Since the beginning of the second Trump premiership, import tariffs have been a near-constant feature of global news. The US has implemented sweeping increases on import tariffs as part of an aggressive trade policy. The detail of the tariffs has been in flux, perhaps most dramatically following Trump’s ‘Liberation Day’ on 2 April 2025, on which ‘reciprocal tariffs’ were introduced, but then ‘paused’ very soon afterwards. While the rate of the tariffs remains subject to (rapid) change, the tariffs have had a clear impact on both the US and global economy. Within the US, Liberation Day was followed by a collapse in share and bond prices, followed by a corresponding rise in interest rates. The US Dollar continues to weaken.
The economies of the world have naturally turned to consider how best to respond to the import tariffs levied against them by the US. Many, including the UK, have leant heavily on diplomatic methods by seeking to negotiate trade deals. For instance, at the beginning of May, the UK announced a deal in relation to US tariffs on automotives, steel, and aluminium. Other countries, such as China, Mexico and Canada, responded by taking a reciprocal tariff approach. But what is the mechanism for setting import tariffs in the UK? What limits exist on the UK’s ability to set import tariff rates, and further, how might changes to import tariffs set by the UK Treasury be challenged domestically?
Tariff setting in the UK
The UK sets its tariffs under the Taxation (Cross-border Trade) Act 2018. The rate of the customs tariff applicable can be changed through statutory instruments (regulations) made by the Treasury.[1] The Treasury, under the 2018 Act, is mandated to make regulations which specify the rate of any import duty which is applicable.[2] Examples of Regulations made pursuant to the 2018 Act include the Customs Tariff (Establishment and Suspension of Import Duty) (EU Exit) (Amendment) Regulations 2021.
Can more favourable tariff rates be set?
One component of the UK Government’s diplomatic strategy for US tariffs is simply to lower import tariffs on US goods. The 2018 Act contains a mechanism for lowering the applicable customs tariff rate in the case of a trade deal between the UK and another country. [3] If, under such a deal, the UK Government agrees to impose a lower rate of import duty than the applicable rate of customs tariff in its standard form, the Treasury is empowered to make regulations to that effect. However, the Treasury may only do so on the recommendation of the Secretary of State.[4] Outside of the scope of a trade deal, preferential rates applicable to developing economies can be set, even in cases where a reciprocal lower customs tariff is not applied to the UK.[5]
Can less favourable tariff rates be set?
The 2018 Act also makes provision for less favourable tariff rates. Section 15, a provision entitled ‘International Disputes etc’, permits the Secretary of State to make regulations varying the amount of import duty payable.[6] This power can be exercised where a dispute has arisen between the UK Government and the government of another country.[7] In the context of a self-styled ‘trade war’, it is at least arguable that section 15 could be utilised by the UK as a mechanism for imposing higher tariffs on the US.
International restrictions
There are several international limitations on the freedom that a government has to set tariffs. For the UK, one significant control on import tariff policy is the fact that the UK is a member of the World Trade Organisation (‘WTO’). The UK joined the WTO as a founding member in 1995. As a member, the UK is subject to a number of obligations set out in the General Agreement on Tariffs and Trade. For example, in the absence of a free trade agreement, the UK must charge all other WTO members the same tariff. The UK, as a member of the Organisation, must also not exceed the tariff rates which it has committed itself to in its schedule, first submitted when joining the World Trade Organisation, but most recently updated following the UK’s departure from the European Union.[8]
The US has also been a member of the WTO since 1995. It is therefore subject to the same obligations as the UK with respect to the setting of tariffs which apply to other WTO members. The recent import tariffs set by the US seemingly violate the obligations that the US has as a WTO member. Consequently, some WTO members such as China and Canada have responded to the tariffs by commencing dispute settlement proceedings before the WTO.[9]
Additionally, membership of a customs union can also operate as a restriction on tariff setting. The UK was formerly a member of the European Union’s Customs Union. Countries subject to the EU Customs Union do not apply import tariffs to goods imported from one another and all apply the same tariffs to goods imported into their territory from the rest of the world. The UK continued to participate in the EU Customs Union until the end of the transition period on 31 December 2020, but following this date, is no longer bound to comply. One example of a customs union to which the UK remains subject is the United Kingdom-Crown Dependencies Customs Union, entered into between the UK, Jersey, Guernsey, and the Isle of Man.
Judicial limitations
The US tariffs have, at the time of writing, suffered a range of judicial setbacks, although they remain operative pending appeal. The US Court of International Trade issued a decision on 28 May 2025 holding that President Trump had exceeded his authority under the International Emergency Economic Powers Act of 1977, 50 U.S.C. 1701. It held that the broad Liberation Day tariffs were unconstitutional, on the basis that they involved a ‘power-grab’ of congressional trade authority. The ruling also struck down the fentanyl-related tariffs on China, Canada and Mexico. A separate US federal court also ruled that Trump lacked the power to impose tariffs to “reorder the global economy” on 28 May 2025.
As outlined above, customs tariffs in the UK are set by the Treasury through the issuing of regulations. Regulations, as a form of secondary legislation, are subject to the courts, which can review them and declare them invalid if they are made beyond the powers clearly authorised by the enabling act – in this case, the Taxation (Cross-border Trade) Act 2018. This Act could be amended by Parliament to expand the powers that the Treasury has. Even without this, though, the Treasury has quite extensive powers to decrease the import tariffs payable, or, in cases of international disputes, increase the applicable tariffs without the prospect of these being overturned by the courts.
Conclusion
In sum, the UK has the power to respond to US import tariffs by both raising, and lowering, the tariffs which are currently applied to US goods. The Taxation (Cross-border Trade) Act 2018 provides a framework for regulations to be passed, which would give effect to any alternative tariffs which may be introduced. These regulations are made by the Chancellor and the Treasury and are not subject to the same parliamentary procedure as primary legislation. Any such action by the Treasury, though, must be compliant with the international trade obligations that the UK is under, for instance, those which apply to members of the World Trade Organisation.
Cassandra Somers-Joce.
Cassandra Somers-Joce studied law at Oxford University, where she is currently a non-stipendiary lecturer. She has previously taught public law at King’s College London, in addition to holding research roles at the University of York and Durham University.
The Constitution Society is committed to the promotion of informed debate and is politically impartial. Any views expressed in this article are the personal views of the author and not those of The Constitution Society.
[1] s.8 Taxation (Cross-border Trade) Act 2018.
[2] s.8(1) Taxation (Cross-border Trade) Act 2018.
[3] s.9 Taxation (Cross-border Trade) Act 2018.
[4] s.9(3) Taxation (Cross-border Trade) Act 2018.
[5] s.10 Taxation (Cross-border Trade) Act 2018.
[6] s.15(1) Taxation (Cross-border Trade) Act 2018.
[7] s.15(1)(a) Taxation (Cross-border Trade) Act 2018.
[8] Department for International Trade, ‘Policy paper UK goods and services schedules at the WTO’, (updated 31 December 2020).
[9] For instance, see World Trade Organisation, ‘Canada initiates WTO dispute regarding US duties on automobiles and auto parts,’ 7 April 2025; World Trade Organisation, ‘China initiates WTO dispute regarding US “reciprocal tariffs”’ 8 April 2025;