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Since beginning his second term at the beginning of 2025, U.S. President Donald Trump has enacted a series of aggressive and wide ranging tariffs on imported goods with the aim of boosting American manufacturing and investment.

Tariffs, which are taxes charged on imported goods from other countries, have been placed on many individual countries as well as whole industry sectors. The most note-worthy are the tariff rates placed on China and India. 

Since then, the impact of these tariffs has rippled through global supply chains, with other countries introducing counter measures. This has created knock-on effects across individual sectors and asset costs. 

In this article, we examine how tariffs are quietly inflating the cost of assets, and why UK businesses need to be vigilant to mitigate the risk of underinsurance.

What is the new tariff landscape? 

In August 2025, new tariff rates for many countries were introduced to correct, as Trump has named them, “unfair trade”. The most notable of which is that placed on China – a 34% additional tariff rate on Chinese goods set to take effect on November 10th. This is in addition to the existing average 10% baseline tariff rate set earlier in 2025.

India has also seen a 50% tariff rate enacted. Already, this rate has impacted around 55% of Indian exports to the U.S.

As at 1st August 2025, the average effective U.S tariff rate was 15.8% according to JP Morgan.

Both tariffs on China and India are having, and will continue to have, a significant impact on global supply chains.

To offset U.S. tariffs other countries have introduced counter measures including economic stimulus packages, sector specific controls or their own reciprocal tariffs.

The UK has attempted to refrain from tit-for-tat tariffs on U.S. goods but it has implemented a 10% import duty on US goods to counter the base 10% tariff introduced by Trump’s administration. For a UK business importing goods from US manufacturers, they are now paying higher costs. 

With the rollout of these tariffs, businesses need to rethink how they approach setting their declared values for property damage insurance coverage, particularly in sectors where there is a high degree of overseas sourced materials or equipment. 

The effect of tariffs on the supply chain

It is already clear that importers of materials and goods are passing on tariff costs to consumers and businesses in terms of higher pricing. Many are also looking to widen their supply chain to seek suppliers from countries with lower tariffs or to market their goods to lower tariff markets. 

The existing tariffs on low cost manufacturing countries such as China, will increase the overall cost of these goods to U.S. businesses, and importers are likely therefore to look to Europe, South America or elsewhere in Asia for alternative suppliers.

In practice, this is likely to change the supply chain environment, disrupting current channels and, while this could create longer term opportunities, it may have a short term inflationary impact across certain markets.

Overall, tariffs are impacting the global supply chain, with costs going up and countries like China and India having to rethink the markets for their goods and whether their place in the current supply chain is still economically viable.

Which UK industries are most vulnerable to these rising costs?

With geopolitical cost pressures stemming from tariffs in India and China especially, on top of the UK’s 10% tax on goods exported to the US, many sectors are facing vulnerabilities. The introduction of tariffs on British goods will increase their price in the U.S., likely leading to a decrease in demand.

Here are some of the industries that are most exposed to these risks. 

1. Car manufacturing

In 2023, the U.S. was the UK’s largest market for cars, with UK car exports to the U.S. being valued at £7.6 billion in 2024. Despite this, in April this year, a 25% tariff was placed on vehicles exported to the US. 

UK car manufacturers may be forced to shift production to the U.S. to avoid these charges. This could cost an estimated 25,000 jobs in the UK, with employees at Jaguar Land Rover and Mini facing the highest risk.

2. Consumer goods and retail 

Clothing and footwear retail stores that source materials from across India and Asia, may see higher costs and reduced demand. 

UK retailers JD Sports, Dr Martens and Asos are amongst those most at risk due to having a high percentage of their sales in the U.S. 

3. Steel and aluminium 

The U.S. is currently the second largest market for steel and aluminium exports. UK exports to the U.S. totalled £388 million in 2023. 

While the UK was exempt from the tariff increase to 50% on steel imports in June 2025, the tariff rate for the UK on steel and aluminium remains at a high 25%. 

The EU announced reciprocal 50% tariffs on imported steel, including the UK, in early October 2025, shocking the UK steel sector.

How can businesses protect themselves from the impacts of these high tariffs?

The high-stakes, volatile nature of these tariffs has created a lasting ripple effect across the globe. This means it is more important than ever for UK businesses across many sectors, particularly those most vulnerable, to implement protective measures. 

Thanks to higher costs, the declared value of assets may be too low for adequate insurance coverage. Declared values that rely on older figures may now be insufficient and put businesses at risk.  

  • The costs of imported materials and components have significantly increased in recent years, exacerbated by new tariff rates. Therefore, using pre-Trump presidency values is no longer viable.
  • Using general inflation in insurance policies will not account for the jump in industry-specific tariffs, such as the 25% tariff placed on exporting cars to the U.S. 

Mitigating the risks 

There are ways to reduce these risks. If declared values have not been reviewed in recent years then consider if any of the following are likely to have impacted values:

  • Tariff percentages and their projected overall increased costs
  • Price premiums caused by disrupted supply chains
  • Changing foreign exchange movements
  • Geopolitical turmoil adding extra time to replace assets

Talk to us today on ways to protect your business

Businesses are at risk of being underinsured and unprepared for worst case scenarios. Get in touch with Charterfields today to ensure your declared values reflect recent changes and your assets are protected.