Skip to content
Type
Infrastructure blog

How could US tariffs disrupt UK infrastructure?

Date
28 May 2025

June will be a critical month for UK infrastructure. But US tariffs could increase project costs, writes Chris Scudamore.

A close-up portrait of Donald Trump in front of a US flag and an image of the White House in Washington DC.
US President Donald Trump imposed new tariffs in April 2025. Image credit: Library of Congress/Unsplash

Next month is a critical moment for UK infrastructure.

As well as the outcome of its spending review, the government is set to publish both its 10-year infrastructure strategy and industrial strategy.

The government’s plans put infrastructure at the heart of its ambitions for growth. But US tariffs could have a significant impact on infrastructure delivery in the UK and globally.

Tariffs explained

In April 2025, US President Donald Trump imposed new tariffs – taxes charged on products coming from overseas – for almost every country in the world.

Since then, the situation has been in constant flux, with tariff rates seeming to change every day.

The US is the largest goods importer in the world, and this aggressive trade policy will have inevitable effects on global supply chains.

Even with the UK and US having agreed a trade deal in early May, the knock-on effects of this disruption to global trade will last for some time.

What are the direct and indirect effects of tariffs?

Tariffs directly affect the costs of materials and equipment for infrastructure projects.

This could increase the costs of infrastructure projects that are currently under construction.

Crucially, many tariff-exposed items – electrolysers, inverters, battery-grade metals, precision heat pump components – are instrumental to the UK’s net zero ambitions.

There are also indirect ‘ripple’ effects to consider.

Governments and investors fear US tariffs could stall economic growth and stoke inflation, leading to higher costs for people and businesses.

The risk of cost increases and potential delays from supply chain disruptions could also make early-stage projects less viable, interfering with project pipelines.

How does this affect capital projects?

Infrastructure projects must navigate a complex web of financial, operational, and sustainability concerns and trade-offs. Potential impacts of the changes to global tariffs include:

Mixed impacts on costs

Some materials and equipment may well cost more once the effect of the tariffs flows through the supply chain.

Some prices may ease. Lower costs for some goods (such as steel manufactured in China) could offset higher costs for others (such as aluminium, turbines, and green tech components).

Economic volatility

Inflation, higher borrowing costs, and currency fluctuations create uncertainty and increase risk. This comes at a time when investment returns, project budgets, and supply chain profit margins are tighter than ever.

Supply chain disruptions

Availability issues could delay construction schedules and drive budget overruns. Key suppliers, particularly smaller businesses, may be unable to fulfil orders, forcing procurers to look elsewhere.

Carbon footprint

A switch to cheaper, higher-emission materials or longer shipping routes will increase scope 3 emissions, undermine compliance with sustainability standards (including PAS 2080), and threaten net zero commitments.

Private investment

Some infrastructure assets may offer less attractive returns due to increased costs, discouraging private investment.

On the other hand, recent developments might create an opportunity for the UK (alongside Europe and the Middle East and North Africa) to position themselves as stable and attractive destinations for investment.

Particularly as global investors seek out markets with greater political and economic predictability.

Navigating the potential impacts and opportunities

Long lead times in construction and the complex nature of contracts and international supply chains make it challenging to adapt quickly to global events.

As mentioned, there may be an opportunity for the UK – and other markets – as investors weigh up the benefits offered from political stability.

Seizing it requires a mix of responses from businesses and the government: short-term, ‘no regret’ actions; and longer-term, strategic actions.

Short-term ‘no regret’ actions

These actions will help build a full understanding of the challenges ahead – and identify ‘quick wins’ to start to manage them.

  • Understand vulnerabilities across the value chain, including the availability and cost of critical materials and equipment.
  • Revisit existing supplier contracts and procurement strategies for impacted materials.
  • Review the financial viability of projects and delivery schedules under different scenarios, identifying key risks and ways of managing them.
  • Assess whether starting or speeding up new or existing infrastructure projects could help support local supply chains.
  • Assess sustainability implications, including whether sourcing cheaper materials could mean higher emissions or lower environmental standards.

Long-term strategic actions

  • Explore onshore or nearshore options (suppliers and manufacturers closer to home) to reduce dependence on global supply chains, ensure more predictable supply, and reduce emissions.
  • Use technology and digital tools to track supply chain costs and emissions in real time.
  • Put in place measures and incentives – a clear regulatory framework, subsidies, tax credits, etc – to position the UK as an attractive and stable destination for private infrastructure investment.
  • Renew efforts to meet sustainability commitments and attract green investment: for example, in offshore wind.

We can’t take global supply chains for granted

The US is redrawing the terms of engagement for global trade.

Tariffs – those imposed by the US and in response by other countries – will affect the price and availability of materials for infrastructure projects.

The extent of the impacts is as uncertain as the tariff measures themselves. But it’s clear that governments and the industry can’t take supply chains for granted.

We should take every necessary measure to ensure the supplies – and costs – of critical materials are as secure and predictable as possible.


*The ICE welcomes guests to share their views about infrastructure policy issues on the Infrastructure Blog. These views are the views of the individual.

If you're interested in writing for the Infrastructure Blog, please email [email protected]. The ICE reserves the right not to publish articles that have been submitted.

  • Chris Scudamore, UK leader for capital projects and infrastructure at PwC