How tariffs could still impact UK retailers
This article is provided by BRC Associate Member, Simon-Kucher.
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UK retailers must act now as U.S.-China tariffs reshape global trade
Recent tariff changes between the U.S. and China are sending shockwaves through global supply chains—and UK retailers stand at a strategic crossroads.
The U.S. has cut tariffs on Chinese goods from 145% to 30%. In return, China reduced its tariffs on American imports from 115% to 10%. While this easing offers temporary relief, it signals broader volatility that’s far from over.
For UK retailers, the consequences are clear: intensified global competition, unpredictable cost dynamics, and rising regulatory complexity. The time to prepare is now.
Chinese exporters shift focus from the U.S. to the UK and Europe
U.S. tariffs have made the American market less attractive for Chinese exporters. In response, many are redirecting goods—and growth ambitions—toward Europe and the UK.
Slower domestic demand in China, combined with inventory surpluses and rising price competition at home, means these exporters need new markets.
Three strategic plays are emerging:
- Direct competition: Fast-moving brands like Shein, Temu, and TikTok Shop are aggressively targeting UK consumers with low prices and fast fulfillment.
- Partnerships: Companies such as JD.com are entering joint ventures, like its deal with Morrisons, to expand collaboratively.
- M&A activity: Others are pursuing acquisitions to quickly establish European footprints and gain regulatory advantages.
To reduce exposure to future tariffs and qualify for local trade benefits, many Chinese firms are also building supply bases within Europe. This localization strategy helps reclassify goods as European-made, sidestepping barriers and reducing delivery times.
These shifts bring both risk and opportunity. While Chinese entrants threaten to erode share with low-cost models, UK retailers also have the chance to collaborate, partner, or innovate in response.
Retailers must rethink supply chain and pricing strategies
Lower procurement costs might sound like good news—but they come with a catch: more competition.
Chinese exporters are willing to accept slimmer margins to clear inventory, which puts pressure on UK businesses to respond without sacrificing profitability.
Meanwhile, tariff unpredictability means pricing strategies must be flexible. Retailers can’t afford to anchor decisions on short-term trends. Instead, they need a plan for long-term volatility.
Five strategic priorities for UK retail resilience
To stay ahead, UK retailers should act now on these five fronts:
- Reassess your competitive position
The arrival of low-cost international players raises the bar. Agile players like ASOS benefit from flexible supply chains. Others must sharpen their brand relevance, assortment, and value proposition. - Redesign pricing strategy
Tariff reductions may lower input costs, but inflation, energy bills, and council tax continue to strain consumers. Retailers must balance margin needs with shopper expectations. - Invest in pricing technology
Dynamic pricing tools and digital shelf labels enable quick, data-driven adjustments. This improves speed to market and protects profitability. - Strengthen customer communication
Shoppers want transparency. Explain pricing shifts and supply changes clearly. Building trust in uncertain times pays long-term dividends. - Diversify your supply chain footprint
Reduce reliance on a single source market. Explore alternative suppliers in India, Eastern Europe, and Latin America to spread risk and build resilience.
Watch for regulatory shifts that may tip the balance
Tariffs are just one lever. Policy changes around trade thresholds, origin rules, and compliance standards will further impact retail dynamics.
The UK’s review of the “de minimis” threshold—currently £135 for duty-free imports—could significantly reshape competitive dynamics. If lowered or removed, imports from platforms like Shein and Temu could become less cost-advantaged, creating a more level playing field for local retailers.
Simultaneously, upcoming trade negotiations with the EU and other partners may redefine market access, origin labeling, and operational costs. Retailers must track these developments closely to stay ahead of the curve.
Strategic agility will define the winners
This is more than a trade story—it’s a global shift in how value flows across supply chains. UK retailers who wait to react will fall behind.
Winners will recalibrate their sourcing strategies, deploy pricing innovation, and pursue strategic partnerships. Those who act now will unlock long-term advantage.
At Simon-Kucher, we help retailers turn global disruption into commercial opportunity. Whether you're rethinking your pricing model, diversifying suppliers, or navigating new regulations, we bring the strategic clarity and commercial insight to help you succeed.
Talk to our experts to build your roadmap through the uncertainty.
