The impact of tariffs either implemented or suggested by the Trump Administration goes far beyond the automotive and manufacturing industry. It appears unanimous that most industry, retail and consumer sectors are in a wait-and-see mode with tariff talk before making costly changes to their operational plans.
Those delays could have an adverse effect on business growth. That’s due in large part to the start/stop nature of tariff implementation displayed so far from the Trump administration. This is similar to the approach that businesses utilized during his first administration as tariffs were proposed and eliminated from 2017-2020, said Antonio Doblas-Madrid, an associate professor in Economics at Michigan State University.
Doblas-Madrid said that given the complexity inherent in supply chains across multiple industries, there may come a time when organizations would have to rethink their supply chain practices. That will likely occur once it is apparent that tariffs will be a long-term policy.
“You have to consider the reactions of trading partners and the reciprocal tariffs that they may implement,” Doblas-Madrid said.
One consideration is how tariffs will impact the exchange rate. For example, if the dollar – which in early March dropped to its lowest level since November 2024 – weakens, it may take six to nine months for import quantities to adjust for multiple industries, Doblas-Madrid said. The implementation and suspension of tariffs historically causes exchange rate fluctuation, which can cause another level of uncertainty related to international trade.
For example, businesses that are worried about tariffs on Chinese goods may search for new manufacturing partners in countries like Vietnam and the Philippines that aren’t currently being targeted by U.S. tariffs. Nearshoring production back to the U.S. is another possibility and appears to have been a stated goal of the Trump Administration, but such drastic measures take time to implement and can be extremely costly.
“If I were a business owner or (executive) I’d continue to do what I’m doing and use the current supply chains I am utilizing before making a big investment,” Doblas-Madrid said. “We’re seeing a muted reaction from (the private sector) until the tariffs look to be more permanent.”
Michigan Manufactures Association (MMA) President John Walsh says his members are hoping the uncertainty over tariffs ends soon, so they can make strategic decisions based on accurate and available information. Walsh believes most manufacturers are putting some initiatives on hold, which in a short amount of time can have adverse financial implications.
Some manufacturers were able to store extra product in anticipation of tariff turmoil, putting them in a slightly better, short-term position. The fear is idle production lines could soon follow.
“We operate largely in a just-in-time environment, so there’s not a lot of space or capacity to overproduce for most (manufacturers),” Walsh said.
As a result, many manufacturers will soon reach a phase where they have excess capacity, if they haven’t already arrived there. That can lead to less capital spending and workforce reductions.
“After a month of this (tariff uncertainty), it becomes disastrous for our members,” Walsh said.
Perhaps more importantly, new contracts or business deals in process are being put on hold for fear of a decision that will be hurt by tariff trends. Companies can manage this in the short-term, and the high-level economic metrics related by federal agencies still show a strong job market for now, Walsh added. But the impact of mass layoffs in the public sector will be more evident in future months, absent tariff policy changes, Walsh said.
Comerica Bank Senior Vice President and Chief Economist Bill Adams said that multiple industries outside of automotive and manufacturing are impacted by long-term tariffs. Steel, aluminum and lumber producers might benefit from being able to charge a higher price for their products, but the demand for such items manufactured in the U.S. globally may fall as well.
Trump raised steel and aluminum tariffs for all exports from 10 to 25 percent effective March 12. Canada, the European Union and China all responded with significant, often reciprocal tariffs of their own on American products, including liquor.
Many consumer products, including home appliances, are faced with a similar dynamic, with the likely ability to charge higher prices. However, those higher prices might simply offset higher costs because foreign-sourced components would become more expensive. They also add more expenses to the bottom-line of steel and aluminum buyers, Adams said.
Agriculture might be impacted as extensively as any industry from tariffs as higher import and export costs trickle down to consumers. The United States Department of Agriculture (USDA) reported in January 2025 that Canada and Mexico are the United States’ first and third largest suppliers of agricultural products, averaging $30.9 billion and $25.5 billion annually. Other agricultural products are imported from other countries as well.
This in turn could impact the retail and food services industry of consumers have less spending power on non-critical goods and services like entertainment and restaurants, according to Adams.
