UK Retailers Face £618.5m Tariff Blow in US Market: New Research Unveiled
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UK Retailers Face £618.5m Tariff Blow in US Market: New Research Unveiled
We’re excited to share insights from our Knowledge Partner, Retail Economics, in collaboration with ESW, on the mounting cost pressures UK retailers are facing due to recent US tariff policy changes. This new research reveals how UK non-food retail exporters are adapting to navigate a transformed trade environment.
US Market: A Post-Brexit Growth Engine Under Threat
Since Brexit, the US has become a key growth market for UK non-food retailers, with exports rising faster than domestic sales and hitting £4.1 billion in 2024 alone. However, that growth trajectory is now facing a significant challenge.
The US has imposed:
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A 10% baseline tariff on imports from most trading partners, including the UK
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A 30% tariff on selected imports from China
This shift in trade policy has immediate and far-reaching consequences for UK exporters.
Four Key Impacts on Retail Exporters
The new US tariff regime is introducing layers of complexity and cost to UK retailers operating in or exporting to the US market. Notable impacts include:
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Rising Landed Costs
Tariffs are driving up the total cost of getting goods to US consumers, putting profit margins under serious strain. -
China-Origin Product Complexity
The loss of the $800 de minimis threshold for certain Chinese goods has disrupted many DTC (direct-to-consumer) models that previously relied on low-cost, high-efficiency international fulfillment. -
Pressure on Product Strategy
Retailers are being forced to rethink their product portfolios - withdraw some SKUs entirely, source alternative suppliers, or redesign offerings to remain commercially viable. -
Market Expansion Delays
The uncertainty and cost volatility have caused some retailers to delay or scale back their US expansion plans. - A £618.5m Challenge
Through extensive modelling of trade flows and tariff rates, Retail Economics estimates that UK non-food retail exporters now face £618.5 million in additional tariff costs under the new US trade policy landscape.
How Retailers Are Responding
In the face of this cost surge and rising uncertainty, UK retailers are deploying a range of mitigation tactics. The four most common strategies include:
➡️ Cost Efficiencies
Retailers are trimming internal costs through restructuring, renegotiating supplier terms, and adopting leaner operational models.➡️ Exposure Management
Businesses are closely examining product-level performance and viability, and are pausing or withdrawing unprofitable SKUs.➡️ Passing Costs to Consumers
Some brands are managing to pass on a portion of the cost, aided by strong pricing power or brand equity. However, only about 20% of the tariff impact is currently being passed on to end consumers.➡️ Absorbing the Cost
A further 16% of the tariff burden is being absorbed by retailers themselves, cutting directly into margins.Looking Ahead
Retailers’ responses will continue to evolve as they navigate shifting trade conditions, changing consumer behavours, and supply chain constraints. There’s no one-size-fits-all answer - tactics vary by category, market, and business model.
For logistics leaders, the implications are clear: strategic agility and supply chain adaptability have never been more critical.
Dive deeper into the data and insights by accessing the full research from Retail Economics and ESW!