10. Budget Update: Trading in a More Hostile World: Tariffs, Brexit and the New Reality for UK Exporters

The three big forces you can’t ignore

Let’s simplify this down. For UK exporters, the “hostile world” boils down to three main pressures.

1. Tariffs and trade barriers

Even if your specific product isn’t heavily hit by tariffs yet, the direction of travel is clear:

• More use of tariffs as a political tool
• More emphasis on “local content” rules
• More checks on origin, standards and compliance

This means:

• You can’t assume “it’ll always be fine” just because it has been so far.
• You need to understand whether your product is at risk of higher duties or stricter checks – especially if you rely on the US, EU or other big markets.

2. Brexit friction

The politics may have moved on, but the practical reality for UK–EU trade has not:

• More paperwork
• More scope for mistakes
• More time and money spent on compliance

You might be dealing with:

• EORI numbers, commodity codes, rules of origin
• Incoterms choices shifting risk one way or the other
• Customers who are still a bit wary of UK suppliers because they’ve had bad experiences

If your export margin doesn’t explicitly include the time, admin and risk costs of all this, your pricing is too optimistic. 

3. Volatile costs and exchange rates

On top of that, you’ve got:

• Shipping and logistics costs that can swing around
• Currency moves that can wipe out your profit on a deal
• Local competitors in your target market whose cost base is different to yours

Ignoring FX risk and cost volatility might have been survivable when margins were fat.

In a tighter, more hostile environment, it’s a recipe for working hard for very little. 

The mindset shift: from “extra sales” to “profitable export business”

Lots of UK firms still treat exports as:

• A nice way to “top up” sales
• Something they do because those enquiries happened to come in

That’s fine if you’re dipping a toe in the water. But if exports are going to be:

• More than 10–20% of your turnover, or
• A key plank of your growth plan

…then you need to treat them as a separate, strategic profit centre, not just “more orders to stick on the pile”.

That means:

• Proper costing
• Proper pricing
• Proper risk management

Let’s talk about what that looks like.

Step 1: Build a true export P&L (not just a sales figure)

Start by separating out:

• Export turnover by country or region
• Direct costs specific to those sales:
  • Extra packaging
  • Shipping and insurance
  • Customs agent fees
  • Local warehousing or distribution costs
  • Duties and taxes
• Hidden internal costs:
  • Extra admin time
  • Time spent dealing with queries, delays and paperwork
  • Time spent on FX and banking

Even if the internal costs are just estimates to begin with, get them in.

You want to be able to answer:

Are we actually making decent profit on exports, after everything? 

If the answer is “we don’t really know”, that’s your first job. 

Step 2: Price for reality, not for fear

One of the most common traps I see is this:

• A UK exporter is so worried about losing the business that they under-price.
• They price almost the same as they would for a UK customer.
• They then absorb:
  • Extra shipping and handling
  • FX risk
  • Delays and admin
  • Occasional returns or customs issues

On paper: “We’re competitive, we won the job.”
In practice: “We’ve worked hard for a margin that barely justifies the hassle.”

You want to:

• Understand your true landed cost to get the product to the customer in good order.
• Decide the minimum acceptable margin you need on export work.
• Be brave enough to say:
  • “We’re not the cheapest, but here’s the value we bring,” or
  • “This market/buyer isn’t worth it on these terms.”

Not every export opportunity is a good opportunity. 

Step 3: Get clear on Incoterms and risk

Incoterms (EXW, FOB, DAP, DDP etc.) might sound like shipping jargon, but they decide:

• Who’s responsible for what,
• When, and
• Where the risk and cost sits.

You want to be very clear, in your contracts and quotes:

• Are you responsible for delivery to port, or to the customer’s door?
• Who handles import clearance and local taxes?
• Who takes the hit if something is delayed or held up?

If you casually agree to terms that dump all the risk and responsibility on you, your “margin” needs to be higher to cover that.

If it isn’t, you’re effectively giving away free risk cover. 

Step 4: Take FX seriously (without turning into a trader)

You don’t have to become a currency speculator. But you also can’t pretend FX doesn’t matter.

A few basics:

• If you’re invoicing in foreign currency, what’s your plan if the rate moves against you between quote and payment?
• If you’re invoicing in GBP, are you factoring in that overseas buyers might see more volatility on their side and push you on price?
• Are you using any basic tools (like forward contracts or simple hedging) to lock in rates on larger or longer-term deals?

The goal is not to eliminate all risk – that’s impossible. It’s to:

Avoid being wiped out by a 5–10% move on a thin-margin deal. 

Step 5: Decide where you really want to compete

Not all markets are equal.

Ask yourself:

• Which countries or regions have higher appetite for quality and service, not just price?
• Where do we have (or could we build) a local partner who knows the landscape?
• Where do tariffs, regulations or logistics make us fundamentally uncompetitive?

It may be better to:

• Go deeper in a smaller number of markets where you can build a brand and a premium position,
• Rather than scatter efforts across lots of countries where you’re just another cheap supplier.

Focus makes it easier to:

• Learn the local rules properly
• Build relationships
• Refine your pricing and positioning for that market

Step 6: Make sure your home base can support the export plan

Export is glamorous compared to tightening your internal systems, but the two are linked.

You don’t want to be:

• Promising tight lead times overseas while your production planning is held together with spreadsheets
• Trying to handle complex export paperwork when your basic stock control is wobbly
• Chasing overseas debtors when your core UK credit control isn’t robust

In a hostile trading world, internal robustness is your best defence.

Your export business will only be as strong as your:

• Processes
• Systems
• Cashflow
• People

This isn’t anti-export – it’s pro-profitable export

To be clear:

• I am not saying “Don’t export.”
• I’m saying “Don’t export on fantasy margins and wishful thinking.”

There is still huge opportunity for UK firms that:

• Offer something distinctive
• Are willing to do the hard work on quality, service and reliability
• Look at the numbers honestly and price accordingly

But the days of:

We’ll just ship it and see what happens…

…are over.

You have to treat export as a serious, structured profit engine, not a side hobby.