The Global Impact of U.S. Trade Tariffs: Perspectives from Key Industries

Daniel Kohut, Vice President, Industry Strategy, Blue Yonder

As of February 11th, the Trump administration has announced worldwide tariffs of 25 percent on aluminium and steel imports, which form a major part of Australia’s economy.

The Trump administration’s proposed increase in tariffs on imports in other areas—ranging from 60% to 100% for China, for example—is sending shockwaves through industries worldwide, particularly in the Asia-Pacific region. With China serving as a global manufacturing hub, companies are grappling with rising costs, supply chain reconfigurations, and market volatility. Industry leaders from manufacturing, automotive, industrials, high tech, and life sciences share their perspectives on the implications of these tariffs and the strategies companies must adopt to mitigate risks.

Blue Yonder’s industry leaders across manufacturing, automotive, industrials, high tech, and life sciences share their perspectives on the implications of these tariffs and the strategies companies must adopt to mitigate risks.

In most cases the economic impacts are likely to be severe, and advanced technologies and business operational changes such as risk and scenario modelling and inventory planning will become critical to ensure business continuity.

APAC manufacturing: Navigating Supply Chain Shifts

Manufacturers in the Asia-Pacific region, many deeply integrated with China, will experience cost increases as tariffs take effect. To offset these challenges, businesses may relocate production to Vietnam, Thailand, or Malaysia. However, shifting supply chains can strain existing infrastructure and labour markets, while also increasing logistical costs. Companies will require enhanced visibility into sourcing, inventory, and compliance, with cloud-based supply chain platforms and advanced risk modelling emerging as critical tools for managing disruptions.

Automotive: Balancing Cost Pressures and Supply Chain Adaptability

The global automotive industry faces rising production costs due to increased tariffs on imported components. Automakers may respond by reshoring production closer to domestic markets, boosting local manufacturing jobs but also raising labour costs. In countries such as Mexico and Korea, the auto industry could face economic disruptions if tariffs impact cross-border trade. To counteract cost pressures, automakers are likely to enhance inventory planning, diversify suppliers, and invest in scenario modelling to navigate shifting demand and supply chain complexities.

Industrial manufacturing: Managing Rising Costs and Global Competitiveness

For industrial manufacturers reliant on raw materials like steel and aluminium, tariffs will squeeze profit margins unless costs are passed on to consumers – increasing the already high rates of inflation in many countries, Australia included. Companies may look to domestic sourcing, albeit at a higher cost, and rethink their supply chain strategies to minimise disruption. While U.S.-based manufacturers could gain an advantage in the short term, increased tariffs may also reduce competitiveness in global markets due to potential retaliatory measures. Strategic planning, cost optimisation, and government advocacy will be key to sustaining competitiveness.

High tech & semiconductors: Navigating Supply Chain Realignments

Since 2017, semiconductor and electronics companies have been shifting production from China to alternative hubs like Mexico, Vietnam, Taiwan, and Malaysia. China’s retaliatory restrictions on key minerals for rechargeable batteries and chips further complicate global supply chains. Evidence of state-sponsored cyber-attacks on Australian rare earths mining company Lynas suggest that this highly competitive market will remain closely guarded and volatile. High-tech manufacturers must optimise their network design, strengthen collaboration across multi-tier suppliers, and recalibrate inventory strategies to mitigate risks and enhance resilience.

Life sciences: Addressing Critical Supply Chain Risks

The life sciences sector, with its highly globalised supply chain, faces critical challenges as tariffs drive up costs for raw materials in pharmaceuticals and medical technology. Many materials have few alternative sources, making local production unfeasible and leading to potential shortages of essential drugs and medical supplies. Relocating suppliers or manufacturing sites in this industry requires extensive regulatory approvals, often taking 18 months or longer. Rising costs will ultimately be passed on to consumers through higher healthcare prices and insurance premiums, exacerbating existing challenges in patient care. The Trump administration’s crackdown on pharmaceutical imports (and indeed black market imports) from Canada will only exacerbate this problem.

A shifting trade landscape: Preparing for Long Term Adaption

Across industries, companies must rethink supply chain strategies, invest in digital tools for visibility and risk management, and prepare for long-term shifts in trade dynamics. Tariffs are not just a cost issue—they reshape global competitiveness, requiring businesses to adopt agile and proactive approaches to remain resilient in an increasingly protectionist environment. While the Trump administration is still very much in the early days of its second term, these changes are already playing out on the world stage. It is critical for companies to adapt rapidly and effectively.

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