Tariffs back on the agenda

What’s happening now?

President Trump had threatened to impose new tariffs on goods from the UK and some other European countries as part of a campaign for control of Greenland, prompting a strong diplomatic response from the UK and EU. Following what he described as a “very productive meeting” with NATO Secretary General Mark Rutte, those tariff plans have been put on hold.

Mr Trump is now proposing cash incentives to Greenland residents in exchange for territorial and economic concessions, though details remain unclear and no agreement has been reached.

It is hard to see a deal progressing without local support, and if this approach fails, the prospect of tariff threats returning remains very real.

How does this compare with previous tariffs policy?

These developments follow the broader pattern of President Trump’s use of tariffs as tools of economic and foreign policy.

Tariff policy was a major feature of his first term, particularly in disputes with China and he has remained committed to this strategy throughout his second term, despite proof of economic harm to the US.

In his second term, the US has implemented new tariffs against multiple countries, though some concessions were made later.

Why this time is different 

Previously, Mr Trump’s use of tariffs was meant to achieve economic objectives and to address perceived unfair trading – perceptions that were rooted in fact.

The new round of tariff policy is different. This time, tariff threats are explicitly intended to support territorial and military objectives.

This creates new legal and diplomatic challenges, especially since the territory in question is owned by a fellow member of NATO.

These new moves, coupled with ongoing strife in other parts of the world, will undoubtedly extend geopolitical uncertainty and instability into 2026, holding back global economic recovery.

What is the impact for the food system?

The exposure of the UK food system to US tariff policy is currently limited and focused. The US takes only 11% of UK food and drink exports (data for 2024 - the last year before the current Trump Presidency).

Two-thirds of this is beverages, mainly spirits. If tariffs were imposed on the UK, the greatest impact would fall on the spirits sector and, likely on Scotland, in particular.

On the import side, the US supplies about 6% of UK food and drink imports. These are mostly wine, spirits fruit, veg and confectionery.

If the UK imposed tariffs in response, the effect would likely be inflationary, at least until these imports could be substituted from other sources.

But the overall direct effect may be marginal, with the effect being masked by other inflationary forces such as labour and packaging costs.

Resilience threat

The greater risk lies elsewhere and could be longer lasting. Restrictions on non-food trade – electronics, robotics, software, and biotech could be far more damaging, impacting innovation and businesses across the supply chain.

The UK food system depends on these items for future development and to build resilience. Progress becomes harder if tools and technology become too costly or simply unavailable.

If there were to be a broad breakdown in the global order (or simply an erosion of the rules-based status quo), this would have significant implications on global trade routes, energy prices, and markets.

Disruption of this order would of course have a ripple effect on the UK food system in the form of higher input prices, energy prices and uncertainty, hitting inflation and availability.

UK food businesses cannot change the outcome of the President’s approach, but amid heightened geopolitical risk, taking action to strengthen supply chains and build resilience is essential.

A forensic understanding of vulnerabilities, coupled with pragmatic decision‑making, can deliver greater stability and foresight across exposed supply chains.