US tariff updates & impact on key industries

Executive summary

Heavy Industry and Manufacturing (Automotive, Construction, Facilities Management, Packaging):

Tariffs of up to 50% on steel, aluminium and copper are inflating input costs, eroding margins and delaying projects. Much of the impact sits in Tier 2 and 3 suppliers, where tariffed commodities are embedded in subcomponents, making visibility and control critical. Automotive supply chains face redesign pressures around steel, copper wire harnesses and electronic components. Facilities management equipment and packaging materials are also exposed to higher steel and resin costs. Companies should secure long-term indexed contracts, hedge core metals, and pilot nearshoring in Mexico, Costa Rica, Eastern Europe and Morocco for metals-heavy subassemblies, while mapping sub-tier exposure and working through Tier 1 suppliers to optimise costs, mitigate risks and enforce re-opener clauses.

Consumer-Facing Sectors (Apparel & Textiles, Pharma, Professional Services):

Retailers and brands are hit by higher landed costs and sourcing disruption, particularly with Bangladesh, China and India under heavy tariffs. Pharma companies face higher costs on EU imports but temporary relief for Indian generics, while professional services confront new outsourcing barriers (e.g., the US HIRE Act). 

EU and US retailers should consider diversifying sourcing toward Vietnam, Cambodia and Turkey, and pilot nearshoring in Eastern Europe as well as optimising distribution flows by regionalising fulfilment hubs. Pharma firms should stockpile critical medicines and partner with US contract manufacturers; and service providers should diversify toward EU and Middle East markets while embedding tariff-adjustment clauses into contracts.

Others (IT & Telecom, Energy, Agriculture, Logistics):

Tariffs on semiconductors, rare earth magnets, oil derivatives, and rubber, combined with logistics disruption and the removal of the de minimis exemption, are driving systemic risk. 
IT and telecom firms face rising costs across electronics and chip inputs. Structural change in semiconductors and tech is underway, with multi-year investment, supply chain shifts, and new trade flows set to reshape the sector. Today’s higher costs are part of a longer transition toward more regionalised and resilient production. 

Energy and agricultural exporters are facing shifting trade flows as tariffs redirect demand and supply across regions. Logistics providers are dealing with higher landed costs and volatile freight capacity, but these rapid shifts are also creating short-term pricing opportunities that vigilant buyers can capture.

Companies should map US-bound exposure, diversify supply routes, build buffer inventories, secure flexible freight contracts, and adopt digital customs tools to mitigate volatility. Across industries, procurement leaders must act decisively: diversify sourcing into lower-tariff corridors, protect contracts with pass-through mechanisms and prepare for potential legal reversals.

Country highlights

In recent months, the US has sharply escalated tariffs under President Trump, creating widespread trade tensions. China and Mexico secured temporary 90-day pauses on tariff hikes, while India and Brazil now face steep 50% tariffs on most imports.

By contrast, the EU and Japan struck compromise deals, accepting around 15% tariffs alongside committing to major US investments. Canada saw tariffs raised to 35%, with some exemptions under United States-Mexico-Canada Agreement (USMCA).

The EU, Japan, South Korea, the UK, Indonesia and Vietnam have generally secured capped tariffs in the 10–20% range, while countries with more contentious US relationships, including China, India and Brazil face 35–50% tariffs with potential for further escalation. Surprisingly, Switzerland tariffs were raised to 39%, with pharma and luxury goods being the largest categories.

Overall, Trump’s strategy of tight deadlines and high tariff threats has produced a mix of truces, partial deals and punitive measures, underscoring a highly fragmented global trade environment that has disrupted flow of goods and services for virtually every country.
 

The evolving trade landscape

Legal Overhang Inside the US (Tariffs Ruled Unlawful, Stay in Effect Pending Review)

The US Court of International Trade held the administration’s International Emergency Economic Powers Act (IEEPA)-based tariffs unlawful; on 29th August 2025, the Federal Circuit largely affirmed but stayed relief to allow a likely Supreme Court appeal. As a result, current tariffs are operative for now, creating refund/policy-reversal risk. The Supreme Court has agreed to hear the expedited appeal on 5th November 2025, with an uncertain decision date.

