Tariff Weekly: Week April 28

In the past week, trade and tariff developments have continued to ripple through global markets, driven largely by the Trump administration’s aggressive tariff strategy. Key highlights include:

Escalation of U.S. Tariff Measures

• The U.S. raised tariffs on Chinese goods to 145%, triggering a reported 60% drop in cargo shipments from China and significant price hikes—up to 377% on some consumer goods sold by firms like Shein and Temu.
• The closure of the de minimis loophole further compounds the cost burden on low-value imports, impacting e-commerce and consumer prices.

Sectoral Impacts

• Automotive: Major manufacturers including GM, Mercedes-Benz, Stellantis, and Volkswagen have suspended financial guidance or reported profit declines due to supply chain disruptions and rising costs.
• Electronics: U.S. tariffs are accelerating supply chain shifts, with Apple, HP, and Pegatron relocating production to India. Microsoft raised Xbox prices, while Apple projects a $900 million hit during its transition.
• Retail: Companies like Shein are reassessing U.S. operations, and Amazon faced criticism over tariff transparency plans. McDonald’s reported its steepest sales drop in years due to consumer uncertainty.
• Commodities: China’s copper supplies are under pressure, driving up global prices. U.S. farmers are losing market share as China diversifies its sourcing.

Macroeconomic Effects

• The U.S. economy contracted by 0.3% in Q1, with a surge in imports ahead of tariff implementation. Consumer confidence has plunged to a five-year low, and inflation expectations are rising.
• The U.S. trade deficit hit a record high, raising fears of a potential recession.

Global Reactions

• South Korea and Japan downgraded growth forecasts and are delaying or reassessing trade talks with the U.S.
• The EU is pursuing negotiations to mitigate tariff impacts, offering increased purchases of American goods.
• Canada and Australia are witnessing political and business sentiment shifts tied to trade uncertainty.
• Chinese manufacturers are reportedly using third countries (e.g., Malaysia) to circumvent tariffs via "origin-washing", raising regional enforcement concerns.

Investment and Business Confidence

• Berkshire Hathaway’s Warren Buffett warned against using trade as a weapon, labeling tariffs an “act of war.” His company’s record cash holdings underscore investor caution.
• Investment funds and emerging markets are adjusting portfolios, some finding new opportunities amid volatility.

Outlook

Amid economic disruptions and geopolitical tensions, global stakeholders are calling for clarity in trade policy. Negotiation signals from China offer a potential opening, but the continued use of tariffs as a strategic lever is reshaping global trade norms and economic planning.