Tariffs: Can Brands Absorb the Shock?

The markets have spoken they usually’re not joyful. We’ve simply seen the largest international drop since COVID. A pointy, gut-level response to what may go down as one of the vital economically turbulent strikes in many years: blanket tariffs from the US, with Asian markets taking the toughest hit. Might this transform one of the vital consequential financial choices of our time? Presumably. However it’s too early to say. 

What’s sure is that this: uncertainty has been re-injected into the veins of world commerce. This isn’t only a headline. That is real-world volatility: pensions bruised, costs rising, shopper confidence shaken. Inflation is likely to be the subsequent hit.

The fallout has barely begun. China’s already retaliating. Japan’s on the defensive. And for manufacturers, the subsequent few weeks are a minefield. Keep tuned. This isn’t only a bump. It is likely to be a reckoning.

President Trump has utilized a default 10% baseline tariff on all imports into the US, efficient 5 April.

Larger charges have been utilized to round 60 international locations, together with China, Japan and EU international locations, that already apply greater tariffs or different non-tariff limitations to commerce, akin to quotas on imports, subsidies or different measures that act to forestall US commerce in these territories.

Mexico and Canada have been notably absent from the brand new announcement. Each international locations are already topic to 25% tariffs on all items exported to the US exterior of the scope of the United States-Mexico-Canada Settlement (USMCA). The USMCA is a free commerce settlement that enables tariff-free import/export between the three international locations of most agricultural and textiles items.

Along with the territory-specific tariffs, President Trump additionally introduced a 25% tariff on all foreign-made vehicles. This can have a disastrous impact on car exports into the US, as revenue margins within the trade are likely to vary round 6-7% and really not often attain 20%. In impact, exporting automobiles to the US shall be a loss-making endeavor typically.

Bluntly, companies importing items from affected territories can pay the respective tariff as a proportion of the worth of the products being imported. The likeliest impact is that the elevated price shall be handed on to customers via greater retail costs. Initially, this may apply solely to US prospects, because the tariffs will solely immediately have an effect on items coming into the US.

Nevertheless, it’s doable – and in some territories very doubtless – that affected international locations will retaliate by making use of their very own elevated tariffs on US items coming into their economies. This is able to have the identical impact on home customers there, pushing up the price of US items.

Already, we’ve seen inventory market falls. The market doesn’t like uncertainty, nor, typically, restrictions on commerce, so we’ll doubtless see additional instability within the quick time period. This can immediately influence traders and retirement/pension savers, however the actuality is that this may imply little or no for the common shopper.

Extra impactful would be the results of any enhance in inflation as a fallout of the brand new tariffs. First, greater costs would imply larger pressure on family funds – or no less than an extension of the restoration from the cost-of-living disaster. Secondly, an increase in inflation would ordinarily delay deliberate rate of interest cuts. Within the worst-case state of affairs, it might result in greater rates of interest. This is able to be a lift for savers, however trigger extended hurt for debtors.

Nevertheless, given the grave projections for what these tariffs imply for GDP, the market’s preliminary response was as an alternative an expectation that central banks shall be pressured to hurry up fee cuts to advertise spending and shield progress.

Count on to see forecasts change ongoing, particularly as responses to the tariffs from different international locations change into clearer. 

The response from manufacturers will rely on the choices out there to them. If different sources exist, we might see a flip in direction of extra home manufacturing and manufacturing, or larger imports from different international locations the place tariffs are decrease. Within the case of the US, larger home manufacturing and manufacturing will virtually actually end in greater prices than earlier than new tariffs have been launched.

There’s a chance that the very excessive tariffs utilized to Chinese language items might see extra Chinese language merchandise routed into UK/EU markets, providing a path to changing costlier US ones if retaliatory measures are introduced. On this state of affairs, costs might truly fall, although this shall be delicate to the make-up of particular person classes and merchandise.

Elsewhere, the roles of staff in probably the most uncovered classes shall be in danger. If employers lose out by being unable to promote into the US market and fail to interchange that enterprise, job losses are inevitable. Automobile producers are probably the most clearly weak to this within the UK and Germany, given the moment imposition of the 25% tariff. Unemployment charges in most superior economies have been low and secure for a protracted interval. A sudden rise in unemployment, even when restricted to pick industries, would have a detrimental influence on shopper confidence.

