UK importers face two cost layers moving simultaneously in 2026: tariff rates that can change overnight, and exchange rates that respond to those tariff announcements within hours. Eight in ten companies surveyed by MillTech reported losses from unhedged currency positions in Q4 2025, with UK firms losing an average £6.7 million each. Forward contracts, options, and natural hedging have moved from finance-team optional to importer-essential — but the right tool depends on whether your tariff exposure is settled or still moving.
That’s the headline. The detail matters because most UK importers think about tariffs and FX in separate meetings — the trade compliance call and the treasury call. In a 2026 environment where tariff announcements move sterling 1–2% inside a trading session, the two need to be the same conversation.
Who this guide is for
This guide is for UK importers paying overseas suppliers in USD, EUR, CNY, JPY, or other foreign currencies, particularly those exposed to US tariff policy, EU regulation, or supply chains routed through China, Mexico, Vietnam, or India. If you’re a UK exporter, the angle is different — see our FX strategy for UK exporters instead.
What’s changed for UK importers in 2026?
Three structural shifts that didn’t exist 18 months ago:
- US tariff policy as a daily FX driver. Since January 2025, US administration tariff announcements have produced single-day moves of 1–2% in GBP/USD and EUR/USD. The 2 April 2025 “reciprocal tariffs” announcement, the 12 March 2025 steel and aluminium tariff (later raised to 50%), and the 14 January 2026 semiconductor re-export tariff each produced sharp FX repricing within hours.
- Tariff legal status keeps changing. On 20 February 2026, the US Supreme Court ruled that the IEEPA does not authorise the President to impose tariffs, removing the legal basis for several reciprocal tariffs. The IEEPA refund window opened on 20 April 2026. UK importers paying duties via US-based supply chain partners are seeing settled tariff costs reverse, while new Section 232 tariffs (steel, aluminium, copper, autos) remain.
- UK-side tariff measures. The UK Steel Strategy 2026 brings 60% reduced import quotas and 50% tariffs on excess steel imports from 1 July 2026. UK importers of steel-derivative goods need to model both inbound UK tariffs and outbound costs from suppliers themselves repricing.
For the macro context, see the House of Commons Library tariff briefing and the Make UK tariffs hub.
How are tariffs and exchange rates connected?
The link is direct. When a tariff is announced or changed, three things happen to currency markets within hours:
- The currency of the country imposing the tariff often weakens initially. US dollar weakness has accompanied most major Trump-era tariff announcements as markets price in slower US growth and inflation pressure. UK importers who held USD-denominated payables saw GBP/USD rise, helping their landed cost.
- The currency of the country being tariffed also weakens. CNY, MXN, and EUR have all moved on US tariff news affecting their exports. UK importers buying Chinese goods saw GBP/CNY become more favourable in late 2025.
- The cross-rate matters more than the single pair. A UK importer paying a Chinese supplier in USD (the typical contract currency for Asian trade) is exposed to GBP/USD and to the supplier’s own pricing decisions made in CNY/USD terms. When tariffs hit Chinese exports, suppliers often raise USD prices to recover margin — partly absorbing the FX move that made the UK importer’s life easier.
Anthony Bull, CEO of Cambridge Currencies, comments that the importers who came through 2025 best were the ones who recognised tariff news as currency news, not just trade news. Most weren’t watching it that way.
How much does FX volatility actually cost UK importers?
Concrete data from the most recent surveys:
| Metric | Value | Source |
|---|---|---|
| UK firms reporting Q4 2025 FX losses | 80% | MillTech survey, Feb 2026 |
| Average UK firm loss from unhedged positions | £6.7m | MillTech survey, Feb 2026 |
| Average GBP/USD intraday move on tariff announcement (2025) | 0.8–1.5% | Market data |
| GBP/CNY 12-month range (2025) | 8.4% | Market data |
| Single-session move, 2 April 2025 reciprocal tariffs | 1.7% in GBP/USD | Market data |
For a UK importer with £20 million in annual USD-denominated supplier payments, an unhedged 5% adverse GBP/USD move costs £1 million on the year — a number that frequently exceeds the entire net margin on the underlying goods. The MillTech survey reported in Bloomberg’s February 2026 coverage showed UK firms specifically experienced average losses of £6.7 million from unhedged positions, with some larger importers reporting losses above £25 million. This is materially higher than equivalent surveys in 2023 and 2024 — a direct consequence of the tariff-driven FX volatility that has dominated 2025 and the first half of 2026.
