U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war.
Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods.
Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration.
Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.”
Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs.
Here are some of the areas expected to be hit:
Automotives
Autos firms — from car brands to the makers of vehicle parts — are expected to be among the worst affected by escalating trade tensions as they represent a major area of international imports into the U.S.
Germany’s Volkswagen, for example, owns Mexico’s biggest car factory where it produces vehicles for export to the U.S. Analysis by RBC Capital Markets estimates the company could see a 9% cut to its earnings as a result of tariffs in a worst-case scenario, while Stellantis — which owns Chrysler and Jeep — also has major operations in Mexico, including the production of Ram pickup trucks, and see a 12% hit to earnings.
The effects on stocks were immediate on Monday, with European automakers on the regional Stoxx 600 index plunging 3.4%, and part suppliers including Valeo and Forvia also tumbling on expectations of a sector slowdown.
Makers of chips and semiconductor equipment, ranging from Taiwan’s TSMC to the Netherlands’ ASML, are braced for a tariff impact given the industry’s global supply chains — including factories in Mexico and China — and because of a potential slowdown in demand.
Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, specializes in making semiconductors for other companies, such as U.S. firms Apple, Nvidia, AMD, Qualcomm and Intel.
ASML, meanwhile, manufactures the extreme ultraviolet lithography (EUV) machines used by many global chipmakers to print intricate designs on chips. ASML ships these tools to multiple countries, including the U.S., Taiwan and South Korea.
“The latest moves won’t do much to calm the high tensions which have hit the semiconductor sector,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Monday.
“Companies like Nvidia rely on the production of chips from outsourced factories overseas, like China and Mexico – but many other parts needed to construct AI data centers could also be vulnerable to tariffs, given they are imported.”
Consumer goods
For the U.S. consumer, a host of household and leisure goods made overseas could be set for price increases, from furniture and electrical appliances to clothing, video consoles, phones and toys.
Elsewhere, there will be an impact on U.S.-exported products sent to countries such as Canada which retaliate with tariffs — as well as on consumer goods firms around the world that send products across the U.S.’ borders.
Fintan Ryan, consumer equity research analyst at Goodbody, told CNBC that tariffs were one of the biggest challenges for the company this year as the U.S. accounts for roughly 45% of the company’s operating profit.
Around 70% of its sales in the U.S. are imports, meanwhile, including Canadian whiskey, Mexican Tequila, Scotch, and Baileys and Guinness from EU member Ireland. Diageo is due to report earnings on Tuesday.
Chinese e-retailers
Chinese companies face the highest risk from tariffs and other changes to U.S. market access, according to analysis by Morgan Stanley. Of those, hugely popular China-linked online shopping platforms such as Temu, Shein and AliExpress are set to be hard hit.
This is because Trump has halted a trade exemption known as “de minimis,” which had allowed exporters to ship packages worth less than $800 into the U.S. duty-free.
U.S. officials have claimed the exemption allowed Chinese e-commerce companies to undercut their competitors and flagged safety concerns due to their “minimal documentation and inspection.”
The U.S. processed more than 1.3 billion de minimis shipments in 2024, according to data from the U.S. Customs and Border Protection agency.
Without the exemption, high-volume, low-cost products from China’s online retailers will face duties, potentially pushing up the end price of the items and causing a fall in demand.
— CNBC’s Ganesh Rao, Michael Bloom, Annie Palmer and Ryan Browne contributed to this story.
Bank of England Governor Andrew Bailey attends the central bank’s Monetary Policy Report press conference at the Bank of England, in the City of London, on May 8, 2025.
Carlos Jasso | Afp | Getty Images
Bank of England Governor Andrew Bailey told CNBC on Thursday that the U.K. was heading for more economic uncertainty, despite the country being the first to strike a trade agreement with the U.S. under President Donald Trump’s controversial tariff regime.
“The tariff and trade situation has injected more uncertainty into the situation… There’s more uncertainty now than there was in the past,” Bailey told CNBC in an interview.
“A U.K.-U.S. trade agreement is very welcome in that sense, very welcome. But the U.K. is a very open economy,” he continued.
That means that the impact from tariffs on the U.K. economy comes not just from its own trade relationship with Washington, but also from those of the U.S. and the rest of the world, he said.
“I hope that what we’re seeing on the U.K.-U.S. trade side will be the first of many, and it will be repeated by a whole series of trade agreements, but we have to see that happen of course, and where it actually ends up.”
“Because, of course, we are looking at tariff levels that are probably higher than they were beforehand.”
In Bank of England’s Monetary Policy Report released Thursday, the word “uncertainty” was used 41 times across its 97 pages, up from 36 times in February, according to a CNBC tally.
The U.K. central bank cut interest rates by a quarter percentage point on Thursday, taking its key rate to 4.25%. The decision was highly divided among the seven members of its Monetary Policy Committee, with five voting for the 25 basis point cut, two voting to hold rates and two voting to reduce by a larger 50 basis points.
Bailey said that while some analysts had perceived the rate decision as more hawkish than expected — in other words, leaning toward holding rates elevated than slashing them rapidly — he was not surprised by the close vote.
“What it reflects is that there are two sides, there are risks on both sides here,” he told CNBC.
“We could get a much more severe weakness of demand than we were expecting, that could then pass through to a weaker outlook for inflation than we were expecting.”
“There’s a risk on the other side that we could get some combination of more persistence in the inflation effects that are gradually working their way through the system,” such as in wages and energy, while “supply capacity in the economy is weaker,” he said.
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