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UK Manufacturers Rethink Trade Strategies as Tariffs Rise

Phil Black - PII Editor 16 minutes ago

30 4 minutes read

One in five manufacturers in the UK have either cut back or completely halted their exports to the US.
Nearly one in four have ramped up their trade with the US to get ahead of the tariffs.
23% have redirected their export efforts towards markets outside the US.
A solid 80% of UK manufacturers remain optimistic about the country’s overall trade outlook.
85% of manufacturers highlight the ‘Britishness’ of their products or companies when competing on the global stage.

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UK manufacturers are taking a fresh look at their international trade strategies as they navigate the challenges posed by rising tariffs and changing global trade policies, according to new insights from Make UK and DHL Express. With costs on the rise, uncertainty growing, and border complexities increasing, businesses are finding it necessary to adapt their export strategies.

The report, titled International Trade Trends 2026: UK Manufacturers in Global Markets, highlights that the increasing trade barriers are pushing manufacturers to explore new export markets, rethink their supply chains, and reassess where they see future growth opportunities.

Despite these challenges, the United States remains a vital export market, with about 60% of UK manufacturers currently engaged in trade with the US. However, the effects of tariffs are already being felt throughout the industry.

A quarter of manufacturers have reported losses on their balance sheets due to the extra costs associated with US tariffs. In fact, nearly 25% ramped up their exports to the US in the early months of 2025 to counteract the anticipated tariff hikes.

At the same time, companies are actively managing their risks. Almost one in four manufacturers have shifted their export focus away from the US, while one in five have either cut back or completely halted their exports to the US. Additionally, 16% are considering doing the same in the future. On the flip side, around 25% of exporters are sticking to their US trade strategies, highlighting the varied impact of tariffs across the industry.

While the US was still seen as the second most appealing growth market at the time of the survey, recent trends indicate that manufacturers are increasingly looking towards opportunities in Asia and Oceania. Nonetheless, the US continues to hold a significant place in the landscape of UK manufacturing exports.

Read the full report

When we look beyond the US market, it becomes clear that there are significant structural hurdles impacting international trade. A striking eight out of ten manufacturers say they’re feeling the pinch from various tariffs. In fact, 58% of those surveyed pointed to tariffs and trade regulations, including rules of origin, as major obstacles to their exporting efforts.

Customs delays are another big worry, with half of the manufacturers highlighting issues like increased paperwork, inconsistent procedures, and a lack of clear guidance at borders.

Yet, there’s a sense of confidence amid the rising competition.

Even with all the ongoing disruptions, manufacturers are holding onto a cautious optimism. Nearly 80% of respondents express confidence in the UK’s overall trade outlook, showing a strong desire to compete on the international stage, even as the global trading landscape becomes more fragmented.

While concerns about global competition are prevalent—87% of manufacturers see it as a challenge—there’s still a robust belief in the strength of British manufacturing. About 85% of manufacturers actively promote the ‘Britishness’ of their products or companies in global markets, acknowledging the UK’s solid international reputation.

Industry insights

Stephen Phipson CBE, Chief Executive of Make UK, shared his thoughts:

“The ability of UK manufacturers to trade goods and services on a global scale is increasingly strained by a mix of higher tariffs, geopolitical tensions, and the need to adapt to a rapidly evolving global landscape.

“Tariffs and trade friction are sowing uncertainty and disrupting long-standing customer and supply chains. Many businesses are responding by diversifying their exports, adjusting their supply chains, or scaling back operations to cope with rising costs and delays.

“Despite these hurdles, manufacturers remain ambitious and forward-thinking. We wholeheartedly support the Government’s strategy to enhance the UK’s global competitiveness and to foster more seamless and predictable trading relationships with long-term partners.”

John Cornish, the Chief Executive of DHL Express UK, shared his insights:

“The research indicates that UK manufacturers aren’t pulling back from global trade; instead, they’re recalibrating their strategies. Companies are adopting a more thoughtful approach to where and how they export, carefully balancing risks while still aiming for growth in international markets.

“We’re witnessing manufacturers diversify and strengthen their trade relationships with markets that pose lower geopolitical risks or benefit from favorable trade agreements with the UK. With the robust nature of British manufacturing and the right support systems in place, exporters are well-equipped to compete on a global scale.”

Supply chains and support needs

The research also highlights a trend towards increased domestic sourcing. Approximately 63% of manufacturers anticipate sourcing more materials from within the UK over the next five years, a rise from 49% since 2020, as businesses strive to enhance resilience, manage costs, and mitigate risks alongside their international trade efforts.

However, manufacturers are vocal about needing additional support to turn their confidence into tangible growth. Over half of them are calling for enhanced government export support, while 38% emphasize the importance of access to logistics partner services, and 36% prioritize customs support.

A sector adapting to change

Overall, the findings paint a picture of a manufacturing sector that is evolving rather than retreating. UK manufacturers are diversifying their markets, fine-tuning their strategies, and responding pragmatically to the shifting global trade landscape. Yet, without focused efforts to reduce trade friction and bolster practical support, the combined effects of tariffs, customs complexities, and uncertainty could hinder future growth.

To ensure that the UK’s trade strategy meets the challenges of today, Make UK is advocating for a renewed emphasis on assisting businesses in navigating global markets, ensuring that ambition is matched by effective execution so that UK manufacturers can stay competitive on the world stage.