For the live GBP/USD rate, see our GBP/USD pair page. The USD forecast 2026 covers the medium-term outlook.
What hedging tools do UK importers actually use?
Four tools, with different fits depending on tariff certainty and timing.
| Tool | Best when | Cost | Tariff fit |
|---|---|---|---|
| Spot transfer | Tariffs settled, payment due now | Lowest direct cost | Settled environment only |
| Forward contract | Tariff costs known, payment due 1–12 months out | 10% deposit, no premium | Strong fit for settled tariff lines |
| Currency option | Tariff outcome still moving, want downside protection with upside | Premium 1–4% of notional | Strong fit for live tariff disputes |
| Natural hedging (multi-currency accounts) | Selling in same currency as paying | Account fees only | Fit for diversified businesses |
Forward contracts remain the workhorse — fix today’s rate for a payment up to 12 months ahead, pay 10% deposit on booking, balance at maturity. The trade-off is rigidity. If the tariff is reversed and your supplier renegotiates the order, the forward sits as a separate obligation regardless.
Currency options buy the right but not the obligation to convert at a set rate. They cost more upfront — typically 1–4% of the notional as a premium — but they suit live tariff disputes precisely because they handle reversal. If the tariff is dropped and your supplier’s price falls, you let the option expire and convert at spot. Our forward contract vs currency option guide covers the choice in more depth.
Natural hedging is the underrated 2026 strategy. Multi-currency receiving accounts let you hold USD revenue in USD and pay USD suppliers from the same balance — eliminating two sets of conversion margins. See our multi-currency receiving accounts comparison for the providers worth considering.
How should UK importers structure FX policy when tariffs are in flux?
A practical framework that adapts to tariff uncertainty:
- Map your supplier base by tariff exposure. Three buckets: settled (UK-EU trade under TCA, most non-US lanes), live (US-routed goods, China-routed goods, sectors flagged for Section 232 review), and reversing (post-Supreme Court IEEPA refund eligible).
- Match the hedging tool to the bucket. Settled lanes can take forward contracts at full coverage. Live lanes warrant options or partial forward coverage. Reversing lanes — where you may receive tariff refunds — should typically be left more open, as the FX gain from a tariff reversal partly offsets the FX cost of waiting.
- Run staged hedging on the largest pair. For most UK importers that’s GBP/USD or GBP/EUR. A common pattern: 50% forward-covered for 6 months, 25% covered for 6–12 months, 25% spot exposure. Adjusts to the tariff landscape without committing the whole book to a single view.
- Recheck monthly, not quarterly. Tariff news cycles in 2025–2026 have been monthly or faster. Quarterly FX reviews mean three tariff cycles between meetings.
- Use HMRC monthly customs exchange rates for landed cost. HMRC publishes the monthly customs exchange rates on the penultimate Thursday of each month. These are the rates customs duties are calculated on — separate from the spot rate you pay your supplier at.
For a deeper framework, see our FX policy framework for UK businesses and the FX strategy for UK importers guide.
When does a forward contract make sense for an importer in this environment?
Three scenarios where forwards are usually right despite the tariff uncertainty:
- Settled UK-EU trade. TCA terms are stable. EUR-denominated payables can be hedged forward without tariff risk.
- Long-term supplier contracts with fixed pricing. Where a supplier has agreed a USD price for the next 12 months, the FX is the only variable left. Locking it removes that.
- Capital equipment imports with delivery 6–12 months out. A £2m machine from Germany ordered today, delivered next April. The forward locks the GBP cost; tariff treatment of the equipment itself is typically settled at order.
Two scenarios where forwards are usually wrong:
- Live US tariff dispute on the underlying goods. If the tariff is reversed and the supplier renegotiates, the forward becomes a standalone FX position rather than a hedge.
