As we navigate through 2025, the global trade landscape is undergoing significant transformations, presenting both challenges and opportunities for small and medium-sized enterprises (SMEs) aiming to expand internationally. Business leaders must stay abreast of evolving trade policies and regulatory frameworks to strategically position their businesses for success. This article delves into the current regulatory environment across key regions—the United States and Canada, the United Kingdom and the European Union, and China and Australasia—highlighting influential business and political changes impacting global trade.
United States and Canada
In early 2025, the United States administration announced a series of protectionist measures, notably imposing a 25% tariff on goods imported from the European Union. President Donald Trump’s declaration underscored a perception that the EU was established to disadvantage the U.S., leading to significant concerns about a potential transatlantic trade war. The European Union estimated that these tariffs could have an impact approximately four times larger than previous measures, potentially affecting €28 billion in trade.
Concurrently, the U.S. initiated a trade conflict with Canada and Mexico by imposing near-universal tariffs—25% on all Mexican exports and 10% on Canadian exports, excluding oil and energy sectors. These regulatory measures aim to address issues such as illegal immigration and drug trafficking, while also seeking to reduce the U.S. trade deficit. In retaliation, Canada announced plans for reciprocal tariffs on U.S. goods, escalating tensions between the two nations.
These developments have introduced volatility in financial markets, with U.S. stock indices experiencing notable declines. The S&P 500, for instance, dropped 2.5% over a week, erasing its year-to-date gains. This market turbulence reflects investor apprehension regarding the potential for a full-scale trade war and its implications for global economic stability.
United Kingdom and European Union
The United Kingdom has taken a significant step in redefining its trade relationships post-Brexit by acceding to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The UK officially applied for membership on 1 February 2021, concluded negotiations by 31 March 2023, and signed the accession protocol on 16 July 2023. Following ratification, the agreement entered into force on 15 December 2024, making the UK the first non-original and European member of the CPTPP.
This accession opens new avenues for UK SMEs to engage with markets across the Asia-Pacific region, offering diversified trading links and enhanced economic security. However, businesses must adapt to the CPTPP’s regulatory standards and leverage the opportunities presented by this expansive trade bloc.
Within the European Union, regulatory reforms are reshaping the trade environment. The Directive on Corporate Sustainability Due Diligence (CSDD), effective from 25 July 2024, mandates large EU and non-EU companies with significant revenue to identify and address adverse impacts in their operations and supply chains, particularly concerning human rights and environmental issues. Companies are also required to develop climate transition plans aligned with the Paris Agreement. Member states are expected to transpose this directive into national law by 26 July 2026, with enforcement commencing from July 2027.
Additionally, the EU’s Regulation on Deforestation-Free Products, which came into force on 29 June 2023, will start applying from 30 December 2025. This regulation prohibits the import, sale, or export of certain commodities linked to deforestation unless certified as deforestation-free and compliant with local laws. Companies must conduct due diligence to ensure product traceability, with non-compliance resulting in substantial penalties.
China and Australasia
China’s trade dynamics continue to evolve, influenced by both domestic policies and international relations. The U.S. administration’s plans to impose a 10% levy on Chinese goods have unsettled global markets, adding complexity to China’s export strategies. Businesses operating in or with China must navigate these external pressures while aligning with China’s internal regulatory standards, which are increasingly focusing on sustainability and technological innovation.
In Australasia, trade policies are adapting to global shifts. Australia’s integration into the CPTPP, alongside the UK’s accession, enhances its trade network within the Asia-Pacific region. However, the region faces challenges due to U.S. tariff plans, which have caused jitters in share markets. The Australian S&P/ASX 200 index fell by 1.5% over a week, reflecting concerns about the broader economic implications of U.S. protectionist measures.
Strategic Considerations for SMEs
Given the dynamic nature of global trade policies, SMEs aiming for international expansion should consider the following strategies:
- Stay Informed: Regularly monitor policy announcements and trade developments in target markets to anticipate changes that could impact operations.
- Diversify Markets: Reduce dependency on a single market by exploring opportunities in multiple regions, thereby mitigating risks associated with regional trade disruptions.
- Enhance Compliance: Invest in robust compliance programs to adhere to varying regulatory standards across different jurisdictions, particularly concerning sustainability and ethical practices.
- Leverage Trade Agreements: Utilise preferential terms offered by trade agreements like the CPTPP to gain competitive advantages in member countries.
- Engage in Advocacy: Participate in industry associations to influence policy discussions and stay updated on regulatory changes.
Bridgehead’s market research suggests that global trade remains a highly dynamic environment, with increased volatility introduced by trade tariffs, regulatory shifts, and evolving geopolitical tensions. While these challenges create uncertainty, they also present opportunities for SMEs that can adapt swiftly to changing conditions. By staying informed, diversifying their markets, and leveraging trade agreements, businesses can mitigate risks and position themselves for sustainable growth. For any help and support navigating these risks, and many others, get in touch with us today!
