The Trump administration’s tariff threats have sent ripples through various sectors of the U.S. economy, casting a shadow of uncertainty over industries reliant on international trade. Automakers, toy manufacturers, and food producers are among the most vulnerable to potential tariffs on imports from Mexico, Canada, and China. Under the North American Free Trade Agreement (NAFTA) and the US-Mexico-Canada Agreement (USMCA), companies have increasingly turned to Mexico for cost-effective production. However, tariffs could disrupt this dynamic, affecting consumer prices and business operations.
Automakers have been particularly proactive in leveraging Mexico's cost advantages. Five major automakers—Ford, General Motors (GM), Stellantis, Toyota Motor, and Honda Motor—produced 1.54 million light-duty vehicles in Mexico last year, primarily for U.S. consumers. Nearly every major automaker operating in the U.S. maintains at least one plant in Mexico, underscoring the significance of cross-border trade in the automotive sector. Wells Fargo estimates that a 25% tariff on Mexican and Canadian imports would jeopardize the adjusted earnings of GM, Ford, and Stellantis.
Antonio Filosa, head of Stellantis' North American operations, acknowledged the industry's need to adapt to potential policy changes.
"We are working, obviously, on scenarios," – Antonio Filosa
"But yes, we need to await his decisions and after the decision of Mr. Trump and his administration, we will work accordingly." – Antonio Filosa
The impact of tariffs extends beyond automobiles. Mattel, a leading toy manufacturer, anticipates that less than 40% of its sourcing will come from China, minimizing its exposure to Chinese imports in the U.S. to 20%. Steve Madden plans to cut its imports from China by up to 45% over the next year as part of its strategy to mitigate tariff-related risks. Currently, about 70% of Steve Madden's merchandise is produced in China.
Meanwhile, tariffs have become a central topic for companies consulting with PwC, reflecting widespread concern about their implications. The U.S. furniture industry also faces significant challenges, with $32.4 billion in imports—29% from China and 26.5% from Vietnam—potentially subject to tariffs.
The food industry is not immune to these pressures. The growing popularity of Mexican cuisine and diets rich in "healthy fats" has made avocados a staple in U.S. grocery stores. In addition, the U.S. imports $40.5 billion in agricultural goods from Canada annually, including $1.7 billion in frozen French fries and other potato products.
Constellation Brands has invested billions to expand its Mexican production capacity, but uncertainty about tariffs has led Wall Street analysts to downgrade its stock. The company's cost of goods sold could rise by roughly 16% if tariffs are imposed.
In response to potential cost increases, DiSilvestro indicated a strategic approach.
"We've done a good job mitigating the potential exposure," – DiSilvestro
"But to the extent we're impacted, we would expect to raise prices to offset it." – DiSilvestro
Matt Priest, CEO of the Footwear Distributors and Retailers of America, emphasized the broader economic implications of such measures.
"All of these actions are inflationary," – Matt Priest
Professor Brett House from Columbia Business School highlighted the far-reaching effects of tariffs on petroleum imports from Canada.
"Something around 50% of U.S. petroleum imports come from Canada. The Trump administration puts tariffs on those, it is unequivocally the case that everything in the United States will become substantially more expensive," – Professor Brett House
"The breadth of the impact that we should expect to see from these tariffs could be enormous and could affect every single thing we produce in the United States and every household and every business. No one will be immune." – Professor Brett House