- Spot purchasing patterns. If you don’t know what or when you’ll buy, you can’t hedge it. Multi-currency accounts and a credit line for opportunistic spot buying serve better.
Will Stead, head of currency at Cambridge Currencies, observes that around 60% of UK importer clients in late 2025 split their cover between forwards (for settled lines) and options (for tariff-exposed lines), versus close to 80% on forwards-only twelve months earlier. The shift is purely about tariff uncertainty, not a view on currency direction.
Why use a specialist currency broker for tariff-era importing?
Three concrete reasons:
- Better rates above £25,000. Specialists work on tighter margins than high street banks, with FX margins of 0.3–0.8% versus 2–4% at retail banks. On £5 million in annual supplier payments, that difference is £85,000–£165,000 per year.
- Forwards and options access without minimums. Most UK retail banks restrict forwards to large corporate clients with treasury teams. Specialists offer the full toolkit to SMEs.
- Phone-based dealing during tariff news. When a tariff announcement hits at 14:30 London time and you need to decide whether to hedge in the next hour, a named UK dealer who knows your book matters more than an app.
Cambridge Currencies operates via FCA-authorised partners Currencycloud (FRN 900199) and ScioPay (FRN 927951). Client funds are held in safeguarded client accounts throughout the transfer process. For broader business FX context, see our how to choose a currency broker for UK business guide and the forward contracts explained reference.
Frequently asked questions
US tariff announcements have moved GBP/USD by 0.8–1.5% on average within trading sessions through 2025. The dollar typically weakens initially as markets price in slower US growth and higher US inflation. UK importers with USD payables generally saw GBP/USD rise on tariff news through 2025, helping their landed costs — but the cross-rate effects on the supplier’s own currency partly offset this.
It depends on the bucket. Settled tariff lines suit forward contracts at high coverage. Live tariff disputes suit currency options that handle reversal without becoming a standalone FX position. Many UK importers in 2026 split their cover — forwards for stable lanes, options for tariff-exposed lanes — rather than hedging everything one way.
A forward contract fixes today’s rate for a future payment, with a 10% deposit on booking and the balance at maturity. The rate is locked regardless of where the market moves. A currency option gives you the right but not the obligation to convert at a set rate, in exchange for an upfront premium of typically 1–4% of the notional. Forwards suit settled exposures; options suit exposures that may reverse.
Natural hedging matches your foreign currency revenue against your foreign currency costs without converting either to sterling. A UK business that earns USD from US customers and pays USD to suppliers can run both through a multi-currency account, eliminating two layers of conversion margin. It works best for businesses with reasonably matched currency inflows and outflows.
HMRC publishes monthly customs exchange rates on the penultimate Thursday of each month, applying to the following calendar month. Customs duty is calculated using these rates, independent of the rate you actually pay your supplier at. The rates apply to the customs value of imported goods worth more than £135.
High street banks typically charge 2–4% above the interbank rate on business FX transactions, sometimes more on smaller amounts. Specialist currency brokers typically charge 0.3–0.8% on amounts above £25,000. On annual supplier payments of £5 million, the difference is approximately £85,000–£165,000 per year. The disparity has driven the bulk of UK SME importer FX flow to specialists since 2020.
Yes. The 20 February 2026 ruling removed the legal basis for several reciprocal tariffs introduced under IEEPA. The IEEPA refund window opened on 20 April 2026 for unliquidated entries, with refunds processed within 60–90 days of CAPE file acceptance. Section 232 tariffs (steel, aluminium, copper, autos) operate under different legal authority and remain unaffected. UK importers with US supply chain partners may see refunds on certain tariff lines but should not assume reversal applies to Section 232 categories.
Speak to a Cambridge Currencies specialist about your importer FX
If you’re managing supplier payments through a 2026 tariff environment and want clear guidance on the GBP/USD or GBP/EUR rate, the option of forwards or currency options for your live exposures, and a named UK dealer to handle the transfers by phone, request a quote and we’ll talk you through it. We work with UK importers across automotive, electronics, fashion, food and beverage, and industrial machinery sectors.
