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US vs Europe: Where Should You Expand To?

With Brexit looming, UK based businesses might be wondering whether to expand into Europe, or to head across to the USA. There are plenty of pros and cons to both options, and an awful lot of uncertainty. But which is the right decision for your business?

Well, the most obvious benefit to expanding into the EU is that until we negotiate our exit – likely to be 2019 according to Theresa May – we’re still a member of the European Union. This gives your business access to a tariff-free market that spreads across 27 countries: a ‘perk’ so sizable it’s hard for the US to beat.

Of course, you may lose access to this market depending on the terms that Britain ‘exits’ on, but for the time being, it’s still an option worth serious consideration.

However, the US is already the single biggest importer of British goods. If Brexit negotiations do go badly, UK based businesses will likely look to America to import their goods and services, and it’s certainly worth investigating at this early stage.

Secondly, the US has the highest number of households worth $100 million or more – even more than China. And even without focusing solely on these super-rich households, the US market is still the number one market for luxury goods in the world (with a value estimated at $79 billion USD). This makes it the top destination on the planet for luxury goods and so, if your business’s products or services are aligned to this kind of market, the USA could be a good bet.

However, if business goes well and you decide you want to expand into the US, setting up a subsidiary is expensive and time consuming. A UK based company can expect to pay tens of thousands of pounds to create a subsidiary company in America, and there’s a minefield of legal and tax-regulated rules and regulations to identify, understand and comply with.

Of course, this can all be made much cheaper and easier using the services of a company like this one, but businesses wanting to expand into the US are ultimately going to have to pay to establish a permanent presence across the pond.

Another problem with investing the US is that Donald Trump has made no secret of his protectionist views when it comes to doing business. So, the ‘special relationship’ that Britain and the US enjoy might well come under pressure if Trump were to occupy the White House.

Due to the fact that the terms of Brexit are still up for discussion, it’s hard to say whether or not businesses will be better off expanding into Europe or the US. And, casting doubt over Britain’s ‘special relationship’ with the US makes the question all the harder to answer.

It’s impossible to say whether your business will be better off expanding into the EU or US, so weigh the options carefully and make a calculated move, having taken as much into consideration as possible.

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