Companies should strengthen contracts with tariff pass-through and re-opener clauses, avoid locking in long-term rates at today’s tariff-inflated levels, and prepare documentation processes to claim refunds if the tariffs are ultimately overturned.

Investment Packages as a Core Trade Mechanism

Instead of relying only on tariffs, the US is securing major investment commitments (e.g., £451 billion from the EU, £413 billion from Japan and £263 billion from South Korea). These investments are directed at strategic priorities such as energy, advanced manufacturing, defence procurement and technologies like AI chips and semiconductors.

Businesses may see new investment opportunities and expanded partnership channels, but these are increasingly linked to US political and strategic priorities. 

Varied National Responses

India and Brazil introduced domestic measures including tax cuts, subsidies and aid packages to offset tariff impacts. In contrast, Canada and Mexico, closely linked through USMCA, opted for measured concessions to maintain stability in cross-border trade.

Market conditions will diverge in some countries: tariffs may be cushioned through domestic policy support in some, while in others, businesses may face longer-term negotiated adjustments.

Shanghai Cooperation Organization (SCO) 2025 (Tianjin)

Leaders flagged deeper economic coordination, including proposals for an SCO development bank and joint payment/settlement infrastructure, with calls to expand local-currency use; Russia also proposed joint bond issuance. These measures are framed as reducing exposure to external policy shocks, including US tariffs.

Firms can expect incremental non-USD settlement options on select SCO corridors. Prepare multi-currency invoicing/FX coverage while keeping USD channels active.

The impact of recent tariff changes on commodities

Commodities

The US has significantly increased tariffs on major commodities. Steel and aluminium remain at 50% alongside a 50% levy on semi-finished copper (and wider copper imports). Brazil-origin steel and copper also stand at 50%, pushing up costs across construction, machinery and grid equipment. In food and agriculture, Brazil’s coffee and India’s shrimp has been lifted to ~50%, reshaping trade flows and pricing. While most EU goods are capped at ~15% under the new framework, metal lines (steel, aluminium and copper) continue to face 50%. As a result, inputs for US manufacturers still carry elevated landed costs despite the headline relief.

Only goods that comply with USMCA rules receive limited exemptions. In addition, the de minimis exemption was removed on 29th August, meaning every import, regardless of value, is now subject to tariffs.

Regions

At the country level, China and India face the steepest exposure, with India subject to potential 50% tariffs on all products linked to Russian oil imports. Canada and Mexico register medium to high impacts across sectors, reflecting constrained carve-outs under USMCA. In contrast, the EU and UK continue to face predominantly low-impact tariffs, benefiting from preferential arrangements. Costa Rica is a western hemisphere country that has fared very well at 15%, and may offer opportunities for near shoring final manufacturing operations.

Implications and Actions

• European and UK suppliers gain substantial competitive advantages, benefiting from low-impact tariffs that position them favourably against Chinese and Indian competitors.
• MENA exporters hold advantages in categories such as organic chemicals and apparel & textiles, providing opportunities for export growth.
• The heightened tariff environment is likely to force suppliers to re-evaluate logistics and sourcing strategies, including shifting manufacturing to or sourcing from lower-tariff regions such as the EU, Japan, South Korea, the UK, Vietnam and Indonesia. These markets should capitalise on new openings, invest in export facilitation and position themselves as alternative suppliers amid shifting trade flows.

Methodology used in the Heatmap

• The heatmap captures tariff revisions announced up to 4th September 2025, covering countries and regions affected by these measures, with a particular focus on the EU, MENA and the UK. Only tariffs effective as of 4th September have been included; threatened or future-dated tariffs are excluded
• Each cell in the heatmap indicates the tariff’s effect on the final industrial product of a sector across key regions
• Heatmap data is sourced from: European Commission, Reuters, ReedSmith, CFI, and AL-Monitor

Notes

1. Commodities with cross-sectoral applications have been allocated to the sectors where their usage is most significant and directly tied to core industrial activities
2. Canada and Mexico are exempt under USMCA
3. * Germany has been used as a proxy for the EU in cases where tariff data for a specific commodity is unavailable, given its status as the member state with the largest trade surplus with the US
4. ** MENA region represents the average tariff imposed by the US on the region’s major exporters
    

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