As tariffs and geopolitical tensions continue there is growing evidence of a rapid move by businesses to near shore supply chains.

Banking giant Santander has issued its Autumn 2025 Trade Barometer, which identified an increasing shift to ‘nearshoring’, with 55% of UK businesses taking steps to bring supply chains closer to home.

The figure is a five percent rise from the previous 12 months. It added one in five (20%) businesses have already relocated their supply chains nearer to the UK and two thirds (67%) of businesses are considering moving supply chains back to the UK or the EU (54%).

According to Santander’s historical data, around 40% of UK businesses have relied on China for part of their supply chain since 2023. Today, more than half (54%) of these firms are now seeking to relocate operations away from China or have plans to diversify their supply chains to reduce dependency – signalling a decisive shift in strategic priorities.

Meanwhile, China’s neighbouring markets are gaining momentum. Interest in Southeast Asia has nearly doubled since Spring 2025, surpassing South Asia (12%) and Central Asia (9%). This suggests a steady regional rebalancing driven by competitive labour and manufacturing costs in economies such as Vietnam, Thailand, and Malaysia.

Jane Galvin, head of Corporate Clients at Santander UK, said: “Ambitious UK businesses are determined to grow, but they face a challenging mix of geopolitical instability and weak domestic growth. As some move supply chains away from markets such as China and closer to home, others are exploring new emerging markets in countries such as Vietnam, Thailand and Malaysia.

“Despite global trade challenges and rising costs, recent trade agreements have boosted confidence, and our Barometer shows record interest in international expansion. It is vital that UK businesses get the support they need to navigate the challenges and opportunities of the current environment. Domestic growth concerns make international growth particularly attractive, and with strong government policies and support to grow overseas, these firms can thrive and promote economic growth.”

Notwithstanding the trend away from supply chains in China, UK businesses are increasingly looking overseas for growth, with nearly half (47%) now considering international expansion – up by a third from 33% in Spring 2025 and more than double the number in Autumn 2023 (21%).

“This growing appetite for global diversification comes amid weak domestic growth and growing concerns over UK tax increases,” Santander added. “The World Trade Organisation (WTO) recently noted that trade’s contribution to UK GDP has stagnated due to ‘persistent underperformance’, underscoring the need for businesses to seek growth opportunities abroad.”

The United States continues to lead as the most attractive export destination for UK businesses over the next 12 months, with more than a third (35%) identifying it as a key market – up from 30% since Spring 2025. Germany maintains its strong position as second, while France has climbed to third place (19%, up from 15%). These trends reflect a sustained optimism toward US and EU markets, bolstered by recent trade agreements and tariff negotiations that appear to have improved trading conditions and shaped expectations.

However, unease around tariffs has not gone away. Tariff volatility is emerging as a longstanding and structural concern for growth, with three in five UK businesses (62%) believing rising global tariff risks threaten their growth prospects, a figure broadly unchanged from Spring (63%), regardless of the US-UK Economic Prosperity Deal being reached. Among firms planning international expansion, this concern intensifies dramatically, surging to 80%.

“Businesses are prioritising commercial opportunity over geopolitical alignment, with India remaining a strategic focus for future export markets – cited by 14% of UK businesses, double the figure from Autumn 2024,” the report added. “Notably 42% of UK businesses view the new UK-India trade deal as a positive step in enhancing their ability to trade.”

However, it cautioned international expansion presents new challenges. Nearly half of UK businesses cite political instability (48%) and navigating new regulatory regimes (47%) as the top barriers – reflecting ongoing geopolitical tensions such as the Russia-Ukraine conflict and strained US-China relations.

“These concerns now outweigh traditional hurdles such as high transport costs (45%) and labour shortages (43%),” the study added. “Many businesses also highlight limited domestic government support (43%) and a lack of reliable market intelligence (41%) as further impediments to global growth.”

Notwithstanding the trend away from supply chains in China, UK businesses are increasingly looking overseas for growth, with nearly half (47%) now considering international expansion – up by a third from 33% in Spring 2025 and more than double the number in Autumn 2023 (21%).