Instability arising from US trade tariffs has fractured the ‘special relationship’ between the UK and US trading partners, according to new research from international SME funder, Bibby Financial Services (BFS).
BFS’s Trading Places report – an annual study of importers and exporters – finds that UK SMEs have suffered average losses of £59,000 in the past 12-months due to US tariffs, leading many to reprioritise trade with Europe.
More than a quarter (26%) are reducing the number of US customers they work with, and a further 17% say they are reducing trade with the US because it no longer aligns with their business ethics and values.
Faced with rising US costs and unpredictability, 57 per cent state they are pivoting towards European and other non-US markets.
UK exporters are now more focused on France (36%) and Germany (35%) as trading partners ahead of the US (29%). Among importers, China has strengthened its position as a leading market, rising from 23 per cent in 2025 to 34 per cent in 2026, alongside Germany (34%).
Data show a marked change in market diversification among UK businesses trading overseas as they seek to mitigate the impact of trading volatility.
Derek Ryan, CEO for North West Europe at Bibby Financial Services, said: “The unpredictability of US tariffs has caused huge issues for UK SMEs in the past year, rupturing business relationships and leading many to rethink their trading strategies. As a result, we are witnessing a practical pivot back toward Europe – a large and accessible market that offers more predictable trading conditions and less complexity for importers and exporters.”
This shift coincides with the 10th anniversary of the EU Referendum, which, according to the data, has left many SMEs weaker. More than half (53%) say Brexit has reduced their competitiveness in global markets, and 57 per cent say the cost of complying with post-Brexit trade rules has hit their bottom line.
In 2016, 51 percent of those trading internationally backed remain, now 62 percent say they would opt to stay in the EU if the referendum vote was held again. Consequently, SME owners and decision-makers are demanding change from the Government. Nearly two-thirds (65%) say the Government is not doing enough to support them, and a further 68 percent are calling for clearer guidance on handling tariffs. More than a third (37%) want the UK Government to rejoin the EU.
Ryan added: “A decade ago, SMEs in the UK looked to the US to fulfil the promise of more trade, better terms and a future outside the EU. Despite challenges associated with post-Brexit compliance, there’s clearly now an appetite for closer ties with Europe in the wake of US volatility. The Brexit cake can’t be unbaked and there appears to be little political appetite to do so. However, the Government can still do more to support SME growth by reframing the UK’s relationship with the EU and seeking tangible measures to reduce trade friction. Fundamentally, this is about redressing the balance between political ideology and stimulating economic growth.”
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