As the United States’ new Baseline and Reciprocal Tariff Policy continues to take effect, small and medium-sized enterprises (SMEs) worldwide face an unprecedented wave of trade disruption and financial uncertainty.
The initial introduction of a 10% baseline tariff on all imports, combined with steep reciprocal tariffs on countries with significant barriers to US goods, has marked one of the most dramatic shifts in US trade policy in decades.
With an already widening global trade finance gap, developing regions are particularly vulnerable to large-scale changes.
Rising interest rates and inflation create a more risk-averse environment for investments, which only drives further rejection rates for SMEs seeking financing applications
Admir Imami, CEO at Zvilo, a leading working capital solutions provider, believes that SMEs need supply chain finance support to mitigate tariff challenges. “While large corporations have the resources to survive any large-scale trade market changes, SMEs operate on tighter margins and have less capacity to absorb sudden cost increases.
“Thus, SMEs must turn to alternative trade finance solutions to ensure they can sustain or build out their operations.”
“As tariffs continue to drive up the price of imported goods and raw materials, SMEs are forced to make difficult choices: pass these costs onto consumers, accept squeezed margins at their loss, or even risk losing competitiveness altogether. Disruptions to supply chains and rising expenses pose massive cash flow challenges for businesses unprepared for sudden shifts in the global trade market.”
“We’ve already seen many escalations for retaliatory tariffs due to the actions of the US, from their major trading partners, including China, the EU and Mexico. Shrinking export opportunities for SMEs are a global concern as these supply chains become more complex and volatile. With a lack of a stable future in sight, smaller businesses need a mindset of survival.
“On top of already challenging environments for SMEs – both from digitalisation and working capital needs created by a culture of late buyers and payers, tariffs will only continue to disrupt and exacerbate delayed payment problems. This threatens to put many out of business unless they are provided with easily accessible liquidity to weather the storm.”
Risk-averse strategies won’t weather the trade storm
Admir advises SMEs that a risk-averse mindset won’t ensure business survival in volatile markets; rather, global and regional market expertise and experience are key to weathering the ongoing storm of changing tariff policies.
“In this volatile environment, SME agility is more critical than ever. The ability to pivot supply chains and invest in regional partnerships is key to business success. Yet if lenders continue to become more risk-averse in their investments alongside the widening global trade finance gap, higher rejection rates are inevitable for traditional financing.
“However, alternative financing and lending solutions can provide SMEs with the needed capital. This is extra important in case sudden shifts in markets necessitate more timely capital access, at favourable terms for SMEs. SME leaders have a responsibility to seek expert support and innovate their lines of investment to maintain a competitive edge on disrupted or limited resources.”
Regional expertise grants a competitive edge
Admir concludes: “SME leaders should consider real-time technology-backed expertise, which is needed to help with the shift towards developing local and regional markets rather than global ones.
“Developing local and regional capabilities and partners is the new frame of focus. Corporates and SME’s alike will need to address their operations and state of trading as the potential slowdown in global levels due to tariffs may slow. Investing in regional trade to bypass this, including local production capabilities, is the right step for businesses, especially in emerging markets.”
“Real-time regional expertise is needed to make reliable financial decisions tailored to specific SME needs in the modern business trade climate. This includes establishing smarter digital lending practices in high-risk, continuously shifting markets, and with AI-powered credit assessment capabilities alongside local and regional growth collaboration, businesses can build their own ecosystem that not just survives but thrives amidst ongoing global trade fragmentation.”
