Tariffs set to cost UK non-food retailers £618.5m

The report shows that non-food retail exports to the US are now worth £4.1bn, but Donald Trump’s baseline tariffs of 10% on UK exports plus 20% above levies on common manufacturing bases for goods risk retailers pivoting elsewhere. 

“UK retailers are undergoing a seismic shift in their export strategies,” said ESW vice president of Northern Europe Jon Sheard. “Retailers can no longer be overly reliant on a single trade corridor and are pivoting to new regions, including the Middle East and Asia-Pacific, where we are seeing exponential growth.”

This data is based on interviews with 200 businesses across non-food retail in Q2 of 2025. According to the study, the average duty rate on UK non-food exports will now rise from 2.3% to effectively 17.2% once rules of origin are accounted for.

That puts the US market dangerously close to a 22% tariff threshold at which more than half of retailers say it will become commercially unviable to export there. 

The report shows that there are a number of ways that retailers will look to mitigate the £618.5m cost, which the authors got to by combining the survey data with economic modelling.

These include looking for cost efficiences such as renegotiating supplier relationships to the tune of £217m. Retailers are also expected to spend £175.8m on managing exposure to the market, whether that is pausing exports or withdrawing certain SKUs. 

It estimates that £126m of the costs (20%) will be passed directly onto the consumer, while 99.6m (16% of the overall cost) will eat directly into margins. Some sectors are expected to pass costs on more readily, particularly the consumer electronics sector where rules of origin and reliance on Chinese imports means that the tariff hit is likely to be sizeable. 

While global retailers will no doubt be working hard on this, the study also found that 71% of small UK retailers had no formal plan for trade policy shocks. 

Outside of the EU, the report shows the Middle East and North Africa (MENA) as an increasingly attractive destination for non-food retailers. Exports there increased by 34% between 2021 and 2024, with the UAE now the fastest-growing market outside of the EU. 

Earlier in the week, Reuters reported that consumer brands and retailers were clashing over tariff-driven price rises. Beiersdorf chief executive Vincent Warner said on Wednesday that French and German retailers were among those to push back, refusing price increases and sometimes asking for price reductions. 

“Tariff volatility is reshaping the global retail landscape,” said Retail Economics chief executive Richard Lim. “Retailers can no longer rely solely on traditional export markets like the US. Instead, they’re evaluating new trade routes and pivoting toward high-growth regions to diversify risk and capture new demand. Now is the time for exporters to plan and act. Future success will depend on the ability to adapt, localise, and seize emerging trade opportunities.”