76% of UK Retailers Seeking New Export Markets Amid Tariff Chaos

The Impact of Tariff Shifts on Global Fashion Retailers

Fashion firms around the world are experiencing significant changes due to recent trade policy shifts. In the United Kingdom, many retailers have reported that these changes have disrupted their long-term plans. A study conducted by ESW and Retail Economics, based on responses from 200 non-food U.K. retailers—many of whom focus on exports—found that a majority (76 percent) are now looking to diversify away from the United States as a key market.

The U.S. has traditionally been the largest non-European retail market for most exporters. However, protectionist trade policies have disrupted long-standing export patterns, prompting larger retailers to "radically re-draw their global growth playbooks." Smaller retailers, on the other hand, have not fared as well. About 71 percent of them said they lack a clear path forward due to the shifting dynamics in the U.S.-U.K. trade relationship. These smaller businesses, often less resourced than their larger counterparts, are particularly vulnerable to the new 10-percent baseline tariff, which is expected to raise average duties on non-food exports from 2.3 percent to a staggering 17.2 percent.

This increase is a major challenge for any retailer, regardless of size. If tariffs were to exceed 22 percent in the future, more than half of the respondents indicated that trading with the U.S. would become "commercially unviable."

Jon Sheard, vice president of Northern Europe at ESW, noted that "U.K. retailers are undergoing a seismic shift in their export strategies." He emphasized that retailers can no longer depend solely on a single trade corridor and are instead exploring new regions, such as the Middle East and Asia-Pacific, where there is significant growth potential.

Expansion into New Markets

According to the report, the export relationship with the Middle East and North Africa has grown substantially in recent years, increasing by 34 percent between 2021 and 2024. The United Arab Emirates (UAE) has emerged as the fastest-growing export market for U.K. retailers outside of the European Union. Other regions, including Western Europe and the Asia-Pacific, have also seen notable growth, with increases of 15 percent and 6 percent respectively.

Richard Lim, CEO of Retail Economics, stated that "tariff volatility is reshaping the global retail landscape." He highlighted that retailers can no longer rely heavily on the U.S. as an export market as they once did. Instead, they are focusing on evaluating new trade routes and moving toward high-growth regions to reduce risk and tap into new demand.

Lim added that "now is the time for exporters to plan and act. Future success will depend on the ability to adapt, localize, and seize emerging trade opportunities."

Strategic Shifts and Challenges

Retailers are quickly adapting to this new reality. The report found that 77 percent of respondents view global brand building as a strategic imperative, and two-thirds are even willing to accept lower profit margins in favor of export growth.

However, there are still significant challenges ahead before these new international growth strategies can fully take shape. In the short term, the biggest obstacles include rising logistics costs, increased operational complexity, and regulatory uncertainty. As they prepare for a transformation in how they conduct exports, many retailers are seeking turnkey solutions to manage logistics coordination, payments, taxes, customs, tariffs, fees, local marketing, and positioning in front of new audiences.

Despite these hurdles, U.K. retailers believe they have a unique advantage: 40 percent of them feel that "Made in the U.K." labeling and messaging conveys a perception of premium quality, thanks to the country's modernized safety and regulatory standards.

Looking Ahead

As the global fashion industry continues to evolve, the need for adaptability and innovation becomes more critical. With shifting trade policies and growing competition, U.K. retailers must remain agile and proactive in navigating the changing landscape. By focusing on new markets, investing in brand development, and addressing logistical and regulatory challenges, they can position themselves for long-term success in an increasingly complex global economy.