Latest in a series of tariff barriers raised

The US president has not yet been in office for a full month of his second term but has already kicked off a deluge of policy changes, including in international trade.

Tariffs increase the cost of goods for the companies that are importing them, who in turn increase the cost of their products to make up the deficit. The net result is higher costs to consumers in the country which imposed the tariff.

However, they can be used to protect producers of similar items if they would otherwise not be cost competitive, assuming the higher prices of the previously cheap imported products remain affordable.

On 1 February 2025, Trump used the International Emergency Economic Powers Act (IEEPA) to impose a 25% “additional tariff” on imports from Canada and Mexico, citing concerns about an “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl”.

Canada retaliated the following day by threatening to impose tariffs of 25% on goods including beer, wine, household appliances and sporting goods.

However, the White House ultimately did not impose the threatened tariffs on either nation and Canada did not carry out its own implementation of tariffs.

Steel and aluminium tariffs

On 9 February, the president announced he would impose a fresh round of 25% tariffs on all steel and aluminium imports into the USA.

It is understood that the motivation for Trump imposing the tariffs on imported metals is to protect jobs in the US domestic steel and aluminium industries.

Between 20-25% of steel used in the US is imported.

UK Government’s response

The tariffs place the UK government in an awkward position, because, while the US is critical to UK defence and security with the protection provided by the US’s nuclear arsenal, the UK does not want to appear weak in the face of an aggressive trading partner.

The prime minister’s spokesperson said the UK and US “work closely together on a range of economic issues, supporting jobs.

“We will obviously continue to have those conversations with counterparts in the US.

“I haven’t seen any detailed proposals following the reporting overnight, but we will obviously engage as appropriate.”

The UK’s incoming ambassador to the US Lord (Peter) Mandelson has not yet been formally appointed to the post, but the UK Government hopes his appointment will help with US/UK relations.

Civils consultancy says tariffs could add costs to UK projects

WSP head of economics Jim Coleman explained the implications of Trump’s tariffs for the civil engineering sector in the UK and elsewhere.

“The impact of tariffs will largely depend on whether they are country-specific or materials-specific,” he said. “Materials like steel and aluminium are essential for civil and infrastructure projects, and tariffs on these could ripple through downstream manufacturing activity.

“Infrastructure value chains are intricate, and the impact will vary depending on factors such as long-term supplier agreements.”

Tariff barriers are nationally determined, which means they will have very different impacts on importers and exporters.

“US projects may face a greater immediate impact, particularly if there’s a retaliatory response from China,” Coleman continued.

“The US steel market is significant, but Chinese steel production is vast, and China could potentially redirect its exports to other markets.

“That said, any constraints on trade, whether from tariffs or retaliation, tend to harm projects universally by increasing costs and creating uncertainty.”

China has already started to react, with the imposition of 10% tariffs on US coal and liquefied natural gas (LNG) and 15% on crude oil.

Large infrastructure projects already face challenges around time and cost overruns, inflationary pressures and exposure to geopolitical risk. Tariffs could compound those risks, according to Coleman.

“Large-scale projects, particularly those in the US, are likely to feel the effects of rising costs and potential trade disruptions,” he said.

“Tariffs could delay schedules, slow down decision-making, or even make some projects less viable due to elevated risks and cost pressures.

“Across the board, trade restrictions rarely improve the conditions needed for efficient delivery of major infrastructure.”

Looking to the UK, Coleman said tariffs may increase infrastructure construction costs.

“Tariffs may lead to cost increases for materials and have knock-on effects on the risk profiles of major projects,” he said. “This could mean delays, slower progress, or increased financial pressures.

“Large-scale infrastructure is already complex, and these additional challenges are unlikely to help streamline progress or improve market conditions.

“Ultimately, the effect on UK projects will depend on the government’s approach. If the UK aligns with EU trade policies or retaliates with its own tariffs, it could add further complexity.”

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