Irish SMEs braced for costs to rise amid ongoing trade uncertainty
Nearly three quarters of Irish SMEs are bracing for costs to rise amid global trade uncertainty, while one in three businesses expect their imports and exports to fall, new research predicts.
The research based on a study of 300 senior finance decision makers at SMEs in Ireland found that sentiment among Irish SMEs has taken a hit since the onset of tariffs, with 40% of firms reporting a deterioration in business confidence.
The trading sentiment tracker by global financial services firm Ebury reported that 72% of SMEs expect their business costs to increase in the next 12 months as a consequence of US tariffs, with these businesses predicting an average 22% uptick in costs. Only 16% of exporting firms expected exports to increase, while just 13% expected imports to grow.
When asked what the biggest fears were, the SMEs pointed to tariffs and trade barriers (31%), currency fluctuations (23%), geopolitical risks (23%), supply chain disruptions (19%), and increased operational costs (18%).
'Our data shows that global trade tensions are clearly weighing on sentiment and trading activity. Despite a recent deescalation in the trade war, many SMEs remain uneasy, not just about tariffs but also the wider volatility in currency markets and heightened geopolitical tension,' said Ebury head of dealing in Ireland, Robert Purdue.
Since the announcement of tariffs, SMEs have responded in different ways with nearly a fifth (18%) of those surveyed diversifying trading partners, 16% changing suppliers, 15% shouldering additional costs while 12% have frozen hiring and 9% have laid off staff. However, over a quarter (26%) say they haven't taken any steps since the announcement, despite the uncertainty and the expectation of greater costs.
US president Donald Trump has threatened to impose 50% tariffs on imports from the EU if an agreement is not reached by July 9. On Tuesday, Mr Trump said the EU are "either going to make a good deal or they'll just pay whatever we say they have to pay" as negotiations continue. European Commission president Ursula von der Leyen said the talks were "complex but we are advancing".
The EU's total exports to the United States last year totalled about €500bn, with Ireland exporting €72bn.
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