In the first of a new Grant Thornton series on trending international insights, we examine the wider impact of tariffs on the mid-market, where a dip in market confidence at the start of 2025 was just the start of more to come.
At the close of 2024, mid-market businesses were riding a steady wave of
optimism. According to Grant Thornton's International Business Report (IBR) research 54.6% of mid-market firms planned to increase their exports, with a similarly strong 50.3% expecting revenue growth from international markets.
However, as we entered 2025 trade tensions escalated, with optimism experiencing its first notable dip in two years (down 2.9pp to 72.7%).
Despite these early signs of caution emerging among mid-market leaders though, the underlying fundamentals – rooted in agility and strategic foresight – remained relatively robust.
Reshaping the global trade landscape
The current wave of new tariffs has proven both unexpected and unprecedented, with the OECD warning that they could take a “significant toll” on worldwide growth [i]. What began as isolated measures has morphed into an uncertain and complex global trade landscape, with the parameters changing on a near daily basis. And in a world where heavy trade barriers are part of everyday business, the ongoing disruption caused is very real.
Reacting to unprecedented roadblocks
As opportunities in traditional global export markets continue to shift, businesses are facing the reality that new trade dynamics may significantly alter their growth trajectories. Firms now need to be more strategic than ever, maximising their value in domestic markets and looking to do more business regionally.
But mid-market businesses are no strangers to navigating severe challenges [ii]. Over the past number of decades, these firms have successfully weathered the Global Financial Crisis, managed the widespread disruptions brought on by COVID and adapted to a whole host of severe supply chain disruptions.
What makes today’s volatile turnarounds on tariffs unprecedented however, is that throughout all of these prior crises the mid-market could focus on their portfolio of non-domestic business to grow despite market turbulence – today’s tariffs are diminishing that option, forcing firms to reassess their addressable markets and potentially adjust their business models.
Businesses should assess both exposure and risk, adjust supply chains in light of this turbulence and look to understand the true value of their products and services in the context of opportunities in emerging markets.
The mid-market advantage
In this constantly evolving landscape, the enduring principles that define the mid-market – focus, agility, and strong leadership – have never been more critical. These core attributes are what empower firms to respond swiftly to new challenges and pivot as needed. Strategic shifts are already being observed, with many companies now looking to concentrate on a select few markets with the most promising prospects – the number of countries businesses are looking to sell to has already decreased (down 3.7pp to 47.8%).
This more focused approach not only maximises resource allocation but also enhances their ability to manage complex tariff-induced changes.
Making tough decisions in a fragmented world
Faced with the reality of a fragmented global market, some mid-market businesses may soon confront the difficult decision to scale down or even halt trade in markets where tariffs make continued engagement unsustainable. For many, this could mean rethinking traditional strategies in favour of structural adjustments – altering contract terms, reconfiguring payment structures or even reimagining supply chain logistics. While these decisions are challenging, they are sometimes necessary to help mitigate impact and safeguard long-term competitiveness.
We’ve already seen the mid-market begin to shift resourcing when it comes to key areas such as supply chain resilience. By the end of 2024, nearly one third (31.8%) of mid-market leaders planned to spend most resources preparing for supply chain interruption as a potential issue – a fourfold increase from the 8.3% who cited supply chain issues as their most significant challenge in 2024. This preparation stems from the experience gathered from weathering previous downturns and the ability to make strong, resolute decisions.
Charting a way forward through change
Ultimately, one unavoidable fact right now is that change is constant. Beyond just tariffs, mid-market leaders face numerous transformative challenges: AI as part of their digital journey, evolving cyber threats, climate change (and regulation) and demographic shifts. Yet the same qualities that help them navigate trade barriers – agility, foresight, and purpose-driven leadership – position them well for these other challenges.
The global economy may suffer further as trade tensions and uncertainty persist, but if there’s a silver lining, its likely to be found in the mid-market – the most resilient and opportunistic segment of the business landscape.
Where strong scenario planning will be key and, for those who get it right, new doors may begin to open. In what seems like a zero-sum game of global tariffs, don’t be surprised if many mid-market firms emerge as unexpected winners.
Look out for more regular content in our “Trending Topics” series. If you would like support or guidance on navigating the current trade environment for your own business, don’t hesitate to reach out to one of our dedicated International Business Contacts today.
