Why is navigating trade policy essential to building supply chain resilience?

The fragility of global supply chains has been laid bare through several disruptions in recent years: Brexit, Covid-19 and now an increasingly uncertain tariff environment. Businesses are navigating a world where the movement of goods is less predictable, more politicised and often more complex.

A key driver of this shift is a change in the way trade policy has been utilised by governments. While historically trade policy has been used in a targeted way, governments are now deploying trade policy to achieve wider economic and security objectives. At the macro level, trade measures are being used to protect certain industries, incentivise domestic production and recently, driven by geopolitics. At the micro level, businesses can experience these shifts in the form of higher costs, disrupted supply chains and growing administrative burdens.

Against this backdrop, supply chain resilience and trade policy have become increasingly intertwined. For UK businesses, understanding and navigating trade policy is not optional, it is essential for building supply chains that can withstand shocks and adapt to change.

Why trade policy matters more than ever

Trade policy has evolved from being primarily focused on tariffs and export opportunities to becoming a key instrument for strengthening supply chains. Recent UK agreements increasingly reflect this shift. While the central focus of the UK-US Economic Prosperity Deal (EPD) is addressing tariff uncertainty, economic security underpins the commitments. For instance, the US agreed to remove tariffs on UK steel and aluminium only on the condition that the UK meets unspecified requirements on the security of supply chains. In addition, both sides committed to closer cooperation on economic security, including when responding to policies of third countries.

The focus on supply chain resilience is, in some part, the result of the uncertain tariff environment experienced throughout 2025. However, governments are utilising additional trade policy tools which could lead to potentially significant disruption for UK businesses. For example, China and the US have both recently proposed expanding their export control regimes, particularly for critical minerals. While these issues were addressed through bilateral negotiations between the US and China, it is clear tariffs are not the only tool governments are considering to improve resilience within supply chains.

Both the UK government’s Industrial Strategy and Trade Strategy highlight the importance of working with trade partners to address supply chain resilience. Furthermore, in September 2024, the UK signed a Memorandum of Understanding with the US and Australia to improve cooperation in addressing risks to critical supply chains.

For UK businesses, this change matters as governments recognise that supply chains are now a strategic vulnerability as well as an economic asset. Access to critical minerals, rare earths, semiconductors and other sensitive components can determine an industry’s international competitiveness.

Supply chain resilience is now a necessity 

Recent history has demonstrated how disruptive sudden policy changes can be on supply chains and the subsequent impact on UK businesses. Since April 2025, the US has introduced broad “reciprocal” tariffs affecting most trade partners, as well as product-specific tariffs (e.g. steel and aluminium, automotive etc.). While many trading partners have since reached trade deals with the US to lower the rates of duty applied to their goods on import to the US, the threat of rapid tariff changes and further trade restrictions remains over the longer term.

For UK businesses, the impact of these tariffs was immediate. The US is the largest single market for UK goods exports and following the introduction of tariffs, monthly UK goods exports to the US fell from £5.9bn in February to £3.9bn in June 2025. The impact of increased tariffs was exacerbated by rapid policy changes which led to uncertainty on the tariff rate that would be applied to goods exported to the US.  

While the long-term impact of recent tariff changes and subsequent shifts in demand and pricing are not yet known, the policy disruptions driving this seem unlikely to disappear. Rather, frequent and more targeted interventions look set to continue. Critical sectors such as semiconductors, energy, automotive and high-tech manufacturing remain particularly exposed to future trade-restricting measures as governments seek to protect their domestic industries. UK businesses that rely on components or raw materials in these areas may need to adapt to frequent trade restrictions or tariffs on an ongoing basis.

The world of recent decades, where the global economy was underpinned by a relatively stable, rules-based multilateral trading system is receding. In its place emerges a more fragmented landscape defined by bilateral deals and the increased use of trade measures as strategic tools. UK businesses must therefore plan for continued uncertainty.

What does supply chain resilience look like?

For UK businesses, supply chain resilience is increasingly moving towards the ability to adapt to a landscape where geopolitics and trade policy can shift with little warning. The experience of recent years has shown that supply chains which are overly reliant on single routes, markets, suppliers or critical inputs are the most exposed when policy changes suddenly arrive. For example, the UK steel and aluminium sector experienced significant disruption when the US introduced supplementary tariffs on these goods in May 2025 and the automotive industry faced bottlenecks when access to semiconductors from a handful of suppliers was restricted.

In the current environment, supply chain resilience is not just about reducing risk but enabling businesses to compete even despite the backdrop of frequent policy interventions and trade disruptions. Rather than responding to shocks as they arise, resilience increasingly relies on the ability to anticipate and plan for them.

This begins with having clear visibility across the supply chain, understanding where dependencies lie and where concentrated exposure could quickly translate into operational or financial vulnerability. From this foundation, businesses can strengthen resilience by developing credible alternatives including diversifying supplier networks and building contingency plans that can be activated when conditions change.

Building resilience also means looking at the tax consequences that extend beyond tariffs. When assessing alternative supply chain models, businesses must understand how each option will affect the businesses global tax profile. This includes understanding whether transfer pricing arrangements can be adjusted to mitigate some impacts and whether some structures offer a more efficient overall tax cost. It is also important to consider how any required investment will be financed in a tax-effective way and to identify opportunities to maximise deductions for new capital expenditure. Incorporating these elements into analysis strengthens decision-making and supports long-term resilience.

Embedding this approach can reduce the impact of disruptions originating from external policy decisions. The benefits of this extend beyond operational stability, with greater resilience supporting more predictable financial outcomes and the ability to act quickly when new policies are announced. In an environment where uncertainty has become a structural feature of global trade, resilience is no longer a defensive measure but a foundation for long-term competitiveness.

What should businesses be doing now?

For many UK businesses, the challenge is no longer identifying risks and disruption but building capability to respond decisively. Embedding trade policy awareness into commercial decision-making can help businesses better anticipate the impact of tariff shifts or policy developments. This includes ensuring supply chain, procurement, finance and tax teams are working from timely insight and using scenario modelling to understand how different policy options could affect operations.

Strengthening the visibility of supply chains beyond tier-one suppliers can also help in identifying where reliance on particular materials, routes or markets may lead to vulnerability under changing conditions. Deeper transparency is not only important for operational resilience, but also for meeting emerging reporting requirements in areas covering supply chain due diligence and sustainability disclosures.

Resilience also develops through closer partnerships with suppliers and logistics providers. Sharing data and coordinating response planning can support decision making, when conditions shift. Digital tools such as real-time monitoring and supply chain analytics can improve early identification of pressure points and help businesses act faster when disruption emerges. Alongside this, engaging with legal teams to understand where flexibility exists in contracts can provide additional certainty. Incorporating tax considerations into analysis can help mitigate additional tax charges and maximise potential tax opportunities created by resilience measures.

Taken together, these actions can help businesses move from short-term reaction to strategic resilience. UK businesses that treat their supply chains as dynamic and consider trade policy risks in their risk management frameworks will be best placed to navigate continued volatility in international trade.

For help in assessing your trade priorities, Deloitte’s specialists are on hand to help.