Global tariff turbulence costs SMEs thousands, prompting rethink of trading partnerships

UK small and medium sized enterprises (SMEs) are being significantly impacted by the upending of the global trading environment, propelled by the US administration’s tariff policies, according to new research from independent funder Bibby Financial Services (BFS).

BFS’s Trading Places report, which surveyed over 500 UK SMEs that trade overseas, found over half (55 per cent) see tariffs as a key economic challenge today – up 15 percent compared to last year. Furthermore, nearly half (47 per cent) expect tariff uncertainty to reduce their overseas trading volumes by the end of this year, rising to 51 per cent for those for which the US is their most important export market.

Jonathan Andrew (pictured), Global CEO at Bibby Financial Services, says: “Our data clearly shows uncertainty regarding tariffs is having a direct impact on the plans of small and medium sized businesses across the UK. However, while some importers and exporters are seeing profit margins eroded amid currency volatility, others are using the situation as an opportunity to review supply chains and customer networks.”

Data uncovers the devastating financial implications that the new tariffs regime could have for UK importers and exporters, with the total cost of levies estimated to reach an average of nearly £17,000 per business. This adds to the ongoing cost burden facing these businesses, many of which continue to struggle with a higher cost environment amid elevated interest rates and persisting inflation. According to the Confederation of British Industry, these challenges are heralding the weakest outlook for UK private sector businesses since 2022.

Although the recent trade deal signed between the UK and the US offers hope, it may come too late: 20 per cent of SMEs are turning their back on the US by reducing the number of US customers they work with, while almost six in 10 (59 per cent) are switching to making FX payments in euros and sterling to mitigate the volatility of the dollar.

Tariff uncertainty and trading volatility are forcing SMEs to reconsider which international markets they prioritise, with many considering onshoring, nearshoring or even “friendshoring” – where supply chains are focused on countries regarded as political and economic allies, or where Free Trade Agreements are in place.

Just under two thirds (64 per cent) plan to seek trading partnerships in new markets in the next 12 months – up more than 10 percentage points from 2024. And 36 percent say they are expanding partnerships to mitigate the risks presented by significant changes to trade policy, tariffs, or the geopolitical situation.

Many are also closely weighing up which of the world’s two biggest economies will dominate in the future – the USA or China. China leads the way as the top new country being targeted for exports in the next 12 months at 13 per cent, nearly doubling the tally from last year (7 per cent) and indicating a significant surge in interest among UK businesses to enter or trade with the Chinese market.

However, SMEs are under no illusion that forging new relationships will be easy. Over half (56 per cent) believe that Brexit has made their business less competitive in the global marketplace, resulting in over three in five (66 per cent) saying they would vote to remain in the EU if they had the chance to vote on the Brexit referendum again – a 13-percentage point rise in Remainers since last year.

Jonathan Andrew continues: “The global trading map is being redrawn, and SMEs across the country are contemplating how they can protect margins and remain competitive amid a constantly moving trading environment. More than ever, it’s vital SMEs can get ahead of the curve by assessing how tariff agreements could impact their operations, as well as taking a proactive role in managing currency risk. It’s these businesses and those who use the current uncertainty as an opportunity to seek new trading partnerships that will be well placed for growth in 2025 and beyond.”

Methodology
This study is based on research of more than 500 UK SME owners and decision makers across the manufacturing, construction, wholesale, transport, retail and services sectors. Research was conducted by independent specialists, Critical Research, between 15-30th May 2025.

About Bibby Financial Services
Bibby Financial Services (BFS) is a leading independent financial services partner to over 8,500 SMEs worldwide.
BFS provides specialist working capital, asset finance and foreign exchange solutions helping businesses to grow and thrive in domestic and international markets.
Formed in 1982, BFS is part of the Bibby Line Group (BLG), a diverse and forward-looking family business delivering personal, responsive and flexible customer solutions for over 215 years.