Tariffs have companies on their toes. Here’s how they’re keeping pace
Tariffs have companies on their toes. Here’s how they’re keeping pace
Tariffs have companies on their toes. Here’s how they’re keeping pace
02.21.2025
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·Tariffs have companies on their toes. Here’s how they’re keeping pace
tariff companies toes
Tariffs are certainly keeping corporate executives very busy these days. The topic has surfaced in nearly 200 earnings calls held by S&P 500 companies as of February 2025, on pace for the most mentions in at least five years. And it appears the topic is just getting started.1
The U.S. has imposed a 10% tariff on all imported goods from China and is negotiating with Mexico and Canada on proposed 25% tariffs. A broader initiative on “reciprocal tariffs” could impose additional import duties on any U.S. trading partner — especially goods from EU countries, India, Vietnam, Brazil, and Argentina — as early as April.2
Other tariffs are aimed specifically at goods and materials. A 25% tariff on all U.S. imports of steel and aluminum is slated to take effect in early March.3 Similar tariffs on imported cars, semiconductors, and pharmaceuticals are planned for early April.4
The dizzying pace of tariff activity has created plenty of late-night television jokes, but the stakes are serious for manufacturers, retailers, consumers, and others who usually share the cost burden of tariffs.5,6
While tariffs are likely to cause price increases on countless consumer goods, the solution is rarely that simple for companies looking to keep their competitive edge and hold onto shoppers who’ve become more price savvy since higher inflation.7
Here are five sectors of the U.S. economy facing tariff headwinds and how some companies are adjusting:
Read more: The 6 items you may want to buy before tariffs return
Autos
About half of the nearly 16 million light vehicles sold in the U.S. last year were imported, led by Mexico, Japan, South Korea, Germany, and Canada.8 The overall impact of tariffs could be $3,000 per imported car, according to one estimate issued before the 25% auto tariffs were proposed.9
Honda, Nissan, and Volvo executives have discussed moving more production to the U.S. but aren’t making any quick decisions. It’s difficult to gauge the costs and length of potential tariffs versus the long-term expense of building or retooling U.S. plants, among other costs.10
Detroit manufacturers General Motors, Ford, and Stellantis are heavily reliant on importing both cars and car parts across U.S. borders. The best-selling Ford F-150 pickup gets more than half of its parts from foreign suppliers, as is the case with many U.S. models.11
The 25% tariff on steel and aluminum imports will impact U.S. automakers on top of the potential tariffs on Mexico and Canada.12 The mere speculation of tariff impacts can lead international suppliers to bump their prices, Ford CEO Jim Farley said.13
Both Ford and GM have been rushing to move more inventory from international plants to U.S. soil, ahead of any tariffs taking effect. GM estimates that such measures can mitigate up to 50% of its tariff impacts, but not all of them.14
Price impacts on new domestic cars vary widely, on top of the nearly $49,000 average price tag currently paid.15 Tariffs also could trigger price spikes on replacement parts, car repair bills, used cars, and even the insurance rates that drivers pay.16
Read more: Driving costs race ahead: Auto insurance, fuel and car prices on the move
Groceries
Perishable foods are most vulnerable to tariffs because they can’t be stockpiled like other items.17 More than half of the nation’s produce is imported from Mexico, including avocados, tomatoes, and strawberries, while other staples like meats, grains, and maple syrup are imported from Canada.18
Food and beverage makers have some tools at their disposal to keep costs steady, such as using alternative ingredients or reducing the size or quantity of an item — a practice known as “shrinkflation.” If food makers do increase prices, grocery chains are seen as having little room to absorb the extra costs without passing them along to consumers.19
Empower research shows that pricing pressures during inflation have already caused Americans to pull back on certain goods, including coffee, fresh produce, and snacks. More than 75% of survey respondents are already using more of their budget on essential items, and 27% have hit their pricing limit.
