The latest challenge to those trading internationally is the conflict in Iran, which comes amid ongoing challenges for UK manufacturers competing with Chinese subsidies, tariffs and high energy costs, which will rise further whilst the conflict in the Middle East continues.
A strategy for UK Manufacturers and exporters
At the recent Make UK Manufacturing conference, there was a lot of discussion around the UK strategy for manufacturing businesses, and those trading internationally have been brought into focus in light of the events in Iran.
The government published its trade strategy in June 2025, which it claimed was built on new policies from the ground up and hailed as a reset to the UK’s approach to international trade. Explained by Sally Jones from the Department for Business and Trade (DBT) as being a mixture of promoting and protecting British businesses, with a focus on growth. Despite this, many manufacturers who export are calling for more support to help them compete in the global market, with high UK energy prices being quoted as a significant issue.
The Make UK panel discussion, Trade winds: navigating growth in a shifting global market, (which included Sally Jones from The DBT), struggled to articulate the popular sectors, although it was indicated that these tied in with the Industrial Strategy
The eight priority sectors set out in the Industrial Strategy are listed here.
- Advanced Manufacturing: Includes aerospace, automotive, agritech, and space.
- Clean Energy Industries: Focuses on offshore and onshore wind, hydrogen, nuclear fission/fusion, and carbon capture.
- Creative Industries: Encompasses film and TV, video games, music, and advertising.
- Defence: Aims to reform procurement and strengthen domestic and export capabilities.
- Digital and Technologies: Prioritises AI, cybersecurity, quantum technologies, semiconductors, and advanced connectivity.
- Financial Services: Focuses on becoming a global leader in fintech and sustainable finance.
- Life Sciences: Targets biotech, medtech, and health innovation in partnership with the NHS.
- Professional and Business Services: Includes law, accountancy, consultancy, architecture, and engineering.
In an earlier session with the Secretary of State for Business and Trade, Peter Kyly, it was highlighted that deals with countries such as India are creating new opportunities for UK manufacturers in markets that are believed to be large, but not saturated. He also highlighted the investment in the UK Export Finance (UKEF), which was helping UK exporters.
Despite this, the UK government can often take up to 3 years to consult on changes and initiatives. Other countries, including the EU, are now starting to implement much faster interim solutions, which helps them to compete in the global market. There was therefore a plea from UK manufacturers for more instant changes, along with investment in training to attract young people from schools and universities into manufacturing. The current changes to training legislation and increases in minimum wages have resulted in huge increases in costs for employers, preventing them from investing in the future workforce.
Make UK and DHL Express published their International Trade Trends 2026: UK Manufacturers in Global Markets report in February, and this was referenced at the recent conference. The research behind the report found that 1 in 5 stopped or reduced exporting to the US, with 25% shipping sooner to avoid tariffs, and 25% adjusting the target destination of their exports to avoid the US market altogether.
A brighter future
Despite these challenges, global trade was proving very resilient, with the January trade outlook indicating a 17-month high in confidence, with 75% expecting volumes to increase.
The Make UK conference also highlighted the fact that British products still carry a premium, which overseas customers associate with quality and reliability, which creates strong demand. Examples of such products include the export of whiskey to Asia and engineering products, including high-end cars for JLR.
Future success is thought to be linked to UK manufacturers managing costs and maintaining the perceived dependability of British products, which should drive demand.
Planning for the short term
At the time of the conference, the conflict in Iran had just begun, and it was suggested that businesses should initially focus on the safety of employees and the shipping of products in the region. A key piece of advice is to ensure that you partner with a shipping business that understands that market. Manufacturers will also need to factor in volatile energy prices in the short to medium term, with higher energy costs also impacted by the events in Venezuela.
Key to planning, as ever, is carefully thinking about suppliers and supply chains. Short-term inflation is likely to impact components and material prices.
In addition, logistically, port congestion and delays are expected in 5-6 weeks’ time and will need to be factored into lead times. Higher borrowing costs and insurance will also become a factor if trading with that region.
Conclusion
UK Manufacturers continue to play an important role in international trade. Strong demand for British products is being recognised by the government, which is now developing a strategy. Manufacturers are calling for this strategy to go further and be implemented faster to help them grow and retain a foothold in global markets.
For more information, please get in touch with your usual Crowe contact.
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