UK SMEs pivot back to Europe as US tariff losses mount

UK SMEs are shifting trade focus back towards Europe after suffering average losses of £59,000 over the past year from US tariff instability, according to new research from Bibby Financial Services.

The funder’s latest Trading Places report found that uncertainty around US trade policy is forcing importers and exporters to reassess customer relationships, supplier exposure and working capital needs.

More than a quarter of SMEs surveyed said they are cutting the number of US customers they work with, while 17% said they are reducing US trade because it no longer aligns with their business ethics and values.

The shift is pushing European markets back up the priority list. BFS said 57% of SMEs are pivoting towards Europe and other non-US markets, with UK exporters now more focused on France and Germany than the US.

The findings point to a practical reassessment of trade risk rather than a purely political response. For SMEs, tariff volatility can affect margins, pricing, payment terms, inventory decisions and access to working capital.

Derek Ryan, chief executive for North West Europe at BFS, said the unpredictability of US tariffs has “caused huge issues for UK SMEs” and is prompting a move towards markets offering more predictable trading conditions.

The research also found that 53% of internationally trading SMEs believe Brexit has reduced their competitiveness, while 57% said post-Brexit trade rules have hit their bottom line.

For invoice finance, trade finance and FX providers, the data suggests SMEs may need more flexible funding as they diversify markets and manage tariff-related cashflow strain.