“The impact will vary from one industry to another but there’s a ‘jobs’ factor as well,” Adams said.
As a result, tariffs aren’t just an issue for business owners in retail and food services and restaurants but their employees, Adams said. Those jobs typically are lower paid than skilled positions and comprise several of the most common occupations in the U.S., along with such jobs as nurses and home healthcare aides.
“If consumers are spending less, it’s harder to be profitable,” Adams said.
The January 2025 jobs report from the Bureau of Labor Statistics showed job losses have already accelerated in retail, technology and leisure, which compromises many hourly workers, he added.
The February jobs report showed job gains and a slightly higher unemployment rate. A total of 151,000 new jobs were created in February, 9,000 less than expectations from economists, but more than the 143,000 revised job gains from January.
“Tariffs may have also contributed to job losses in February,” Adams said. “When you (operate) in an industry with margin pressures, reducing workforce is one way to cut costs.”
The expanding discourse on tariffs also impacts the media, technology and telecommunications industries either directly or indirectly, said Dallas Dolen, Technology, Media and Telecommunications Industry Leader for PwC US. Dolen said that many companies in these sectors have or were soon planning to announce significant investments in data centers and energy to power AI applications or tools. Software and AI companies that are heavily reliant on platform providers for support may feel the most financial pain.
Specifically, instituting tariffs on Chinese imports causes issues for the semiconductor supply chain. Escalations are leading to increased costs for essential components utilized in network infrastructure, consumer electronics, and emerging technologies such as 5G and AI, Dolen said.
The telecommunications sector is facing elevated costs for equipment and infrastructure components due to tariffs. Tariffs on equipment and materials essential for media production are escalating operational costs for content creators and broadcasters, he added.
“This financial strain could result in higher production expenses and influence the availability and pricing of media content,” Dolen said. He added that AI investment costs can be extensive for telecommunications and technology, and related tariffs in those sectors may reduce margins, making it harder to justify such investments.
“I’m not an economist, but I understand what companies and markets value most – certainty in the macroeconomy and market conditions,” Dolen said. “International companies, even those based in the U.S., must be cautious about favoring certain economies over others when making strategic decisions.”
Doblas-Madrid believes the agriculture industry and American farmers will be hurt by prolonged tariffs. Additionally, the administration’s focus on deportation and immigration control may make it harder for some farmers to meet their margins. That could impact labor availability, jobs that are often filled by immigrants or migrant workers. Or there might be less demand for U.S. agricultural exports because of the tariffs.
“This will cause food inflation,” Doblas-Madrid said.
Tariffs will hit different retail sectors as well, said Simone Peinkofer, an associate professor at the Eli Broad College of Business at Michigan State University. Grocers, for example, will have to deal with tariffs impacting fruits and vegetables like blueberries and bananas which are imported from Mexico and meat products which are imported from Canada. Electronic retailers are also likely to feel the impact of the tariffs with electronic imports from Mexico.
Consumers are likely to see higher prices at fast fashion retailers such as SHEIN and Temu, but retailers selling appliances, electronics, toys, and apparel will be affected, said Peinkofer.
“Higher prices in those sectors will likely be passed on to consumers,” she added. “Consumers are already strained financially from the last few years of heightened inflation and consequently will have even less disposable income available. Thus, consumer spending is likely to decrease.”
Manufacturers, including those outside of the automotive industry, want fair and effective trade policies and trade agreements with other countries, Walsh said. But he feels trade policy changes should only be made with trade issues in mind, and not as a bargaining tool for other administrative goals. Walsh stressed he’s not sure whether the administration is using tariffs as a bargaining tool for other issues, such as reducing the flow of drugs into the U.S. It has been mentioned by the administration as a factor for tariffs on Canadian and Mexican products.
“The trade policy won’t solve the fentanyl issue. We agree these drugs are terrible for (residents),” Walsh said. “But these tariffs will exacerbate pain for manufacturers. We’re just asking for a coordinated approach with trade and tax policy. I’m not sure a trade war is an effective way to address the drug trafficking problem.”
