US Tariffs – Implications of President Trump’s Greenland statement

21st January 2026

Update from BCC on Trump's Tariffs

What did the President say on 17 January?

If 8 European states, including the UK, oppose the US acquisition of Greenland, and following 
recent military personnel activity by them there, tariffs of 10% would be applied to goods of 
those countries imported into the US on 1 February, with a further 15% increment being added 
to tariff rates on 1 June. Previous tariff announcements have been related to either balance of 
trade or national security concerns. This is the first time that a geopolitical matter has been the 
principal driver of tariff proposals in the President’s second term in office, rather than being 
linked to claimed trade imbalances. No Proclamation or Executive Order has been issued by the 
President to implement this plan as yet, and that may not emerge until very close to 
implementation judging past precedents of tariff announcements in 2025 and early this year.

What does this mean for UK businesses?

There are nearly two weeks to go until the tariffs would be due to take effect, with potential 
negotiations in the interim, but so far the President has doubled down on his tariffs statement. If 
the legal basis is established for across the board tariffs, the impacts on £60bn of UK annual 
goods exports to the US would be £6bn in additional annualised costs from 1 February to be met 
by US business, consumers, or UK companies themselves in some cases, rising to £15bn in 
annualised additional costs from 1 June. The impact of these new proposed tariffs is 
therefore greater in magnitude than the US tariff changes made in 2025. UK companies who 
supply goods to US customers via delivery duty paid (DDP) trading terms would have to meet 
these costs directly. Otherwise the customers will meet the costs on importing the goods. 
Overall effects of greater uncertainty, reduced orders, higher costs, and lower margins for the 
40,000 UK exporting firms trading goods with the US.

How are tariffs currently affecting the UK and US economies?

The Office for Budget Responsibility forecast in November at the time of the Budget that UK 
export growth would be 3.3% in 2025 but fall markedly to 0.3% in 2026. The Yale University 
Budget Lab estimates that 0.4% would be knocked off US economic growth in 2025 from tariff 
effects, but that growth of 3.2% was still expected for 2025. Higher US tariffs could have 
negative effects on UK growth, with estimates of 0.1% to 0.3% annualised growth reductions 
from a range of UK economic forecasters on 19 January depending upon the final scale of 
confirmed tariffs.

Surveys from the British Chambers throughout 2025 found that tariffs were one of the main 
causes of declining business sentiment (alongside UK tax rises) - after the April tariff 
announcement, 62% of firms with exposure to the USA and 41% of those without expected a 
negative impact, mainly in terms of increased prices.

How might the tariffs be introduced?

The implication from the President’s statement is that these would be new duties, stacked upon 
existing tariffs. 
Section 232 tariffs – steel, aluminium, copper
In sectors such as automotive, steel, aluminium, copper, and semiconductors where duties 
under section 232 of the US Trade Expansion Act 1962 are in place, the President has powers to 
vary existing section 232 duties. This would have to involve exemptions for those countries not 
2 party to the dispute over Greenland. Currently on UK steel, aluminium and many derivative 
products of these alloys 25% duties have applied since March 2025. A phased rise in duty could 
take the applicable rate up to 50% by early June.

Semiconductor goods

The President has recently announced 25% duties on semiconductors and derivative products 
unless in supply chain sectors seen as crucial in the development of AI or other critical supply 
chain sectors. Duties on semiconductor products in scope could be similarly doubled by early 
June.

Automotives

The UK and US reached a deal last year on a 100,000 vehicle annual quota for UK car exports to 
the US to face lower tariffs of 10% compared with the 27.5% section 232 duties applied from 
spring 2025. This covers just about all of the UK’s car exports to the US, focused on the upper 
end of the market. There are no indications for now that this deal is being reconsidered, but if 
the tariffs suggested by the US President were to go ahead and the deal was suspended, 
powers do exist to extend the scope of the duties on cars once more to affect UK car exports on 
a similar scale to last May.

Pharmaceutical products

A deal was reached in December to ensure that tariffs on pharmaceutical exports from the UK 
to the US remained at zero. An investigation is underway by the US Government on potential 
new measures under section 232 applicable to the rest of the world, but general section 232 
tariffs are not in place yet for pharmaceutical products which would make increasing tariffs on 
those much more difficult for the President.

