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As the first 100 days of President Trump’s return to office unfold there’s been a flurry of activity in the form of Executive Orders and intentions laid out by the Oval. One of the anticipated announcements, and certainly a cornerstone of Trump’s election campaign, was the return of reciprocal tariffs.
In a memo that went out to Whitehouse staffers, Trump asked for detailed plans that take into consideration current tariffs, trade balances, and exchange rates. While this raises concerns for some, others look forward to a stimulated manufacturing sector and a more equitable international trade landscape.
Here’s a closer look at the sector and country-specific tariffs and what they mean for trade relations and economic output.
Impact on the Automotive industry
Trump has long bemoaned what he terms the “unfair treatment” of American-manufactured cars in the export market. The EU, for example, charges four times the US tax, at 10% for importing American car brands, while the U.S. only taxes 2.5% on the import of European cars.
When it comes to pickup trucks, however, the US collects a 25% tariff on imported vehicles from Mexico and Canada. This makes Detroit manufactured vehicles (e.g. Ford, General Motors, Tesla) a more affordable option for Americans and benefits locally-made production.
To ensure a fair trade balance for both parties, a meeting between EU trade chief, Marcos Sefcovic and Commerce Secretary Howard Lutnick is scheduled to iron out the tariffs.
Taiwanese Semiconductor Industry
Taiwan’s semiconductor supremacy has long been an issue for the US. Semiconductors and chips are integral to the manufacturing of almost every electronic device, including supercomputers, cellphones, cars, laptops, and even LED lightbulbs. In this sector, Trump aims to push Taiwan into sharing knowledge and expertise on semiconductor production, and shifting the manufacturing away from Taiwan.
The world’s reliance on Taiwan’s sensitive supply chain was brought into stark relief during the 2020 – 2023 global semiconductor and chip shortage. With both China and the US eager to share in Taiwan’s market dominance, the island finds itself in a geopolitically sensitive situation. How the semiconductor tariffs will affect US tech producers and consumers in the short to medium term remains to be seen.
Green Energy
China, Mexico, and Canada are some of the top producers of parts and machinery required for renewable energy. With a suspected incoming 25% tariff on these countries, this is likely to add strain to the industry.
According to the American Clean Power Association, the United States-Mexico-Canada Agreement is a driving factor behind keeping the cost of green energy low. They also acknowledged that while they rely heavily on Canada and Mexico for machine production, the US is making strides in manufacturing parts locally.
The issue remains the same in green energy as across other sectors, which is the short to medium-term impact on ordinary Americans. “Since tariffs are ultimately taxes paid by consumers, they could lead to higher inflation and interest rates, as well as slower growth. If this happens, it will undermine the profitability of solar and wind installations, which depend on long-term project finance and have been hurt by high interest rates in recent years,” said analysts from Morningstar.
Country-specific tariffs
The 1st of April is a significant day for the Trump administration, as it’s the chosen deadline for the Commerce Secretary to handover plans for reciprocal trade and tariffs. A number of countries have already been in talks with the President and are looking forward to negotiating favorable terms for the next four years.
In an effort to boost local manufacturing and production, Trump envisions a boost in investment to the US through these trade instruments. Explaining his trade policy, he said that, “If you build your product in the United States, there are no tariffs.”
“In almost all cases, they’re charging us vastly more than we charge them, but those days are over,” he said. “This should have been done a long time ago.”
The European Union is among those who can expect a change in trade policies, along with India, Vietnam, and Thailand in the East. Asian countries, in particular, impose higher duties and see the US as a destination market for their exports.
The memo that went out to the Commerce Secretary requires a 180-day turnaround on advice in relation to the US’ current trade relations with various countries, and applicable reciprocal excise taxes. The memo was signed ahead of Trump’s meeting with his Indian counterpart, Narendra Modi, who has already taken steps to reduce tariffs on items like motorcycles.
Undeterred by the gesture, Trump remained steadfast that “Whatever India charges us, we charge them.”
Equally feeling the pressure, Thailand and Vietnam have also committed to reviewing their trade agreements with the US.
The European Union responded that it remained committed to “maintaining a close partnership with the US.” Speaking on the matter, the commission’s spokesperson, Olof Gill, stated that they “will continue to seek constructive engagement” but will “stand ready to protect [their] interests.”
The Impact of Tariffs on Business
Higher prices could reduce consumer spending and slow economic growth. In addition, tariffs can disrupt supply chains and raise production costs for businesses.
This economic landscape could introduce more market uncertainty, which can lead to fluctuations in the stock market. Consider the potential impact of tariffs on the economy and your portfolio.
How Businesses Can Protect Their Interests
There are a number of actions that impacted business owners can take to reduce their risk of exposure to tariffs. These include:
Analyzing financial and physical import and export flows.This allows teams to assess the potential total landed cost against which tariffs (and baseline duties) will be applied.
Reviewing contracts with suppliers and customers to clarify contractual liability for duties, tariffs, and taxes, including an examination of sales terms and importer-of-record roles and responsibilities.
Considering the renegotiation of supplier and customer pricing agreements and/or cost-splitting arrangements.
Evaluating current domestic or alternative sourcing options for the impacted countries and considering country-of-origin planning to mitigate duties.
Keeping up with the latest news and developments in trade and tax policies so you can respond quickly to changes in trade regulations and tariff rates.
Concluding Thoughts
In the evolving landscape of global trade, President Trump’s renewed tariff strategy signals a decisive and ambitious approach to reshaping America’s economic relationships. By prioritizing reciprocal tariffs and pushing for fairer trade terms, the administration seeks to stimulate domestic manufacturing and reduce perceived trade imbalances. However, this strategy is not without risks. The potential for retaliatory measures from key trade partners and the likelihood of increased costs for businesses and consumers could introduce significant volatility into the market.
As the administration moves forward with its aggressive tariff agenda, the coming months will be critical in determining the broader economic impact of these policies. The response from international partners—whether through cooperation, negotiation, or countermeasures—will shape the future of these trade relations. Businesses must stay agile, closely monitoring policy developments and preparing for potential shifts in supply chains and pricing structures.
Ultimately, while the promise of boosting American jobs and manufacturing remains at the heart of Trump’s vision, the balance between protectionism and global collaboration will define the long-term success of these measures. In this high-stakes environment, strategic foresight and adaptability will be key for businesses navigating the uncertainties of the evolving tariff landscape.
