Caught in the Crossfire: How U.S. Tariffs Are Disrupting the UK Bio-Based Sector

As U.S. tariffs ripple through global trade networks, UK companies in the bio-based sector are increasingly exposed—grappling with rising costs, supply chain disruptions, and unpredictable access to critical export markets. For a sector built on sustainability, innovation, and international collaboration, the stakes couldn’t be higher.

Rising Costs, Disrupted Operations

UK-based manufacturers with operations in the United States are already seeing significant impacts. Tariffs on imported raw materials have increased costs for U.S. sites, while export terms like Delivered Duty Paid (DDP) are resulting in substantial additional expenses—potentially running into the hundreds of thousands of pounds annually. While some customers may absorb these costs, that remains uncertain.

At the UK end of the value chain, firms face difficult choices. With many products already positioned at premium price points, there’s limited flexibility to pass on new costs without risking customer relationships—yet absorbing the tariffs internally is unsustainable.

“We risk losing the customer if we raise prices—but we simply can’t absorb the extra cost.”

Global Inputs, No Easy Substitutes

UK innovators in the sector rely on specialised inputs sourced from diverse global suppliers, including single-source facilities in Asia and manufacturers in Europe. These materials are often critical to production and cannot be easily or quickly substituted.

In many cases, over 90% of revenue is generated from North American markets. Tariffs—whether applied to finished goods or their components—would significantly disrupt operations and threaten the commercial viability of technologies developed and funded in the UK.

Eroding Returns on Public Investment

Over the past decade, millions have been invested in bio-based innovation by both businesses and the UK government. However, the commercialisation pathway for many of these breakthroughs still relies heavily on access to overseas markets, particularly the United States, where demand for sustainable materials is more advanced and scale opportunities are greater.

Without secure trade channels, the UK risks falling behind international competitors who offer stronger domestic market support and clearer long-term strategies for bio-based technologies.

Complex Trade Rules Add Further Confusion

A growing concern surrounds rules of origin—specifically how transformations in chemical or biological inputs are treated for tariff purposes. For example, if a material is synthesised using ingredients from multiple countries (some of which are tariffed), it is unclear whether the final product qualifies as originating from the UK.

“Selling advanced materials to the U.S. now attracts tariffs—but at what rate? It’s not clear whether the transformation process resets the origin.”

This legal grey area creates uncertainty across the sector, especially for companies with internationally integrated supply chains. Some have also reported the removal of previously agreed tariff concessions with no explanation, compounding the challenge.

Broader Market Impacts: From Feedstocks to Packaging

Recent changes in tariff codes may have varied effects across the bioeconomy:

• Rising raw material prices in China may reduce the competitiveness of low-cost imported packaging, potentially benefitting UK and European suppliers.

• At the same time, bio-based feedstocks like proteins, starches, alginates, and sugars are experiencing price increases of 30–40%, due to disrupted transcontinental trade and escalating global demand.

• These costs widen the gap between bio-based and fossil-based alternatives, threatening commercialisation and scale-up efforts.

Companies also note that equipment costs are rising—an unwelcome trend as many are planning or undertaking capital investment in new production facilities. As investment becomes riskier, so too does the prospect of future growth.

SMEs: Squeezed and at Risk

Small and medium-sized enterprises, which form the backbone of the UK bio-based sector, are particularly vulnerable. Unlike larger firms, SMEs often lack the financial buffer to absorb tariff-related cost increases. They face stark choices: either pass costs on to customers who may not accept them, or pivot away from key markets entirely.

Cross-border tariffs are especially damaging when supply chains involve multiple international steps—creating a compounding cost effect that undermines financial predictability and supply chain resilience.

“Tariffs are disproportionately additive if supply chains cross borders and back again.”

The Need for Clarity, Support, and a Domestic Market

There is some hope on the horizon, with early reports suggesting that a UK–U.S. trade deal could be within reach. But stakeholders remain cautious, noting long-standing disagreements over regulatory standards and agricultural imports that could stall progress.

In the meantime, what the UK bio-based sector needs is clear:

1. Tariff exemptions for bio-based feedstocks and intermediates, to maintain global competitiveness;

2. Transparent rules of origin, aligned with the complexity of modern chemical and biological manufacturing;

3. Stable trade agreements, to provide long-term predictability for exporters;

4. Domestic market development, supported by public procurement policies, certification frameworks, and targeted incentives;

5. Support for SMEs, including financial tools, technical guidance, and access to international trade support.

Final Word: A Sector Worth Protecting

The bio-based sector represents one of the UK’s most promising paths to a more sustainable, innovation-driven future. But without urgent policy and trade support, the economic and environmental returns of this investment risk being lost.

“Without access to the U.S. market and a stronger domestic demand, we may not be able to commercialise technologies we’ve spent a decade developing.”

The message is clear: tariffs are not just a short-term cost—they’re a long-term threat to innovation, competitiveness, and the UK’s leadership in sustainable materials.