About 70% of the steel used for U.S. canned foods is imported from countries such as Germany, the Netherlands, and Canada.20 Can makers and major food companies including Hormel, Del Monte, General Mills, and Goya won some tariff exclusions in 2018 and are seeking relief again, noting that U.S. metal suppliers are even more limited than before.21
Coca-Cola says it will consider shifting more production to plastic bottles in response to aluminum tariffs, but it hasn’t ruled out finding domestic sources for its cans. Potential price increases are also on the table.22
Prescription drugs
The U.S. purchased more than $176 billion in prescription drugs and related goods in 2023.23 Many medications or their ingredients come from Europe, including $15.6 billion in semaglutide, a key component in popular appetite-suppressing drugs like Ozempic and Wegovy.24
Top producers including Denmark-based Novo Nordisk were increasing U.S. manufacturing capacity before the tariff announcements, due to surging demand.25 The Ozempic maker says such facilities can be a hedge against tariffs, but the company isn’t completely immune.26
It isn’t just brand names. Tariffs on China have the potential to impact the cost of generic drugs, which account for 90% of all U.S. prescriptions.27 China supplies the raw ingredients found in products like painkillers, blood thinners, heart medications, antihistamines, and antibiotics.28
China is also a leading source of medical equipment and devices, along with necessities like disposable face masks and plastic gloves.29 Hospital and healthcare groups are asking Washington for tariff exemptions.30
Read more: GLP-1 medications: Transforming health and spending habits
Retailers
Retailers are still trying to gauge the potential supply and price disruptions from newly announced tariffs. Walmart declined to incorporate tariffs into its financial outlook but acknowledged that it isn’t likely to escape impacts.31
Groceries make up 60% of Walmart’s business, while other popular items like microwave ovens face aluminum and steel tariffs. The company is exploring alternative sources for both materials and finished goods but also isn’t ruling out price increases.32
Columbia Sportwear said the some its products already carry duties up to 37.5% and that the company will be cautious until it can better gauge the ultimate impact of fresh tariffs.33
Tariffs could cost households an extra $2,500 to $7,600 per year, according to estimates from the National Retail Federation.34
Footwear retailers are particularly vulnerable to tariffs, with more than 99% of U.S. shoe and sneaker imports coming from overseas markets including China, Vietnam, and Indonesia.35
Not all retailers are worried. TJ Maxx says it can skirt many tariffs because it buys excess merchandise from designer brands and top stores that’s already been imported into the U.S. The retailer’s strong inventory and purchasing flexibility are seen as positives in the current environment.36
Energy
Gas prices could surge as Canada supplies roughly 60% of crude oil imports.37 The impacts wouldn’t be felt immediately or nationwide, but Midwest states are seen as most vulnerable because many gas refineries in that region use Canadian oil.38
Many of those states currently have an average retail gasoline price under $3 a gallon, but economists say that wouldn’t last if tariffs take effect.39
Mexico accounts for about 10% of crude oil imports.40 Refiners in the Gulf Coast states might have an easier time than Midwest refiners in finding different sources of oil, thanks to better access to overseas shipping.41
Valero Energy, one of the largest U.S. refiners, said it has been planning for several tariff scenarios and has flexibility because of where facilities are located.42
The energy impacts aren’t limited to gasoline. Canada is also a major exporter of natural gas, along with uranium used to fuel U.S. nuclear power plants.43 The U.S. also imports some electricity from Canada over the border, mostly for power grids in New England and other states.44
Read more: Pay at the pump: Gas prices by state
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1 CNBC, “Tariffs, immigration and DOGE: What companies are saying about the impact of Trump policies on business,” February 2025.
