John AlexThe trade war story used to be simple. It was about Washington and Beijing throwing tariffs at each other while everyone else watched from the sidelines. In late 2025, that changed. French president Emmanuel Macron has gone public with an ultimatum to China, warning that the European Union could copy American style tariffs if Beijing does not address a record goods trade surplus with the bloc that now exceeds 300 billion euros.
For UK mid-market exporters, this is not some far-off diplomatic spat. It lands straight in the order book. Many manufacturers and service firms that still think of themselves as “local” are wired into EU or China facing supply chains, whether through components, contract manufacturing or customers that re-export. A tariff change in Brussels or Beijing can now move their margins as surely as a raw material increase.
At the same time, UNCTAD’s Trade and Development Report 2025 estimates that global trade in goods and services grew about 4 per cent in the first half of the year, helped by companies front-loading imports ahead of expected tariff shifts. That early sprint masks a more cautious outlook for 2026 as higher borrowing costs and the lagged impact of tariff hikes start to bite.
Add in a McKinsey supply-chain survey showing tariffs have become the number one geopolitical concern for operations leaders globally, ahead of wars and pandemics, and you have the outline of a new kind of trade war. The question is what mid-sized exporters in the UK do about it, given they lack the lobbying muscle and in-house war rooms of the multinationals.
A new tariff map for Europe and China
When Macron says China is “crashing into the heart” of Europe’s industrial model, he is talking about something very concrete: a Chinese goods trade surplus that passed 1 trillion US dollars in 2025, backed by aggressive exports of vehicles, batteries, solar panels and electronics into Europe and beyond. For Brussels, that surplus is no longer just an economic issue. It is framed as a threat to strategic sectors and jobs, especially in Germany, France and Italy.
The EU has already launched subsidy investigations into Chinese electric vehicles and other green-tech products. Tariffs under its anti-subsidy rules are a matter of “when” rather than “if”. Beijing is trying to ease tensions, including by talking up investment in Europe and stressing that South East Asia or Central Asia can absorb some of the pressure. But if talks fail, higher duties on whole product categories could land quickly.
For the UK, outside the EU but still deeply integrated with it, the risk is twofold. British exporters selling into the EU can be caught by retaliatory moves aimed at allies of Washington. At the same time, British firms that compete with Chinese imports inside the EU may suddenly find themselves with a short-lived competitive boost they do not have the capacity or capital to exploit.
In brief
- China’s annual trade surplus has passed 1 trillion US dollars, with a large share vis-à-vis the EU.
- Macron has openly threatened EU tariffs if the imbalance is not reduced.
- UK firms are exposed indirectly through EU supply chains and directly through their own China links.
Why mid-market exporters feel tariff whiplash fastest
Tariffs rarely arrive in neat, predictable increments. They tend to appear after a complaint, an investigation and a tense negotiation cycle. For a mid-sized exporter that does not have staff in Brussels or Beijing, the first sign is often a customer email asking to renegotiate price or a freight forwarder warning that a shipment may be reclassified.
The economics are brutal. If a 15 per cent tariff lands on a finished good with an operating margin of 8 per cent, somebody has to absorb the difference. A multinational can shift volume between plants, push back on suppliers across multiple categories or simply walk away from less profitable customers. A mid-market firm with one main factory and a handful of key clients often ends up carrying the hit at least in the short term.
The cash-flow effect is just as important as the headline margin. UNCTAD notes that more than 90 per cent of global trade now relies on some form of trade finance. If banks and insurers see higher policy risk on a route, they may demand bigger collateral or shorten credit terms just as customers are asking for longer payment periods. That is a classic mid-market squeeze.
Many leadership teams respond by trying to tell a clearer story in their board packs. That can be as simple as building visual scenario trees that show, in a handful of pages, how a tariff range affects price, volume and cash. Even a basic browser tool that lets you crop photo snippets of freight quotes or customs notices into a single slide can help non-specialist directors see the pattern rather than drown in detail.
In brief
- Tariffs land on thin margins and often arrive faster than contracts can be rewritten.
- Financing conditions tighten when routes are seen as higher risk.
- Mid-market boards need simple, visual ways to understand tariff exposure.
Rewriting contracts, pricing and supply chains
Once the first shock has passed, the real work is in the legal and operational plumbing. Many mid-sized exporters are discovering that their standard contracts are vague on who carries the tariff risk. Terms like “delivered duty paid” or “ex-works” have big implications when duty suddenly jumps, yet in many mid-market firms they were copied years ago and never revisited.
The starting point is usually a line-by-line review of incoterms, escalation clauses and force majeure wording. Legal teams are trying to build more explicit tariff-sharing mechanisms into multi-year contracts, while sales teams walk the tightrope between protecting margin and keeping key accounts. In parallel, operations directors are asking whether they can shift final assembly, testing or packaging into tariff-friendly jurisdictions so that goods qualify under different rules of origin.
