What Impact Will Global Trading Disruptions Have On UK SMEs?

2025 will be remembered for the year where international trade was turned on its axis!

At the time of writing, the rates for US tariffs are somewhat still in a state of flux, but there is an expectation that they will now remain at 10% minimum for UK exports to the US.

The UK Government is making progress to form international trade agreements between many countries and regions including India, Europe, Canada, Gulf and South Korea amongst others. 

These could provide some opportunities for some businesses but may also cause some challenges for others. 
 

What steps can you take to ensure you don’t miss out?

1. Assess how your business may be impacted.  Businesses in agriculture, food production, textiles and light manufacturing/engineering could be impacted by more competition from new entrants with cheaper costs of production. Strategic business planning may help you identify new routes to market and opportunities for growth, so that you are less reliant on their traditional business activities. Speak to us if you need more support with this.
    
2. If your business exports directly to the US, you have likely already recognised that your costs will increase.  Cash flow projections will help you understand if you have capacity to absorb those higher costs or whether you need to increase your prices. The importation process and paperwork is also likely to become more time-consuming, at least in the short-term, so it will be worth considering the timing of shipping in the coming months and also whether to move some production or retail to the US in the longer term. 
    
3. If you import directly from overseas, you will want to consider if your costs will change. Some companies who export to the US may choose to increase costs across all their markets, to offset some of the trading impact of tariffs on dealing with US customers.  Other companies may choose to offload excess stock onto the UK market, so this may bring prices down. 
    
4. All other trading businesses will find that their purchasing costs will likely be disrupted eventually, as increased costs filter down the supply chain. This may be an opportunity to revisit who you use as their suppliers, to ensure that your supply chain is resilient and as cost-effective as it can be. 
    
5. If you are considering exporting to new markets, especially those countries where new trade deals have been negotiated, check out further support from UK Export Academy or the British Chamber Network. 

Here are three ways we can help and support you further:

1. Funding – with access to over 100 lenders across the full range of products, we can quickly identify potential sources of finance if you need more working capital.  This could be in the form of a cash flow loan or other short term funding such as invoice finance or a merchant cash advance. For those who are trading internationally, supply chain finance or trade credit can be used to fund the transaction. 
    
2. Optimising credit scores – using the Credit Review Service, we can help you have the highest credit score possible, so that you can attract the lowest interest rates for lending and the highest trade credit from your suppliers. This is especially important if you are going to be forming new supplier relationships. 
    
3. Tracking credit scores – as more companies are adjusting to this new world of costs, you will benefit from tracking the resilience of your existing suppliers to watch for any signs of distress.  You should also keep a closer eye on your customers so you can react quickly and change their trading terms, if the company looks to be suffering from financial difficulty. Speak to us about the Capitalise for Business facility we can offer our clients.

If you want more information about strategic planning, funding or credit scores, you can contact us here