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i. Trade war will damage global growth, OECD warns [www.ft.com]
ii. Building resilience in international business [www.grantthornton.global]
Let’s now turn to the situation in Spain, which, along with 33 other countries, is part of the research that Grant Thornton conducts every quarter. The data shows that, despite the ongoing trade tensions, Spain managed to close the month of February with a year-on-year increase of 0.4% in goods exports. However, the trade deficit widened by more than €1 billion, due to a 3.5% rise in imports.
In February 2025, Spanish exports reached €31.973 billion, recording a year-on-year increase of 0.4%. The European Union remained the main destination, accounting for 60.9% of the total, although this represented a 3.3% decrease compared to the previous year.
In this regard, according to our International Business Report, seven out of ten (71%) Spanish business leaders have a positive view of the European Union, highlighting its financial support and freedom of movement as key pillars for reducing uncertainty. The fact that the majority of Spanish exports are destined for Europe helps cushion the potential negative effects of the ongoing trade war, which in Spain is impacting specific sectors for which the government is preparing support and mitigation measures.
By contrast, exports to non-EU countries grew by 6.8%, with standout performances in markets such as the United Kingdom, Turkey, Mexico, the United Arab Emirates, Canada, and India—all of which reached record figures for the month. Spain posted a trade surplus of €2.168 billion with the EU, while recording a trade deficit with non-EU countries. These figures reflect a growing diversification of Spain’s export destinations beyond the European bloc.
However, the “Trump effect” has indeed influenced the sentiment of the average Spanish business leader. In fact, the intention of Spanish companies to increase their exports has dropped six points in the last quarter, standing at 44%—a figure very similar to that of the European Union (43%), but nine points below the global average (53%).
Likewise, the expectation of revenue growth from non-domestic markets has also declined, reaching 45%. This represents a two-point decrease compared to the previous quarter (47%), although it remains above the figure from a year ago (43%). Moreover, companies are planning to sell to significantly fewer countries than in the previous quarter: only three out of ten respondents plan to expand their export markets.
The challenges of a global market
In such a deeply globalized market with numerous competitors operating simultaneously, Spanish companies identify their main challenges as the difficulties they face when working with suppliers and supply chains, along with the emergence of new digital and cybersecurity risks in the sales process. In fact, they are already allocating resources to anticipate these issues, recognizing the value of such a strategy following their experiences during the 2008 financial crisis, the pandemic, and the recent energy tensions.
In the face of an unsettled international landscape marked by multiple challenges — including cyberattacks, IT system failures, and supply chain disruptions — Spanish companies are strengthening their commitment to technology, talent, and investment in R&D. This strategy is aimed not only at anticipating disruptions, but also at consolidating their competitiveness in an increasingly demanding environment.
The Strategic Role of the Spanish Middle Market
Uncertainty affects not only foreign trade but also domestic operations. The main concerns for Spanish business leaders include excessive regulation (51%) and economic instability (51%), both showing an upward trend compared to the previous year. Geopolitical tensions also play a role, representing a risk factor for 47% of companies.
That said, Spain’s privileged economic position, which has become a model of development not only in Europe but globally, is reflected in the outlook. 58% of companies expect to increase their revenue over the next twelve months, and more than half (55%) foresee higher profitability. Once again, the key findings from our study align with growth forecasts from international institutions such as the International Monetary Fund (2.5%) and the European Union (2.3%): Spain and its middle-market businesses are set to continue playing a leadership role in a European landscape marked by slow or even negative growth — as seen in the case of Germany, formerly the engine of the EU.
The Bank of Spain forecasts GDP growth at 2.7%, although a tenth of a point may need to be deducted due to the recent energy blackout in the Iberian Peninsula on April 28, which, according to CEOE, may have resulted in losses of up to €1.6 billion.
This disruptive event warrants close attention, but it does not override the favorable momentum currently experienced by the Spanish economy — despite the uptick in unemployment, which approached 12% in the first quarter. In any case, as noted at the beginning of this article, the agility and forward-thinking nature of the Spanish middle market continues to work in the country’s favor. These companies are adaptable and responsive, which will be critical not only to overcome trade barriers, but also to address structural challenges such as climate change, digitalization, access to skilled talent, and other unexpected disruptions (hopefully few) that may arise in the coming months.
Stay tuned for updated data and forecasts in the upcoming articles in our Economic Outlook section of Grant Thornton Insights.