How Trump's tariffs could impact US companies

What happened?
Since taking office on January 20, President Trump has introduced several policies and executive orders. On his first day in office, he issued the America First Trade Policy, which launched an investigation into unfair trade practices, expected to conclude on April 1. A key component of this investigation, "Unfair and Unbalanced Trade," targets countries with significant annual trade deficits in goods, potentially subjecting them to country-specific tariffs. This includes several European Union nations (e.g., Germany, Ireland, and Italy), Asian jurisdictions (e.g., Vietnam, Japan, and Taiwan), and other global trade partners. A review of unfair trade practices by other countries and a consultation with respect to the United States-Mexico-Canada Agreement (USMCA) also are key components of the investigation.

Additionally, on February 13, President Trump introduced the Fair and Reciprocal Plan, designed to evaluate and impose reciprocal tariffs on countries that enforce higher duties/tariffs on US goods, including through a value-added tax or other non-tariff barriers. The European Union, India, and Japan have been identified as potential targets due to their tariff policies on American products.

Both the America First Trade Policy and the Fair and Reciprocal Plan are expected to have their investigations completed by April 1 with potential new tariffs as soon as April 2.

Why is it relevant?
The Trump tariff policies significantly expand the scope of products, industries, and countries subject to tariffs compared to previous administrations. Barring carve-outs or a new exclusions process, even Chinese goods that previously were exempt from tariffs would be impacted by the new Trump tariff proposals. Importers and purchasers across all sectors therefore must assess the impacts of these new policies on a go-forward basis.

In PwC's US Tariff Industry Analysis, the data reflects that the total tariff measures could increase from $76 billion a year to nearly $697 billion a year, although that figure does not take into account countermeasures that trading partners may impose, or behavioral adjustments that companies may make, in reaction to US policy changes.

From an industry perspective, the key sectors that will be impacted include industrial products, consumer products, automotive/aerospace, pharmaceutical, life science, and medical device, technology, media, and telecommunications (TMT), energy, utilities and resources, and private equity.

Action to consider
As tariff rates continue to evolve, it is crucial for US multinational corporations to assess the impact of these trade policies on their business operations and supply chains.

Each multinational corporation, including those not currently subject to tariffs, should assess the pre/post impact of the tariffs on its earnings per share and overall shareholder returns. Focusing the impact assessment at operating profit potentially could create a drag on earnings per share based on the implication of corrective actions on the statutory model. It is crucial for companies to model the changes to have data-driven insights that inform strategic decisions moving forward. Additionally, as certain industries historically have been subject to predominantly low or duty-free rates, companies in these industries should consider whether existing trade, logistics and sourcing operations, and regulatory controls should be enhanced to address the changing risk profiles associated with the new tariffs.