Experts Share: What The Tariffs The US Are Introducing On Mexico, Canada And China Mean For Startups

In the beginning of the month, President Donald Trump announced a 25% tariff on imports from Canada and Mexico, and a 10% tariff on imports from China. These measures are said to address issues related to illegal immigration and drug trafficking.

A recent study by Ivalua found that 96% of UK businesses are worried about these tariffs. Many anticipate increased costs, with over a third planning to pass these expenses onto customers. Some fear that significant trade changes could threaten their survival.

Among the 47% of UK businesses expecting more supply chain disruptions this year, 51% plan to reassess their supplier relationships. Also, 45% predict that rising supply chain costs will reduce profitability. Businesses will have to make sure that their strategies are in alignment with the new changes.
 

What Do Experts Think?

 
We’ve asked experts how they think the tariffs will affect startups, and this is what they shared…
 

Our Experts

 

Alex Saric, Smart Procurement Expert, Ivalua

 

 

“Uncertainty around how trade policies and tariffs will be implemented in the UK and EU means UK businesses won’t know how best to optimise supply chains to mitigate the impact until the last minute. At a minimum, they should start working with suppliers now to reconsider supply chain operations and identify ways to mitigate the impact potential EU and UK tariffs.

“UK businesses should prepare for the impact increased tariffs will have on their suppliers at home, in the EU, as well as in China, Mexico, and Canada where tariffs come into force on Tuesday. But the reality is that certain industries, especially those dependent on rare earth minerals or established manufacturing clusters, can’t easily shift away from China.

“In times of uncertainty, knowledge truly is power. Understanding supply chains at every level means you’re better equipped to develop informed contingency plans, and make accurate decisions, whatever policy shifts come your way. This type of major restructuring will likely increase costs and complexity in the near term, but investing in supplier visibility and flexibility will reduce pain in the future as the risk of trade wars increases.”

 

Les Roberts, Small Business Expert, Bionic

 

 

“There’s no denying that small businesses make up the backbone of our economy in the UK. Small businesses – organisations with less than 50 employees and an annual turnover under £10 million – account for a huge 99.2% of businesses in every main sector in the UK and microbusinesses – less than 10 employees – contributed £820 billion to the economy in 2023.

“The key to growing the economy is to support small business growth and research from the Social Market Foundation discovered that helping more small businesses expand internationally could grow the UK economy by £9 billion.

“However, it’s these small and micro businesses who may be some of the hardest hit as a result of Donald Trump’s second term as president. Micro businesses and SMEs have had to deal with a growing number of challenges over the last few years – especially when it comes to attempting to scale internationally. Brexit, an increase in inflation, decrease in consumer spending and an energy crisis are just the tip of the iceberg when it comes to obstacles.

“There are reports that post-Brexit trade barriers, like VAT charges at point of entry, are affecting SMEs ability to trade internationally and time will only tell what impact the new Labour government’s policies will have. Trade with the USA could become more expensive if, as expected, Donald Trump imposes trade tariffs on international goods and services.

“There’s also the issue that many businesses now depend on US-based services like Amazon Web Services for cloud computing. Could these become more expensive for businesses not based in the USA? While large firms may be able to shoulder the costs, micro businesses and SMEs might be unable to cope and 9% have ceased international trade since 2018.

“Although certain support packages have been put in place over the past few years to support international growth, there has been concern that this aid doesn’t go far enough. The IOE&IT launched the “MSME Support Package” in 2023 which involved businesses teaming up with relevant trade experts who offered advice and expertise for that particular organisation’s needs.

“However, although any UK based micro, small or medium size business could apply for the programme, the IOE&IT estimates only 1,250 firms would be able to receive help due to the bespoke nature of the consultancy. This did raise the question, does the £5 million fund go far enough to help the UK’s SME sector expand internationally?”

 

Nick Rakovsky, Founder, DataDocks

 

 

“Given how deeply integrated North America’s supply chains are, this move signals bad will toward key partners. Many top executives I’ve spoken with are concerned and uncertain about the future. Since our economies are so interdependent, this decision will disrupt supply chains significantly.

“In the short term, companies won’t be able to pivot quickly enough to secure new sources. Some may absorb costs initially, but ultimately, higher expenses will be passed on to end consumers, just as we’ve seen with inflation in recent years, particularly in grocery prices.

“Businesses dislike unforeseen turbulence, and history shows that uncertainty often leads to more conservative decision-making. This could trigger supply shortages, cost increases, and resource constraints similar to those experienced during COVID-19.”
 

 

Sabby Gill, CEO, Dext

 

 

“The imposition of US tariffs on Canada, Mexico, and China has sent global markets into turmoil, with UK businesses now bracing themselves for potential fallout. While the UK has not yet been directly targeted, UK exporters are vulnerable to further trade disruption, which will be a real challenge to competitiveness. More than ever, it’s critical that businesses in the UK enhance their strategic and scenario planning, especially those reliant on US trade.

“Small businesses, in particular, may bear the brunt of these potential tariffs, given they often lack the resources to absorb or offset increased trade costs. To prepare, they must identify key risks, plan for multiple financial scenarios, and build resilience against fluctuating costs and income. With tariffs driving up expenses, reviewing supply chains, exploring alternative suppliers, and sourcing materials from lower-tariff regions will be critical.

