As European governments look to close ranks against the turmoil unleashed by Trump’s tariff, they should look closer to home for a resilient army that stands ready to help. Europe’s best defence to global economic shifts is the 24.3 million small and medium-sized businesses that make up 99.8% of Europe’s economy.
Trade wars are blunt instruments handicapping large corporations and SMEs alike.
For SMEs, operating on razor-thin margins, swings in production costs can prove fatal. They don’t sit on a pile of cash or have generous credit lines. When the shock comes, they feel it first.
From the weakest link to the greatest asset
But it doesn’t need to be this way. Europe’s SMEs are also agile enough to weather this storm, given adequate support.
Tariffs force companies to rethink supply chains. And when global imports become expensive, unreliable, or politically charged, demand for local alternatives surges.
This is where SMEs have an edge. They’re closer to the end customer and closer to the supply. They’re fast, flexible and deeply embedded in their communities. They’re uniquely positioned to help localise production and fill the gaps left by disrupted imports.
Take the automotive sector: Europe’s carmakers may be scrambling for parts caught up in tariff chaos as they suddenly become too expensive or take too long to arrive. But there is an army of automotive SMEs ready to fill the gap – nearly 1.8 million of them in fact. These local SMEs can step in and replace disrupted imports faster than big corporations or overseas suppliers.
Building resilience starts locally
Our European economies have been built on the backs of small businesses and now we need to make sure they have the financial support to step up.
It comes down to two things: speed and access to capital.
SMEs need immediate, direct financial support to manage rising costs and stay afloat during the tariff fallout. That means launching a dedicated EU-level support package, tailored to the pace and realities of small businesses.
Europe already has the funding for this. The €723 billion Recovery and Resilience Facility, originally created to tackle the economic shock of COVID-19, can – and should – be partially reallocated to confront this new crisis. Grants could absorb tariff-driven cost spikes, while loans could unlock working capital tied up in payment delays or reconfiguration of supply chains.
The tariff shock has been similar to the Covid pandemic to markets: applying similar logic to building SME resilience makes sense.
SMEs need tools to keep trading, including credit insurance and export risk coverage, to protect them from disruptions and defaults. Without that safety net, many won’t survive.
Bureaucracy also shouldn’t become the bottleneck. Policymakers must pause or simplify application and reporting requirements, so SMEs can stay focused on what matters: keeping the real economy running.
Encouragingly some governments are already moving. Spain is leading the way with a €14 billion emergency package to support businesses, proof that bold, targeted action is possible.
The ultimate test
As a platform building infrastructure for SME finance, we know that financial support needs to be relevant and accessible.
Tariffs may have triggered this crisis, but they’ve only revealed what was already broken in SME financing. This moment should spark a long-overdue reckoning.
If we fail to empower these businesses now, we won’t just lose supply chain resilience. We’ll lose the only players agile enough to rebuild it, and no future tariff deal will bring them back.
If SMEs are the backbone our economy relies on, we need to demonstrate our commitment. Let’s celebrate SMEs as the strategic assets they are, the first line of defence and Europe’s best hope for recovery.