The rapid influence for customers shall be felt within the US, with worth fluctuations. Fast will increase in prices for merchandise imported into the US, significantly for low-margin items, are doubtless, as there shall be little alternative however to move them onto customers and enhance costs.

Solely as soon as different international locations challenge their measures will we all know the extent of the influence in, for instance, the UK, Germany and elsewhere. Nevertheless, we nonetheless must be ready in these international locations.

That is the place Mintel’s understanding of customers is uniquely priceless: our analysis from March 2025 reveals that 62% of US customers say rising costs on account of tariffs will make them rethink loyalty to sure manufacturers. The price-of-living disaster is a latest (and ongoing) precedent for the way we are able to count on customers to answer rising costs. For instance, we all know from our analysis that savvy purchasing exercise ramped up, customers traded down the place acceptable and more and more turned to low-cost retailers. We all know, too, that customers will nonetheless discover house to deal with themselves the place they’ll, and the lipstick impact has been seen throughout the economic system. Immediately’s tariff state of affairs isn’t the identical, however we are able to look to examples throughout classes for a information on what we are able to count on from buyers.

Questions you’re in all probability pondering that Mintel can reply:

One essential factor to remember is that affected international locations will see this announcement – or no less than will need to see this announcement – as a place to begin for negotiations. 

For instance, the UK has obtained off as frivolously because it might with a ten% fee, however is in negotiations over a brand new commerce settlement that the UK authorities hopes will end in zero tariffs. The UK has, thus far, tended to take a cautious strategy to responding to President Trump’s bulletins. Even so, UK Enterprise Secretary Jonathan Reynolds has introduced a session on which merchandise might be used as a part of a tariff response, which can finish on 1 Might.

On 3 April, Ursula von der Leyen, the President of the European Fee, introduced that the EU needed to barter to “take away any remaining limitations to transatlantic commerce” however was “ready to reply”. The EU has already responded with retaliatory tariffs on as much as $28bn of US items after the US utilized a 25% tariff on metal and aluminium. The EU has dominated out additional retaliatory tariffs for 4 weeks, however is more likely to announce some on the finish of April if no progress is made on negotiations with the Trump Administration.

China has been extra bullish. The Commerce Ministry acknowledged that “China firmly opposes this and can take countermeasures to safeguard its personal rights and pursuits.” The 34% reciprocal tariff introduced for Chinese language imports to the US is along with a 20% levy already utilized by President Trump, that means China’s fee is, in impact, 54%. On 4 April, China introduced its personal 34% tariff on all imports of US items, to take impact from 10 April. In the meantime, there may be an expectation that there shall be different non-tariff reactions from China that can influence on commerce with the US, akin to extra export controls on essential minerals, or enhanced scrutiny on US firms working within the nation.

Japanese Prime Minister Shigeru Ishiba has promised assist for Japan’s home industries, expressing disappointment on the information. Japan’s auto trade accounts for round 3% of GDP.

Many different international locations lack the power to current a significant pushback in opposition to the tariffs with their very own measures in opposition to the US. Nonetheless, they’ll as an alternative look to barter commerce offers and/or realign with different commerce companions to guard their economies. Nations like India and South Korea look amongst these international locations more likely to negotiate as a primary precedence.

There may be nonetheless a component of ‘wait and see’ across the response from the US’s commerce companions. My colleagues and I’ll proceed to observe the state of affairs and supply steering based mostly on any retaliatory measures.

We’ve forthcoming Mintel professional opinion items discussing how customers are more likely to be impacted, serving to our shopper perceive the implications on their markets and industries.

In case you’re a Mintel shopper, our class specialists are already exploring the tariff implications for imports into the US within the following articles. I encourage you to verify them out:

In case you’re not a Mintel shopper, my colleagues have shared some compelling, related insights in different Highlight articles. Price a learn, however when you have particular questions or are all for talking to a Mintel Analyst, please do get in contact.