UK retailers to “actively diversify” beyond the US due to tariff uncertainty

The US is historically the UK’s largest non-European Union retail market, but with the ongoing uncertainty surrounding tariffs imposed by President Trump’s administration, 76 percent of UK exporters are now actively looking to diversify beyond the US market.

New research from ESW, which delivers international ecommerce solutions, and research consultancy Retail Economics, found that with the US’s new baseline 10 percent tariff in 2025 is set to increase average duties on UK non-food exports from 2.3 to 17.2 percent, UK retailers and businesses are having to re-draw global growth playbooks and “reevaluate long-held assumptions about US viability”.

Findings of the research undertaken by Retail Economics in Q2 2025 of 200 businesses across UK non-food retail, focused on exporters, and economic modelling, found that more than half of UK exporters would find trade to the US commercially unviable if tariffs exceed 22 percent, while 77 percent of retailers view global brand-building as “a strategic imperative”.

Two-thirds added that they are willing to sacrifice profit margin for export growth, noting that the biggest barriers to international expansion include logistics costs, operational complexity, and regulatory uncertainty.

While 71 percent of small UK retailers admit they were unprepared for US trade shocks, and the “stark operational gap could hit margins overnight”.

Middle East and Asia-Pacific emerge as breakout growth corridors for UK businesses amid tariff volatility

Jon Sheard, vice president of Northern Europe at ESW, said in a statement: “UK retailers are undergoing a seismic shift in their export strategies. Retailers can no longer be overly reliant on a single trade corridor and are pivoting to new regions, including the Middle East and Asia-Pacific, where we are seeing exponential growth.”

According to the ‘Rethinking Reach: How UK Retailers Are Turning Trade Pressure into Global Advantage’ report, exports to the Middle East and North Africa increased by 34 percent between 2021 and 2024, with the UAE now the fastest-growing UK export market outside the EU. Other growth regions include non-EU Western Europe, which is up 15 percent and Asia-Pacific, up 6 percent.

The report also adds that UK retailers retain a distinctive advantage, with 40 percent of respondents noting that the ‘Made in UK’ label delivers a premium perception overseas due to the country’s elevated safety and regulatory standards.

Richard Lim, chief executive of Retail Economics, added: “Tariff volatility is reshaping the global retail landscape. Retailers can no longer rely solely on traditional export markets, like the US. Instead, they’re evaluating new trade routes and pivoting toward high-growth regions to diversify risk and capture new demand.

“Now is the time for exporters to plan and act. Future success will depend on the ability to adapt, localise, and seize emerging trade opportunities.”