In the first of a new Grant Thornton series on trending international insights, we examine the wider impact of tariffs on the mid-market, where a dip in market confidence at the start of 2025 was just the start of more to come.
At the close of 2024, mid-market businesses were riding a steady wave of optimism.
According to Grant Thornton’s International Business Report (IBR) research 54.6% of mid-market firms planned to increase their exports, with a similarly strong 50.3% expecting revenue growth from international markets.
However, as we entered 2025 trade tensions escalated, with optimism experiencing its first notable dip in two years (down 2.9pp to 72.7%). Despite these early signs of caution emerging among mid-market leaders though, the underlying fundamentals – rooted in agility and strategic foresight – remained relatively robust.
Reshaping the global trade landscape
The current wave of new tariffs has proven both unexpected and unprecedented, with the OECD warning that they could take a “significant toll” on worldwide growth[1]. What began as isolated measures has morphed into an uncertain and complex global trade landscape, with the parameters changing on a near daily basis. And in a world where heavy trade barriers are part of everyday business, the ongoing disruption caused is very real.
Reacting to unprecedented roadblocks
As opportunities in traditional global export markets continue to shift, businesses are facing the reality that new trade dynamics may significantly alter their growth trajectories. Firms now need to be more strategic than ever, maximising their value in domestic markets and looking to do more business regionally.
But mid-market businesses are no strangers to navigating severe challenges[2]. Over the past number of decades, these firms have successfully weathered the Global Financial Crisis, managed the widespread disruptions brought on by COVID and adapted to a whole host of severe supply chain disruptions.
What makes today’s volatile turnarounds on tariffs unprecedented however, is that throughout all of these prior crises the mid-market could focus on their portfolio of non-domestic business to grow despite market turbulence – today’s tariffs are diminishing that option, forcing firms to reassess their addressable markets and potentially adjust their business models.
Businesses should assess both exposure and risk, adjust supply chains in light of this turbulence and look to understand the true value of their products and services in the context of opportunities in emerging markets.
The mid-market advantage
In this constantly evolving landscape, the enduring principles that define the mid-market – focus, agility, and strong leadership – have never been more critical. These core attributes are what empower firms to respond swiftly to new challenges and pivot as needed. Strategic shifts are already being observed, with many companies now looking to concentrate on a select few markets with the most promising prospects – the number of countries businesses are looking to sell to has already decreased (down 3.7pp to 47.8%).
This more focused approach not only maximises resource allocation but also enhances their ability to manage complex tariff-induced changes.
Making tough decisions in a fragmented world
Faced with the reality of a fragmented global market, some mid-market businesses may soon confront the difficult decision to scale down or even halt trade in markets where tariffs make continued engagement unsustainable. For many, this could mean rethinking traditional strategies in favour of structural adjustments – altering contract terms, reconfiguring payment structures or even reimagining supply chain logistics. While these decisions are challenging, they are sometimes necessary to help mitigate impact and safeguard long-term competitiveness.
We’ve already seen the mid-market begin to shift resourcing when it comes to key areas such as supply chain resilience. By the end of 2024, nearly one third (31.8%) of mid-market leaders planned to spend most resources preparing for supply chain interruption as a potential issue – a fourfold increase from the 8.3% who cited supply chain issues as their most significant challenge in 2024. This preparation stems from the experience gathered from weathering previous downturns and the ability to make strong, resolute decisions.
Charting a way forward through change
Ultimately, one unavoidable fact right now is that change is constant. Beyond just tariffs, mid-market leaders face numerous transformative challenges: AI as part of their digital journey, evolving cyber threats, climate change (and regulation) and demographic shifts. Yet the same qualities that help them navigate trade barriers – agility, foresight, and purpose-driven leadership – position them well for these other challenges.
The global economy may suffer further as trade tensions and uncertainty persist, but if there’s a silver lining, its likely to be found in the mid-market – the most resilient and opportunistic segment of the business landscape.
Where strong scenario planning will be key and, for those who get it right, new doors may begin to open. In what seems like a zero-sum game of global tariffs, don’t be surprised if many mid-market firms emerge as unexpected winners.
Look out for more regular content in our “Trending Topics” series. If you would like support or guidance on navigating the current trade environment for your own business, don’t hesitate to reach out to one of our dedicated International Business Contacts today.