2 Wall Street Journal, “Where Is Trump’s Tariff Strategy Going?,” February 2025.
3 Bloomberg, “Trump Sets 25% Steel, Aluminum Tariffs, Widening Trade War,” February 2025.
4 CNN, “Trump plans to impose 25% tariffs on autos, chips and pharmaceuticals,” February 2025.
5 New York Times, “Late Night Weighs In on the ‘World’s Dumbest Trade War,’” February 2025.
6 New York Times, “How Tariffs Work,” February 2025.
7 New York Times, “From Groceries to Cars, Tariffs Could Raise Prices for U.S. Consumers,” February 2025.
8 Wall Street Journal, “Trump Is Scrambling Global Automakers’ Reliance on America,” February 2025.
9 Barron’s “Trump’s Proposed Tariffs Could Cost U.S. Companies. Here Are the Most Vulnerable Industries,” February 2025.
10 Wall Street Journal, “Trump Is Scrambling Global Automakers’ Reliance on America,” February 2025.
11 CNN, "Trump’s autos tariffs could quickly make car prices more expensive,” February 2025
12 Wall Street Journal, “Trump Imposes Global 25% Steel, Aluminum Tariffs,” February 2025.
13 AP, “Trump steel, aluminum tariffs likely to drive up car costs, industry leaders say,” February 2025.
14 CNBC, “GM expects to mitigate up to 50% of potential North American tariffs, which Ford describes as ‘chaos,’” February 2025.
15 AP, “Trump steel, aluminum tariffs likely to drive up car costs, industry leaders say,” February 2025.
16 Wall Street Journal, “Why Tariffs Will Make Car Insurance Even More Expensive,” February 2025.
17 New York Times,” From Groceries to Cars, Tariffs Could Raise Prices for U.S. Consumer,” February 2025.
18 Washington Post, “From beer to barley: How Trump’s Mexico tariffs could affect your wallet,” February 2025.
19 Food Dive, “More ‘shrinkflation’? How Trump tariffs could reverberate through the food industry,” February 2025.
20 BBC, “Three American goods that could rise in price due to metal tariffs,” February 2025.
21 NPR, “How Trump's tariffs on steel and aluminum could hit you at the grocery store,” February 2025.
22 CNBC, “Coca-Cola says it will sell more soda in plastic bottles if aluminum tariffs take effect,” February 2025
23 CNN, “Trump plans to impose 25% tariffs on autos, chips and pharmaceuticals,” February 2025.
24 CNBC, “Trump’s reciprocal tariffs would hit these European Union products that Americans buy the hardest,” February 2025.
25 Forbes, “Novo Nordisk Invests $4.1 Billion For New US Facility—Boosting Ozempic Production,” June 2024.
26 Bloomberg, “Novo Nordisk Is Prepared for Trump’s Tariff Threat, CEO Says,” February 2025.
27 The Hill, “How Trump’s tariffs could impact the pharmaceutical market,” December 2024.
28 The Independent, “China makes some of Americans’ most common medicines. They won’t be spared from Trump’s tariffs,” February 2025.
29 The Independent, “China makes some of Americans’ most common medicines. They won’t be spared from Trump’s tariffs,” February 2025
30 Fierce Pharma, “Trump tariffs threaten US drug supplies and risk higher prices, trade groups warn,” February 2025.
31 CNBC, “Walmart shares drop as retailer says profit growth will slow,” February 2025.
32 AP “Walmart rolled through 2024, but uncertainty about consumers and tariffs seep into year ahead,” February 2025.
33 CNBC, “Columbia Sportswear CEO talks tariff impact: ‘We need some surety about what’s going to happen,'” February 2025.
34 USA Today, “How will Trump's tariffs hit your wallet? What to expect on everyday price tags,” February 2025.
35 Washington Post, “Tariffs will make shoe production pricier. Who will bear the cost?,” January 2025.
36 CNN, “Tariffs will hurt most stores — but not TJ Maxx,” February 2025.
37 Congressional Research Service, “U.S. Petroleum Trade: Crude Oil Imports from Canada and Mexico and Potential Tariffs,” February 2025.
38 CNN, “Here’s what will get more expensive from Trump’s tariffs on Mexico, Canada and China," February 2025.
39 CNN, “Here’s what will get more expensive from Trump’s tariffs on Mexico, Canada and China," February 2025.
40 Congressional Research Service, “U.S. Petroleum Trade: Crude Oil Imports from Canada and Mexico and Potential Tariffs,” February 2025.
41 NBC News, “Gas prices set to rise as Trump tariffs hit Canadian and Mexican oil,” February 2025.
42 New York Times, “Trump Tariffs Could Hurt Oil Companies and Increase Gas Prices,” February 2025.
43 Barron’s “Oil and Uranium Markets React to Trump Canada Tariffs,” February 2025.
44 Utility Dive, “Uncertainty clouds northern US grids amid Canada tariff threat,” February 2025.
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