A trade war can also affect the value of the U.S. dollar. A strong U.S. dollar benefits importers, but it can run counter to the goals of boosting domestic manufacturing for both local consumption and export, Dolen said.
Doblas-Madrid notes that the impact of tariffs isn’t all negative or positive on U.S. companies or consumers. “The cost benefit pattern of tariffs isn’t monolithic,” he said. The increased globalization of trade has often benefited consumers and corporate profits but reduced the number of jobs in many sectors. With that work shifting toward countries with lower labor costs, it has helped improve the lifestyle of workers outside of the U.S. that otherwise would have bene faced with extreme poverty.
“Some workers in the U.S. may not like the globalization of trade but it also helped keep some of their (costs) down,” Doblas-Madrid said, adding that other leaders have used tariffs to negotiate other issues over time.
While nearshoring may be a goal of the Trump Administration, Doblas-Madrid doubts it would result in a significant uptick in new manufacturing jobs in the U.S. It may increase demand for professionals skilled at managing automated equipment increasingly being used on plant floors.
“I don’t think we’ll ever return to the golden area of American manufacturing that we saw in the (early to mid-20th Century),” Doblas-Madrid said. “If you look at a factory floor today it’s more about technology and capital investments and I do think that’s where more of the attention would go in the U.S.”
The MMA works closely with the National Association of Manufacturers (NACM) and collaborates with other state-based manufacturing trade associations. Through these connections and led by NACM, Walsh believes the manufacturing industry does have access to some of Trump’s cabinet members and other appointed decision makers in his administration. The goal is to share the message from manufacturers that tariff uncertainty is bad for business.
He adds that NACM and all state trade organizations are aligned in their messaging. Collectively they are trying to influence these officials of the damage tariff talk is having on the manufacturing industry, and thus the economy as a whole. While the MMA hasn’t yet encouraged members to reach out to their own elected officials to voice these opinions, that may happen soon.
“Our members are very focused on the impact and uncertainty that exists surrounding their ability to make decisions in their business,” Walsh said. “That’s not a good place to be.”
From a supply chain standpoint, the impact of tariffs goes far beyond automotive, Doblas-Madrid said. Most products purchased by consumers are made outside of the U.S., including clothing and shoes, toys, electronics and more. While supply chain costs, such as transportation, the cost of dock workers and other logistics may not directly rise because of tariffs, a general increase in oil and other energy costs for U.S. and foreign-based manufacturers could increase the cost of goods as well.
That being said, cost increases caused by tariffs wouldn’t necessarily be passed to customers on a one-to-one level. The ability to move goods through the global supply chain won’t be interrupted as it was in the months and years following the Covid pandemic when plants and transportation lanes were shut down. As a result, Doblas-Madrid doesn’t expect a shortage of goods but the rate at which parts are transported from one country to another may slow.
“Tariffs are the choice of revenue for many developing countries that aren’t able to implement a complex tax system or collect the same amount of money through income tax,” Doblas-Madrid said. “Every good product comes with a bundle of tradeable goods and services and if the system is changed by what amounts to a sales tax on (exported and imported) U.S. goods, the supply chain will see some changes. We’ll ultimately see what the impact becomes.”
Outside of steel and aluminum producers, companies and sectors making products in the U.S. that aren’t reliant on inputs affected by existing or new tariffs would benefit the most, Dolen said. He believes that applies to a relatively small group of companies, many of which likely do not compete extensively with inbound firms.
“Domestic industrial and automotive companies are the most obvious winners, but many essential components – such as battery materials – still come from abroad,” he said.
All leaders in different sectors can do is stay informed as to the latest updates with existing or potential tariffs, Peinkofer said, even retailers, which are affected by price increases downstream in the supply chain.
Knowing what is happening, when it is happening, and assessing the potential impacts are key. “This will help retailers to prepare and implement any potential contingency plans from a supply chain perspective,” she said.
For now, businesses across all sectors are left reacting – or not reacting – to the latest tariff news, which seems to update on a daily, if not hourly basis. “I wish I knew the outcome (of the tariff talk. It would certainly make each new headline a little easier to digest,” said Dolan.
