Makers of products from sportswear to luxury cars and chemicals painted a dismal picture on Wednesday of consumer and industrial health, hitting share prices and adding to concerns concerning the damage from U.S. President Donald Trump‘s trade wars.
Increased tariffs on all U.S. steel and aluminium imports took effect on Wednesday, as Trump stepped up his campaign to reorder global trade in favour of the USA. Europe swiftly retaliated.
Trump’s plans for tariffs – and their back-and-forth implementation since he took office in January – have upended industries from cars to energy and unnerved businesses and investors. Worries that rising costs will reignite inflation, and that souring consumer sentiment could herald a U.S. recession, have caused stock markets to plunge.
At a grains conference on Tuesday in Carlsbad, California, news of Trump’s steel and aluminum tariffs on Canada drew groans from the room of corporate agriculture executives, grain processors and traders. The whipsaw pace of policy changes that affect their industry has made the last six weeks seem for much longer, many told Reuters.
“Nearly everyone within the economy is struggling to grasp wild swings in Washington policies, and their implications for on a regular basis decisions,” said Stephen Dover, chief market strategist at asset manager Franklin Templeton.
The constant flip-flopping over tariffs is paralysing industries. Automakers, for instance, are unable to plan while there may be a threat of 25 per cent tariffs on components made in Canada or Mexico.
“No reasonable auto executive could make such investments if the expected returns could be worn out on the stroke of a pen,” Dover said.
Germany’s Porsche said on Wednesday it was assessing the way it could pass on to consumers the price of possible tariffs – expected to be 25 per cent for U.S. imports from Europe – without pressuring its margins. That means prices may very well be hiked to offset any drop in unit sales.
“For now, we hope there are answers that may result in a smart tariff regime between regions,” Porsche CFO Jochen Breckner said on a press call.
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Two major South Korean steelmakers said they were considering options including possible investment in operations in the USA because the metals tariffs got here into force.
Canada’s Algoma Steel paused exports of steel from Canada to the USA until Thursday, when Canadian ministers are expected to fulfill their U.S. counterparts in Washington. CEO Michael Garcia called the tariffs “very concerning.”
Speaking on French television hours before the aluminium tariffs got here into force, Airbus CEO Guillaume Faury warned of a trade “conflagration” because the world descends into tit-for-tat measures.
“A few of my suppliers could be affected and we’re beginning to see some disruption,” he said, adding, “We’re in a trade war and when a trade war begins, it tends to sustain itself and feed itself.”
To this point the aerospace industry has not seen a big direct impact but a lot of its suppliers are in Mexico, Canada and China, which have been targeted by earlier duties or tariff warnings.
JPMorgan’s chief economist Bruce Kasman said he saw a 40 per cent probability of a U.S. recession this yr, which might rise to 50 per cent if Trump follows through on threats to impose reciprocal tariffs from April. He also warned of lasting damage to the USA as an investment destination if the administration undermines trust in governance.
Asked a few recession resulting from his trade policies, Trump said on Tuesday: “I don’t see it in any respect.” On Monday, he had declined to rule one out.
Earnings from German sportswear maker Puma and Zara-owner Inditex underscored concerns that uncertainties over trade are beginning to curb American spending. Shares in Puma, which highlighted trade disputes as a challenge and announced job cuts, lost almost 1 / 4 of their value.
France, Spain and Italy all requested that the European Commission exclude wine and spirits from the list of U.S. goods targeted with tariffs, an executive from a big European spirits producer said on Wednesday. EU tariffs on U.S. spirits reminiscent of bourbon whiskey shall be “devastating” for the liquor industry, trade associations on either side of the Atlantic said.
Shares of U.S. beauty firms, including Estee Lauder fell after a French cosmetics industry body said there was “enormous” risk of retaliation by the U.S. after the EU said it will impose tariffs on U.S. imports including makeup.
Greater than 900 of the 1,500 largest U.S. firms have mentioned tariffs on earnings calls or at investor events for the reason that starting of the yr, in keeping with LSEG data.
The tariffs are already driving prices for aluminium users in the USA to record highs.
Data on Wednesday showed U.S. consumer prices increased lower than expected in February, although tariffs on imports are expected to boost the prices of most goods within the months ahead.
German chemicals distributor Brenntag warned that 2025 shall be one other difficult yr, shaped by economic and political uncertainty and subdued economic growth globally.
CEO Christian Kohlpaintner said the “confusing, inscrutable” situation made it hard to run a business. Germany’s chemicals association VCI said on Wednesday it didn’t expect any recovery this yr.
“The massive risk is that firms stop spending and equally the buyer also stalls purchases,” said Justin Onuekwusi, chief investment officer at investment firm St. James’s Place.