“Beyond supply chain adjustments, staying informed on policy changes, adjusting pricing strategies, and renegotiating contracts where possible will help businesses remain agile. Alongside this, digital transformation can reduce dependence on physical exports and open up new revenue streams. By taking proactive steps, UK small businesses can minimise disruption and strengthen resilience in an increasingly unpredictable trade environment.”

 

Dr Martin Lukavec, Senior Lecturer, London School of Business and Finance

 

 

“How will the new tariffs imposed by the U.S. on Canada, Mexico, and China influence startups? Directly, almost not at all—but there are exceptions. The vast majority of startups provide services, while the U.S. tariffs target goods imported into the country. For example, startups developing software (many of which recently offer AI solutions for voice recognition or encryption services) can rely on a well-established infrastructure of localised software sellers. These include apps purchased through Google, Microsoft, or Apple, which sell and tax software via local subsidiaries, with only money crossing borders. However, some startups, such as Oura or Cradlewise, produce physical goods that might be subject to tariffs or potential retaliatory measures.

“As for retaliatory tariffs, their effects on U.S. startups are likely to be minimal as well. The tariffs imposed by China and the EU on the U.S. during Donald Trump’s first term, along with already announced responses by Mexico and Canada, were primarily aimed at goods produced in predominantly Republican or swing states. To my knowledge, no technology was included in any of the tariff packages implemented or announced.

“There will be a significant impact on currency values relative to the U.S. dollar, making labor in much of the world (due to tariffs and the possibility of further tariffs) cheaper than before. This will paradoxically make life easier for startups in the U.K. and Europe, as they can offer more competitively priced products. The same effect, however, will play out in reverse in the U.S.

“Does this mean we will see the gradual movement of the startup universe’s center to the rest of the world? Not likely. The startup infrastructure in the U.S. is highly developed, and Silicon Valley remains the primary destination for entrepreneurs seeking venture funding. Alternative infrastructures in other regions cannot be built in just a few years.

“Much will depend on how the rest of the world reacts. The EU has recently established trade deals with Canada, Mexico, and Mercosur (Brazil, Argentina, Uruguay, and Paraguay), although many of these agreements are still pending implementation. The Trans-Pacific Partnership (TPP) went into force without the U.S. after Donald Trump opted out during his first term. These trade alliances have the potential to strengthen over time, and eventually, we might live in a world where trading with the U.S. is too cumbersome. However, that is a question for decades, not years.”

 

Jonathan Jackman, Regional VP EMEA, Kinaxis

 

 

“The introduction of tariffs by the incoming US administration will have profound ripple effects on supply chains globally. It is very likely that new tariffs implemented by the US will trigger counter-tariffs resulting in a more complex international trade environment overall.

“Organisations will have a few medium-term options to respond with: onshoring or nearshoring if that’s available, increasing safety stock which we know some US manufacturers have already started to do, and prioritising core products. However, these are not quick solutions, especially if businesses don’t already have diversified supply chains. It is crucial that organisations remain agile and prepare to make transformative changes to their supply chains as quickly as possible.

“Advanced technologies that enable organisations to model scenarios and predict the potential impact of tariffs will be crucial to short term adaptation. It is likely that businesses have been conducting analysis of the potential impact of new tariff regimes for some time, preparing to act swiftly as and when tariffs are implemented. This is not a new challenge as companies have already developed and executed contingency plans to address disruptions caused by recent conflicts and natural disasters.”

Jay Dhokia, Founder, Pro3PL

“Amid a returning Trump administration, the United States is predicted to take a national rather than global interest in trade. Overseas businesses in the pharmaceutical and electrical sectors will likely feel the impact alongside the well-touted fishing, petroleum and mining industries. A recent report suggested the UK could face a £22 billion hit to exports if the US imposes a blanket 20% tariff.

“Perhaps a lesser-known or reported casualty of the tariffs are logistics, transportation and supply chain operations. For example, 3PL and 4PL operations often rely on strong international trade and steady trade flows to the United States which risk being disrupted due to the proposed measures.

“However, with many businesses potentially looking to rethink and look for alternatives to manage their logistics, some supply chain operations could become great beneficiaries if they can evolve and navigate the risks to come.

“Early stockpiling will likely be a key delivery challenge as businesses look to rapidly frontload and store products in the United States before tariffs are implemented — a consideration that could place a great deal of pressure on existing operations. Elsewhere, some companies will have to rethink their long-established production locations and agreements potentially creating long delays and holdups.

“Inevitably, costs of imported goods will rise in tandem with tariffs which may influence consumer behaviour. A steep drop in US demand for international products could occur simply because they’ve become too expensive for the average person to buy. As such operational efficiency through technology and re-negotiating contracts will become paramount for businesses to keep costs down and the supply chain moving. We’re likely to see greater use of artificial intelligence as well as demand forecasting models to follow real-time market trends and mitigate the risk of overstocking. Equally, some UK companies could see a huge increase in demand if traditional trade partners for products like textiles are hit even harder by the proposed tariffs, making diversification incredibly important across the logistics industry.

“Looming over all this, though, is the potential for international trade retaliation. Broader trade conflicts as a result of tariffs imposed by the US would amplify supply chain challenges on a global scale, creating an overall reduction in global trade and a new normal for the industry. It will be essential for supply chain and logistics operations to show a sense of resilience and adaptability in the face of potentially disruptive tariffs across 2025 and beyond. My advice is for businesses and supply chain managers to keep a watchful eye on the news as discussions around tariffs progress over the coming year. ”