Over a fifth of UK SMEs say trade tariff war remains their biggest challenge

"More than one in five UK small and medium-sized enterprises say international trade tariff disputes remain the single biggest challenge facing their business, as global tensions continue to drive up costs and disrupt supply chains. New research from Paragon Bank, based on a survey of 1,000 SMEs, found that 21 per cent now view tariff wars as their most significant current concern - ahead of labour shortages, inflation and domestic regulatory pressures."

"The impact is particularly acute in sectors most exposed to international trade. In transportation and storage, more than a third (36 per cent) of SMEs said tariffs represented their primary challenge, while in manufacturing one in four businesses reported the same. A quarter of respondents said their profit margins had been directly hit, while 23 per cent reported reduced access to export markets or weaker demand from overseas customers."

"Tariff uncertainty is also weighing on confidence and planning. Around 22 per cent of SMEs said it was hampering decision-making, 20 per cent reported longer production times, and 17 per cent said sales had fallen as a result. The latest wave of trade disputes has its roots in escalating tensions between major global economies, most notably the US-China trade war that began in 2018. Fresh US tariffs introduced in April 2025 triggered retaliatory measures, creating renewed volatility for businesses operating across borders."

21% of UK small and medium-sized enterprises view international trade tariff disputes as their single biggest business challenge, ahead of labour shortages, inflation and domestic regulatory pressures. Tariff increases and retaliatory measures have driven up input costs, disrupted supply chains, lengthened production times, and squeezed profit margins. Transportation and storage firms (36%) and manufacturing firms (25%) are particularly affected. A quarter of respondents reported direct hits to profit margins, and 23% cited reduced access to export markets or weaker overseas demand. Around 22% say tariff uncertainty hampers decision-making, 20% report longer production times, and 17% report falling sales.

Read at Business Matters