The findings come from a July 2025 survey of 250 finance decision-makers across the UK’s manufacturing, distribution and logistics sectors. Conducted by Sage partner CPiO, the research focused on SMEs with annual revenues above £1m, examining how businesses are reshaping finance and investment strategies in response to tariff shocks.
Up to 40% sales hit as supply-chain risks climb
Tariff changes are acting as a brake on growth: more than two-thirds of SMEs said they have scaled back or postponed investment decisions, while just under a fifth described the impact as “very high.”
At the same time, 27% reported a 21–40% collapse in their sales pipeline, underscoring the immediate pressure on order books.
Seven in ten respondents said supply-chain risks had increased since the measures were imposed, with one in seven describing the rise as “significant.” The report links this to shifting US sourcing strategies, where major manufacturers are pulling back from overseas partners and ramping up domestic production.
Tariffs expose cracks in SME finance systems
The study also points to fragility within UK SMEs. Nearly half of finance leaders admitted they struggle to model future scenarios accurately, with leadership indecision and skills shortages cited as major hurdles. In addition, 48% said recent disruption has exposed weaknesses in their ERP or finance systems, but only 18% are prioritising upgrades.
Despite this, firms are planning measures to strengthen resilience. The most common priorities include diversifying suppliers or reshoring (43%), improving finance skills and training (43%), and expanding domestic warehousing or stockpiling (38%).
SMEs push for trade deals over tariff retaliation
SMEs also want government action. Nearly half of respondents called for new free-trade agreements to open market access, while 45% favoured diplomacy over retaliation, and 44% said clearer, timelier tariff guidance is essential.
“The changing trade tariffs are more than a policy issue – they are directly stalling sales pipelines, straining supply chains and paralysing decision-making for UK SMEs,” said Andrew Watkinson, managing director at CPiO.
