Navigating The New Trade Landscape: The Impact of US Trade Tariffs on Key Industries

Delivery

This report comes in PPT.

Key Findings

US trade tariffs increase cost pressures

President Trump's administration is considering tariffs that would impact a broad range of trade partners and goods. This adds more uncertainty to the global economy and business landscape as well as significant cost pressures. Under the worst-case scenario trade tariffs could cost US importers USD1.2 trillion annually.

Trade diversification potential is limited

US trade diversification potential remains limited, at least in the short term. Already high production concentration in the leading supplier countries as well as lack of production capacity and technological know-how in alternative countries largely limit trade and supply diversification efforts.

Higher costs to be passed on to end-consumers

Companies, feeling significant cost pressures from higher trade tariffs, will look for ways to pass on cost increases to the end-consumer. Inflation in the US can increase by 3 p.p. due to tariffs with even higher potential impact on consumer goods such as apparel, where share of imported goods stands at 80%.

Other countries will retaliate with counter tariffs

Other countries are expected to retaliate and introduce counter tariffs on US imports. Mexico and Canada already hinted at tariffs on US products that would impact a broad range of goods. Countries are most likely to implement asymmetric measures, targeting sectors that would cause minimal negative effects on domestic markets.

Retaliatory measures would hurt US commodity and automotive sectors

US suppliers of agricultural commodities and motor vehicles would face the greatest impact from punitive counter tariffs introduced by other countries. In both industries, Mexico, Canada and China are among the key buyers of US goods, thus counter tariffs would result in significant disruptions.