UK small businesses face significant costs due to tariffs

In 2025, small and medium enterprises (SMEs) in the United Kingdom are grappling with the financial consequences of tariff disruptions. A report has revealed that 30% of SMEs estimate incurring additional costs related to tariffs ranging from £10,000 to £20,000 this year alone, with 2% forecasting losses exceeding £1 million. Businesses across various sectors are impacted, with those in services facing the brunt of these challenges. The average loss attributed to tariff turbulence is pegged at £17,000 per business, reflecting the critical strain these tariffs impose on operational profitability. The recent volatility of exchange rates is a significant factor influencing these figures. At present, the exchange rate has strengthened to £1 equal to $1.358, marking an increase of over eight percent since the beginning of 2025. This fluctuation has had varied impacts; for businesses importing from the United States, the stronger pound allows for increased purchasing power, yet exporters face a grim situation as it eats into their profit margins, compelling many to reconsider their trading strategies. Around 30% of UK SMEs are engaged in exporting to the US, a figure that is substantially higher in certain sectors like retail and wholesale. A major concern among these businesses is the looming uncertainty attributed to tariffs and customs regulations, which they cite as the principal difficulties they face, superseding challenges such as inflation and global conflicts. More than half of these exporting firms predict a decline in their sales volumes going forward, reinforcing the pervasive anxiety regarding their financial futures in response to the unpredictability of Global Trade. In light of these challenges, many SMEs are actively seeking new trade partners, looking beyond the US to markets like China, which has emerged as a favorable alternative for importers and exporters alike. A heightened focus on currency management is also prevalent, with businesses increasingly aware of the importance of managing foreign exchange risks. The UK government is responding to this landscape, emphasizing the need for long-term stability through trade deals aimed at safeguarding key industries amidst ongoing global uncertainties.