Why UK Small Business Owners Should Be Paying Attention to TariffsWhy UK Small Business Owners Should Be Paying Attention to Tariffs
When you hear the word “tariff”, your mind might jump to big international trade deals or headlines about Brexit, but for UK small business owners, tariffs can have a very real, very local impact.
Whether you import products or materials, sell to customers overseas, or rely on a supply chain that crosses borders, changes to tariffs can directly affect your pricing, profit margins, and even customer relationships.
Here’s what every small business owner in the UK should know about tariffs and why it’s worth paying attention.
So What Are Tariffs Exactly?
Tariffs are taxes or duties placed on goods as they cross international borders. Most commonly, they apply to imports, meaning you pay a fee to bring certain products or materials into the UK. They can also apply to exports if you're sending goods abroad, depending on trade agreements with that country.
In theory, tariffs are meant to protect domestic industries, but in practice, they often lead to increased costs for businesses further down the chain, including yours.
How Tariffs Might Affect Your Small Business
Even if you're not directly importing or exporting, tariffs can still sneak into your costs. Here’s how:
1. Rising Supplier Costs
Many UK wholesalers, manufacturers, or product suppliers import goods from abroad. If they're hit with higher tariffs, those costs are often passed on to you, affecting your margins without you even realising why prices have crept up.
2. More Expensive Materials or Components
If your business relies on overseas parts or ingredients (think packaging, textiles, electronics, or food items) tariffs could mean you’re paying more for the same materials than you were last year.
3. Longer Lead Times and Admin Burdens
Tariffs often come with extra paperwork, customs checks, and delays at borders. That could mean longer wait times for stock, delays in fulfilling customer orders, or more admin time for you and your team.
4. Pricing Pressure
You might face tough decisions: absorb the extra cost and lose profit or increase your prices and risk losing customers. Either way, your pricing strategy might need to shift.
Recent Developments in UK Tariffs
Since the UK left the EU, businesses now face tariffs on certain goods coming from or going to the EU unless those goods meet rules of origin requirements. In other words, if your products are largely made outside the UK or EU, you might face extra charges, even when trading within Europe.
For example:
- Clothing brands importing fabric from Asia, then selling into Europe, may face tariffs both ways.
- Food and drink businesses using imported ingredients might not qualify for tariff-free EU trade.
And it’s not just the EU. Post-Brexit, the UK is striking new trade deals with countries like Australia, New Zealand, and members of the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). Each comes with its own set of tariff rules.
What Can You Do About It?
While tariffs might feel outside of your control, there are a few steps you can take to minimise the impact:
Review Your Supply Chain
Could you source materials locally? Are there UK-based suppliers who offer more predictable costs and delivery timelines?
Understand the Tariff Codes
Each product has a specific tariff code that determines how much duty is applied. Getting this right can help you avoid overpaying or underpaying and getting fined later.
Speak to a Specialist
Working with an accountant or customs advisor who understands international trade can be a huge help. They can advise you on duties, VAT, and compliance and spot potential savings.
Factor Tariffs into Your Pricing
Make sure you're building enough margin into your pricing to account for future changes. That way, you're not left scrambling when costs rise.
Tariffs might sound like something only big import/export businesses need to worry about, but if you’re a small business owner in the UK, they could be affecting your bottom line more than you think.
Whether you’re already feeling the impact or just want to future-proof your finances, it pays to be informed and proactive.
At Perk Accounting, we support small businesses with everything from everyday bookkeeping to business advice. If you're unsure how tariffs affect your business or want to make sure you're not leaving money on the table, get in touch for a free chat.
