Our interest and collaboration with US-based SMEs and innovators have brought us to talk about the US on several occasions. Therefore, we follow and are very well aware of the recent changes in the workings of US-UK (and Scotland) relations.
For SMEs on both sides of the ocean, tariffs and upcoming elections -such as Florida’s elections in April 2025– are creating waves of uncertainty. These developments can significantly impact supply chains, profitability, and market competitiveness. To this, the overall social unhappiness that we have seen since January 19th
Let’s explore the potential impact of tariffs on US-based as well as UK SMEs and how businesses can adapt to thrive in this dynamic environment.
The Impact of Tariffs on US SMEs
1. Increased Costs
Tariffs on imported goods, such as steel and aluminium, have driven up costs for US SMEs reliant on these materials.
This squeeze on profit margins often forces businesses to raise prices, potentially reducing their competitiveness in domestic and international markets.
2. Supply Chain Disruptions
SMEs are particularly vulnerable to supply chain disruptions caused by tariffs. Delays and increased costs can be especially challenging for businesses operating on just-in-time inventory systems, where efficiency is critical.
3. Mitigation Strategies
To solve these challenges efficiently, many SMEs are:
- Diversifying supply chains to reduce dependency on tariff-affected regions.
- Sourcing materials domestically to avoid import costs.
- Passing costs onto consumers strategically to maintain profitability without losing market share.
The Impact of Tariffs on UK SMEs
UK SMEs exporting to the US are facing higher tariffs, making their products less competitive in the US market.
This can lead to decreased demand and revenue, particularly for businesses heavily reliant on transatlantic trade or those operating with tight margins.
This pressure can limit growth opportunities and hinder long-term sustainability, hindering also the relationship that the UK and the US have tried relentlessly to strengthen since Brexit.
What are UK SMEs doing?
Our latest research shows that many UK SMEs are exploring alternative markets to reduce their reliance on the UK, while also adjusting their pricing strategies.
What markets? Certainly, APAC is a perfect candidate for the UK to scale internationally, while also remaining competitive as a global economy. Among these, it is important to mention China, which remains a major market for UK luxury goods, education and financial services, Singapore, Australia and New Zealand.
Nevertheless, EU countries such as Germany, France and the Netherlands are also becoming important partners, thanks to the terms of the Trade and Cooperation Agreement.
Information SMEs should monitor
Trade Policy Updates
Stay ahead of the curve by keeping abreast of evolving trade policies. Recent developments include:
- New tariffs introduced by major trading partners.
- Negotiations aimed at resolving existing trade disputes.
Our experts analyse these updates to provide actionable recommendations for SMEs seeking to protect their bottom lines. Stay tuned for our updates and reports.
Economic Indicators
Economic health directly impacts SME performance.
Key indicators to watch include:
- Interest rates: Rising rates increase borrowing costs, affecting capital-intensive projects.
- Inflation: Persistent inflation erodes purchasing power, impacting consumer spending.
- Consumer spending trends: Shifts in consumer behaviour highlight emerging opportunities and threats.
Business Strategies
Navigating today’s complex economic landscape requires strategic foresight. Consider implementing the following strategies:
- Supply Chain Diversification: Reduce dependency on single-source suppliers to enhance resilience.
- Technology Adoption: Leverage digital tools to streamline operations and improve customer engagement.
- Market Exploration: Identify untapped markets to diversify revenue streams and mitigate risks.
How NorthStar Consulting UK Can Help
At NorthStar Consulting UK, we empower SMEs with data-driven insights and strategic guidance to overcome challenges posed by tariffs, political shifts, and economic uncertainties.
Our services include:
- Comprehensive market research to uncover growth opportunities.
- Detailed industry analysis to inform decision-making.
- Rigorous due diligence to assess risks and optimise outcomes.
Contact us today to learn more about how our expertise can benefit your business. Together, let’s build a resilient future for your SME!