That is where the supply-chain strategies highlighted in McKinsey’s 2025 survey move from PowerPoint to the factory floor. Tariffs have pushed companies to experiment with nearshoring, dual-sourcing and more tactical inventory positioning close to customers instead of a single, lean global flow. For mid-market exporters, that might mean adding a secondary supplier inside the EU, using a contract packer in Eastern Europe or Mexico, or building buffer stock in a bonded warehouse.
In practical workshops, some teams literally print tariff maps and trade-flow charts and crop photo segments for each customer or route. Sticking those on a wall in a meeting room sounds low tech, but it turns a theoretical risk into something sales, operations and finance can solve together, customer by customer, instead of arguing abstractly about “China exposure”.
In brief
- Contracts need to say clearly who absorbs tariff changes and when prices can be adjusted.
- Nearshoring, dual-sourcing and bonded stock are now mainstream mid-market tools.
- Visualising exposure by route and customer helps align sales, ops and finance.
Questions UK mid-sized firms should ask in 2025–26
The firms that navigate tariff whiplash best are not the ones with the most data. They are the ones that ask sharp, practical questions early and often, then act on the answers. For UK mid-market exporters, those questions cluster around suppliers, customers and internal resilience.
On the supplier side:
- Which of our tier-one suppliers are themselves exposed to EU China measures or US China measures that could spill over.
- Do we have at least one alternative source in a different tariff jurisdiction for critical components.
- Are our suppliers’ own contracts designed to pass tariffs straight through to us without warning.
On the customer and route side:
- Which customers depend on re-exporting our goods into third markets that may face new duties.
- How concentrated is our revenue in a handful of tariff sensitive products or destinations.
- What would happen to our cash-flow if transit times stretch because shipments are being diverted away from high duty ports.
On the internal side:
- How quickly can we reprice and communicate those changes without losing trust.
- Do we have the credit lines and insurance in place to ride out a quarter of disruption.
- Have we rehearsed a tariff shock as seriously as we rehearse a cyber incident.
When teams document these answers, they often find messy screenshots from customs portals, email trails and freight platforms. Cleaning those up for training packs or risk playbooks matters more than it sounds. Taking time to crop photo images of online portals and annotate where tariff codes, surcharges and lead-time warnings show up can help new starters spot trouble in minutes rather than months.
In brief
- Start with sharp questions about supplier exposure, customer concentration and route risk.
- Stress test cash-flow and credit lines for at least one quarter of disruption.
- Turn messy operational knowledge into clear, visual playbooks for staff.
Where this leaves UK mid-sized exporters
Tariff whiplash is not going away. UNCTAD expects global trade growth to moderate in 2026 as the short-term boost from front-loaded orders fades and the impact of higher borrowing costs and policy uncertainty spreads through investment plans. At the same time, China’s record surplus and Europe’s political mood make further trade action more likely than not.
For UK mid-market exporters, the answer is not to retreat into purely domestic business. That is rarely realistic, and it would mean giving up on hard-won positions in Europe and beyond just as South to South trade and services trade are growing faster than the global average. The more realistic path is to accept tariffs and trade fights as a standing feature of the landscape and to build capabilities accordingly.
That means investing in contract literacy, not just sales flair. It means building supply-chain optionality as a core competence, not a one off project, and it means treating geopolitical monitoring as part of ordinary management information rather than sporadic doomscrolling. Above all, it demands that mid-sized firms behave more like the multinationals they often supply: testing scenarios regularly, documenting responses and updating them as the map shifts.
Tariff whiplash is painful, but it is not random. The patterns are visible for leaders who are willing to look closely and act early. The firms that make it through this phase in good shape will be those that learned to read those patterns, rewire their contracts and supply chains, and stay calm when the next round of trade headlines hits.
FAQ
Why should mid-market exporters care about EU China tariff talk if they do not sell directly to China or the EU.
Because many UK firms sit in the middle of supply chains. They may supply components to an EU customer that ships finished goods worldwide, or rely on Chinese inputs that become more expensive or harder to source when duties change upstream.
What is the simplest first step a mid-sized exporter can take on tariff risk.
Start with a basic exposure map. List main products, destinations and customers, then identify where tariffs are already higher than average or are under investigation. This gives you a shortlist of routes and contracts to review in detail.
Is nearshoring realistic for smaller manufacturers with limited capital.
Yes, but usually in stages. Instead of building a new plant, many mid-market firms start by adding a second supplier in a different region, using contract manufacturers or packers, or positioning more inventory closer to key customers.
How often should companies revisit tariff clauses in contracts.
At minimum, when contracts renew or when there is a major policy change on a key route. In a more volatile environment, many firms now build annual review points into multi-year agreements to adjust for duties, freight costs and regulatory shifts.
Do services exporters face the same tariff risks as goods manufacturers.
Services trade is less directly exposed to tariffs, but it is affected by the same geopolitical tensions through data rules, licensing, visa policies and customer investment decisions. Mid-market services firms still need to monitor policy in their key markets.
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