Donald Trump’s move towards a flat 10% tariff is the kind of global policy shock that quickly filters down to smaller firms, even when they don’t export directly to the US.
A blanket duty changes expectations overnight: it affects pricing, demand forecasts and supplier relationships, and for SMEs operating on tight margins, that uncertainty can be more damaging than the tariff itself.
The tariff is being positioned as a broad ‘global’ measure following legal challenges to earlier duties, which signals to businesses that volatility in trade policy could persist, rather than simply being a short-term disruption. For UK SMEs already navigating fragile confidence, that makes planning investment or expansion far more difficult.
The timing is particularly challenging. Surveys from business groups and the Bank of England point to a subdued trading environment, with weak demand, squeezed margins and cautious hiring intentions already shaping decision-making. Many smaller firms are still rebuilding export momentum after a prolonged period of trade friction and slower growth, so any new shock to global demand risks stalling that recovery.
Even for SMEs without direct exposure to US customers, the secondary effects could be significant. Tariffs tend to ripple through supply chains, pushing up the cost of imported components and raw materials, especially where global suppliers adjust pricing to offset reduced access to the US market. This could leave British firms facing higher input costs at the same time as customers are becoming more price-sensitive: this is a tricky combination to manage for businesses with limited pricing power.
There’s also the currency dimension to consider. Trade tensions often trigger volatility in exchange rates, which can massively complicate planning for SMEs who import goods or price contracts in foreign currencies. Larger firms can hedge these risks more easily, but smaller businesses often have far fewer buffers, meaning relatively small fluctuations can quickly erode their margins.
At a macro level, the US remains the UK’s single largest trading partner, accounting for 17.5% of our trade, so any policy that dampens transatlantic trade flows or slows global growth is likely to feed through into weaker demand across multiple sectors. SMEs tend to feel those slowdowns first, whether that’s through reduced orders, longer payment cycles or projects being delayed due to uncertainty.
Naturally, shifts in global trade patterns can create pockets of opportunity, particularly if companies look to diversify suppliers or markets. However, in the near term most SMEs will be focused on resilience rather than expansion: reviewing supply chains, building contingencies and managing cashflow more tightly.
Broad tariffs create a more complex and unpredictable trading environment at a time when many small businesses are already under severe pressure from rising costs and soft demand. The key for Britain’s SMEs will be staying agile and well-informed, but there’s a clear role for policymakers in ensuring smaller firms have the support and clarity they need to navigate yet another period of global trade uncertainty.
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