Tariffs and Uncertainty: Why Retailers Are Looking to the UK as a European Launchpad

One of the biggest impacts on the retail sector so far this year has been tariffs and their influence on international markets. These duties have an overwhelming effect on the retail industry, from source to store, and we have seen in recent weeks how retailers have responded to the U.S., the world’s largest retail market, imposing historic tariffs on many of its largest trading partners.

America Just Got More Expensive

The most obvious and prevalent impact that these tariffs have had on the retail industry is the increase in cost, for both retailers and consumers. Unless a brand and their whole supply chain is entirely based in the U.S. their access to that market now incurs a cost. The brand either eats that cost, leading to less revenue and profit, or passes that cost on to their customers, potentially risking a loss of loyalty or sales due to increased prices. In most cases it is the latter.

This decision and the consequences are predictable in the face of tariff imposition. What makes the current climate more worrying for the sector as a whole is the uncertainty that accompanies these policies. When these same duties can be reversed at any time, or even escalated, the U.S. market feels more volatile and high-risk for global investors than ever before.

So, as the American market becomes more costly and riskier for retailers across the globe, how should retailers in North America and around the world react?

The Rest of the World Awaits

Retailers are already taking action. They are looking to other major markets: the UK, Europe, India, China and APAC. These markets are now more stable; politically, policy-wise, and culturally. And brands are acting already.

Australian swimwear brand RAQ Apparel shut down its U.S. online store after new tariffs rendered its American operations financially unviable. This is a prime example of how small businesses are impacted disproportionately; they simply do not have the infrastructure and cashflow to facilitate doing business across the globe under the weight of tariffs this size. Small brands are not the only businesses that have had to step back from the U.S. market. Jaguar Land Rover paused shipments to the America in response to 25% tariffs on all foreign built cars on top of those specific to the UK. These added costs, in some cases, make retailing in the U.S. simply unfeasible.

Large companies can somewhat circumvent these duties. A story from last month reported that Apple had flown in multiple planes full of iPhones ahead of the tariff imposition. An expensive yet effective response, for the time being. Outside of the U.S., IKEA responded by reshuffling their global supply chain, completely halting production in the U.S. and China and investing in their European facilities to avoid getting caught in the crossfire of the ongoing trade disputes between the two largest markets in the world.

Other companies are simply adapting where they can. Uniqlo originally planned for rapid U.S. expansion this year, aiming for major market share. These efforts have been significantly scaled back, either delaying or cancelling several locations. As a Japanese company they are now faced with tariff exposure and uncertainty around future trade relations along with existing cultural hurdles. The Swedish company H&M was looking to steadily open new stores in the U.S. and grow their footprint, instead they are pivoting by closing underperforming U.S. stores and leaning more heavily into e-commerce. Tariffs on clothing and fabrics from Asia, combined with economic uncertainty and reduced footfall, has completely reconfigured their plans for the U.S. market. Instead, they are shifting their investments to Europe, India, and Latin America which they consider more stable markets.

The Strength of Europe

Europe is a robust and long-standing retail market with a wide array of audiences and retail environments. Pairing this with the relatively stable and predictable trade and regulatory environments the UK and EU offer allows brands to plan much longer term without sudden policy whiplash.

The consumers of London, Paris, Milan, Berlin, and Amsterdam, are full of trend-savvy consumers who value innovation, sustainability, and unique brand stories. This lends an advantage to retailers in categories like fashion, wellness, and luxury, as European audiences are often more responsive to premium positioning than in the United States.

Some of this links heavily to how brick-and-mortar retail exists in these different markets. While the U.S. retail market is over-saturated and facing a mall-centric retail apocalypse, parts of Europe are thriving with hybrid retail models: curated storefronts and high streets, concept stores, and experiential flagships.

Especially in cities like London and Paris where retail still holds huge cultural weight. Both cities have an incredibly longstanding history of retail, with the likes of Oxford Street and the Liberty Department store which opened in 1875 in London and The Champs-Élysées and the LVMH owned Le Bon Marché which opened in 1838.

Brands can take individual advantage of this attitude in consumers too. European customers often reward heritage, craftsmanship, and originality, meaning smaller and mid-sized brands can punch above their weight. The U.S. market, by contrast, is deeply competitive and heavily driven by discounting, scale, and aggressive marketing spend.

The UK is the Doorway to Europe

Entering the European retail market might seem complex, but the UK offers a powerful and strategic starting point.

The retail environment in the UK is one of the best in the world and is home to some of the most famous shopping destinations in the world; Oxford Street, Harrods, The Trafford Centre, Regent Street, Selfridges, One Liverpool, the list goes on. Within this ecosystem there exists a startling blend of heritage and innovation, and retailers here get to speak to – and learn from – a truly global audience. This diversity shapes everything from product selection to in-store experience.

For global brands, London is often the first stepping stone into the European market. It has the international prestige, infrastructure, and consumer base that makes it a low-risk, high-reward entry point.

Particularly for brands coming from U.S. and Canada, the blend of North American business sensibilities and a shared language combined with a mature and robust retail ecosystem and access to European consumers is increasingly appealing. For retailers from Canada or the U.S., this means fewer cultural or operational hurdles than diving straight into France or Germany.

Investing in retail in the UK opens the door to Europe and an escape from the uncertainty that is currently impacting the American retail sector.