK income and corporation tax as well as transfer pricing and VAT.
The US has not (yet) imposed tariffs on services, although President Trump has said that 100% tariffs might be imposed on films made outside the US. There is little further detail, so it is not clear how a proposal to impose charges on foreign film production would work in practice. The issue is of significance to the UK which has a film sector worth £1.36bn and which employs more than 195,000 people. The Government has confirmed that it is in active discussion with the US about the issue and will take a calm and steady approach in dealing with anything that emerges from these discussions.
In terms of taxes imposed by jurisdictions that affect US businesses, the Trump administration has been severely critical about digital services taxes. It argues these unfairly target US technology companies, are extraterritorial, and discriminatory. Despite this the UK, in common with other countries including some EU Member States, continues to impose a charge on the UK revenues of search engines, social media services and online marketplaces. Liability to UK DST arises where a group's worldwide revenues from such digital activities exceeds £500m with more than £25m of that revenue deriving from UK users. Once the thresholds are met, a 2% charge applies on revenue above £25m that can be attributed to UK users. There has been much speculation that the UK might either increase the thresholds or reduce the rate. There has even been suggestion that the UK might follow Canada's lead and abolish its DST altogether in the hope doing so will facilitate further beneficial trading arrangements with the US. This has not happened to date and it is notable that that the UK's DST tax was not mentioned in the Economic Prosperity Deal suggesting that the UK Government is standing firm on its DST for now. It is perhaps helpful that to the UK's negotiating position that its DST can at least be framed as a temporary tax which will be repealed in the event of a global solution on Pillar One.
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