Other goods sectors

In other goods sectors from food and drink to clothing to industrial goods, new tariffs would 
most likely be levied by Executive Order under the International Emergency Economic Powers
Act (1977) (IEEPA) which the President used to introduce his “reciprocal” tariffs from early April 
2025. In affected sectors, the additional rate applicable to UK goods entering the US is 10%, 
stacked on the pre-existing US most-favoured nation tariff rates on imports. For example, the 
tariff on a woollen jumper exported from the UK to the US is currently 22% (12% MFN plus 10% 
reciprocal tariffs). If the new tariffs stacked on the existing IEEPA rates, this would produce a 
combined tariff rate of 20% plus MFN from 1 February, and 35% plus MFN from 1 June. Tariffs 
on Scotch whisky could be 35% from 1 June.

National security is one of the purposes which can be used to invoke IEEPA but the President’s
use of the Act is being challenged in the Supreme Court, in a case brought by 1,000 US firms.
The Supreme Court ruling, when it comes, will have an impact on the usage of IEEPA authority
for some tariffs. If deemed unconstitutional, Plan B for the President could be using Section 122
of the Trade Act (1974) - giving him the power to levy tariffs of up to 15% for rolling 150 day
periods. This would only allow use of the Act to deal with balance of payments issues
however and not matters of national security, which is the President’s justification for the
Greenland-related tariffs. An adverse ruling would present a spanner in the works for any 
further usage of IEEPA authority, but may not directly apply to future usage based on a distinct 
national security basis.

Can the US levy different tariffs on individual EU states?

Yes, in distinguishing between different states on tariffs, the US approach is focused on country
of origin. For example, goods from Guadeloupe and Martinique were subject to a different tariff
to the EU in 2025 under IEEPA, despite being part of France and the EU. It would make EU-US
trade increasingly complex with new rules of origin required to be developed. The EU is
considering standing up its proposed tariff counter-measures suspended following the
Turnberry Agreement last autumn as well as usage of its Anti Coercion Instrument (ACI).
Does the UK have an equivalent of the EU’s economic security powers, especially its ACI?
Not currently. Prior to this dispute, DBT was due to consult on expanding Ministers’ legal and
policy toolkit to deal with complex trade-related disputes, with potential legislation being
examined for the King’s Speech in May.

BCC Insights Unit snap research findings on US tariffs plans
Using its unique access to companies across the UK, the British Chambers of Commerce 
award winning Insights Unit carried out a snap survey of nearly 350 businesses, over a 
24-hour period between Monday and Tuesday lunchtime this week (19-20 Jan). 

• A third of surveyed businesses (33%) say they will be exposed to the latest 
US tariff threat
• Of those exposed to the tariff threat, 33% of businesses are already taking 
action
• 55% of those exposed say they see risk, but have yet to take any action

Of firms exposed, 17% are carryingout contingency planning and 12% are already 
planning a strategic shift to reduce exposure to the United States. While, 4% of exposed 
businesses are carrying out active adjustments, changing aspects of their operations. A 
further 12% of firms say they’ll be exposed but expect no change because they think the 
tariffs won’t be implemented. 
What should Government do?

Our DG met with Minister Bryant in a pre-arranged meeting on 19 January and discussed US 
tariffs impacts upon UK companies. DBT’s US team are joining us on a special BCC Trade Policy 
Committee meeting with the Network on US tariffs on 22 January. We have surveyed companies 
this week through the Insights Unit, and looking to host a BCC webinar on US tariffs in the week 
of 26 January. We have been active in pressing key business lines when the President’s 
statement was released and daily since then both in print, online and broadcast media.

The uncertainty facing multiple sectors even with the benefits from the Economic Prosperity 

Deal still in place is real. We urge calm but firm negotiations to de-escalate the current 
situation and recognise the mutual benefits to both economies of transatlantic trade and 
upholding the commitments of the deals in place. Measures we asked for last year in the 
initial phase of new tariffs, included:

• Additional export finance lending capacity from UKEF – was extended by HMG to 
£80bn last spring. DBT announced on 20 January plans to bringing forward new 
legislation to expand this capacity very soon.
• Support for firms facing cash flow pressures through expansion in scope of British 
Business Bank loans. Extended by DBT last spring.
• Examine scope for targeted further unilateral UK Global Tariff (MFN) reductions to 
support key manufacturing sectors and consumers with cost pressures.

These are measures which HMT/DBT/UKEF should consider revisiting in the new landscape with 
potential additional US tariffs applying from 1 February