- US market access is no longer automatic for UK startups.
- Tech firms face higher costs and growing trade uncertainty.
- Founders are shifting towards diversified, resilient growth strategies.
For a long time, the US has been the obvious first stop for ambitious UK startups. It offers scale, deep pools of capital, and a kind of global validation that few other markets can match. Landing US clients or investors has often been seen as proof that a company has arrived.
That assumption is now being quietly questioned.
Since April 5, 2025, most UK goods entering the US have been hit with an additional 10 per cent tariff under trade measures introduced during the presidency of Donald Trump. Services remain outside the scope of these tariffs, but for many tech startups, particularly those dealing in physical products or cross-border infrastructure, the shift has added friction where there used to be flow.
The US still matters. What has changed is the ease of getting in.
A flat 10 per cent changes the math
According to the Department for Business and Trade, the 10 per cent tariff applies to most UK goods exports to the US, sitting on top of existing import duties. Steel and aluminium remain subject to a separate 25 per cent tariff, while autos were initially hit harder before being partially eased under a later UK-US deal.
For tech startups exporting hardware, electronics, or connected devices, this has altered the cost structure almost overnight. On April 8, 2025, City A.M. reported that UK tech SMEs were raising concerns about whether these higher costs could realistically be absorbed or passed on to US customers without damaging demand.
Legal analysts at Browne Jacobson described the situation as disruptive rather than catastrophic. Their analysis pointed out that tariffs raise landed costs and force businesses to revisit pricing, supplier contracts, and even product design. Some companies, they suggested, may look to automation or AI-driven efficiencies to manage rising expenses, although this is not a simple fix.
What is already clear is that uncertainty is shaping behaviour. Katrina Young, founder of KYC Digital, told Eastern Eye that trade volatility is increasingly influencing how founders and investors think about expansion.
“Access isn’t automatic anymore,” she said. “We’re seeing investor hesitancy and delayed cross-border decisions around major trade announcements. Startups now have to build for uncertainty, not assumption.”
The wider trade relationship helps explain why these shifts matter. Data from the Office for National Statistics shows that US imports from the UK totalled £57.1 billion in 2024, down 2 per cent on the previous year. Services were not subject to tariffs, but the fall in goods trade underlines how sensitive the relationship can be.
Services are exempt, but risk still travels
At first glance, service-led tech firms might appear insulated. Software, digital platforms, and most SaaS products are not directly affected by tariffs. But analysts warn that this distinction only goes so far.
In a January 10, 2026 analysis, The Conversation argued that tariffs disrupt innovation not just through pricing, but through uncertainty. UK startups working in AI, cybersecurity, or semiconductors often rely on US-based cloud infrastructure, research partnerships, or manufacturing capacity. Even if the product itself is exempt, decision-making can slow when trade relations become unpredictable.
Trade body techUK echoed this concern in its April 1, 2025 briefing. It noted that tariffs are applied on an ad valorem basis, meaning the cost impact grows with product value. For advanced technology equipment, even a flat 10 per cent can quickly become material.
There is also the practical question of who pays. The Department for Business and Trade has advised exporters to revisit Incoterms carefully. Under delivery duty paid terms, tariff liability falls on the UK exporter rather than the US buyer. As reported by Gowling WLG, businesses are being urged to double-check harmonised system codes to avoid delays or misclassification.
Young said these details now shape core strategy, not just compliance.
“Cloud dependency risk, talent movement barriers, and tightening data regulations are part of the innovation equation now,” she said. “If your system assumes seamless US access, that’s a vulnerability.”
Relief deals helped, but didn’t reverse course
A UK-US economic deal agreed in June 2025 softened the impact in some sectors. Auto tariffs were reduced from 27.5 per cent to 10 per cent under a 100,000-unit quota, and aerospace duties were removed altogether. The Department for Business and Trade said these changes would save UK firms hundreds of millions of pounds each year.
For most tech startups, however, the baseline 10 per cent tariff remains in place. The Institute for Government noted in its July 28, 2025 explainer that while politically sensitive industries received targeted relief, the broader tariff framework stayed intact.
Services remain unaffected, but the Department for Business and Trade has flagged potential risks linked to US objections over the UK’s Digital Services Tax. While no direct retaliation has followed, the warning reflects a wider trend: trade policy and tech regulation are becoming more closely linked.
This is already influencing how some founders plan growth. Young said her work with startups increasingly focuses on reducing reliance on a single market.
“If the US slows, do you have visibility in the UAE? If pricing becomes harder, can you bundle differently for EU clients? And if cross-border capital tightens, can you show traction in Africa or APAC?” she said. “These are no longer contingency questions. They’re central to survival and scale.”
Despite the challenges, the US remains hard to ignore. A December 1, 2025 report by The New York Times found that many UK exporters continue to prioritise the US, reportedly viewing tariffs as a manageable cost given the size and depth of the market.
Smaller businesses, however, appear to feel the pressure more acutely. On July 3, 2025, The Independent reported that some UK small businesses faced projected losses of up to £20,000 due to tariff-related uncertainty, even after the trade deal.
For startups operating with limited runway, those figures influence hiring plans, fundraising timelines, and where growth efforts are focused.
Young said the lesson from the Trump era is not that global expansion is off the table, but that it needs to be intentional.
“Startups can’t build like it’s 2018 anymore,” she said. “Innovation can’t rely on access. It has to be resilient, geographically, technically, and financially.”
The shift
Taken together, the data, policy updates, and founder experiences point to a subtle but important change. Access to the US market has not disappeared. But it is no longer something startups can assume will always be there or always be easy.
In a more protectionist global trade environment, UK startups need to future-proof by building strong brand narratives, diversifying markets early, and investing in long-term credibility and global relationships, said Richa Grover, founder and CEO of aRe Globbal PR and Events.
For many founders, resilience is no longer just a defensive move. It is becoming a design principle, shaping how modern tech businesses think about growth in a world where borders matter again.
