US tariff uncertainty pushes UK SMEs back to Europe

UK SMEs are increasingly turning away from the United States and refocusing on European markets as the impact of US trade tariffs continues to disrupt international trade, according to new research from Bibby Financial Services (BFS).

The latest Trading Places report reveals that UK importers and exporters have suffered average losses of £59,000 over the past 12 months as a result of US tariffs, prompting many businesses to reassess their international trading strategies.

More than a quarter (26%) of SMEs trading internationally say they are reducing the number of US customers they work with, while 17% are actively scaling back trade with the US because it no longer aligns with their business ethics and values.

In response to rising costs and ongoing uncertainty, 57% of SMEs say they are pivoting towards Europe and other non-US markets. France and Germany have now overtaken the US as the preferred export destinations for UK businesses, with 36% and 35% of exporters respectively identifying them as key trading partners, compared with 29% for the US.

The report also highlights shifting import patterns. Alongside Germany, which remains a key sourcing market for 34% of importers, China has strengthened its position significantly, with the proportion of businesses importing from the country rising from 23% in 2025 to 34% in 2026.

The findings suggest UK SMEs are increasingly diversifying their international trading relationships in an effort to reduce exposure to geopolitical volatility and trade disruption.

“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.”

The research comes as the UK marks the 10th anniversary of the EU Referendum, with the survey indicating that many SMEs remain dissatisfied with the impact Brexit has had on their businesses.

More than half (53%) of SMEs trading internationally say Brexit has reduced their competitiveness in global markets, while 57% report that the cost of complying with post-Brexit trade rules has negatively affected their profitability.

Attitudes towards EU membership also appear to have shifted. While 51% of internationally trading SMEs supported remaining in the EU in 2016, almost two-thirds (62%) now say they would vote to remain if a referendum were held today. More than a third (37%) believe the UK should rejoin the EU.

The findings also point to growing frustration with government support for exporters and importers. Almost two-thirds (65%) of SME decision-makers believe the Government is not doing enough to support businesses engaged in international trade, while 68% are calling for clearer guidance on managing tariff-related challenges.

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.”

The Trading Places report is based on research among UK importers and exporters and examines how geopolitical tensions, tariffs and changing trade conditions are reshaping international business strategies.