{"id":7290,"date":"2025-01-08T22:22:01","date_gmt":"2025-01-08T22:22:01","guid":{"rendered":"https:\/\/intelligence.supplyframe.com\/?p=7290"},"modified":"2025-02-27T21:10:55","modified_gmt":"2025-02-27T21:10:55","slug":"new-tariffs-impact-global-manufacturers","status":"publish","type":"post","link":"https:\/\/intelligence.supplyframe.com\/es\/new-tariffs-impact-global-manufacturers\/","title":{"rendered":"How New Tariffs Will Impact Global Manufacturers in 2025"},"content":{"rendered":"

In November 2024, President-elect Donald Trump pledged to impose hefty tariffs on three primary U.S. trading partners: Canada, Mexico, and China. <\/p>\n\n\n\n

When Trump takes office on January 20, 2025, he promises to impose a 25% tariff on imports from Canada and Mexico unless the countries stop the flow of illegal drugs and undocumented immigrants into the United States, even though the move violates the free-trade deals of the countries. <\/p>\n\n\n\n

Trump is also considering a 60% tariff on all Chinese goods and has threatened a 100% tariff on products from the BRICS nations of Brazil, China, Russia, and South Africa.<\/p>\n\n\n\n

Disover How Supplyframe Helps Teams Navigate Tariffs<\/strong><\/h4>\n\n\n\n
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Learn More<\/a><\/div>\n<\/div>\n\n\n\n

Cause and Effect <\/h3>\n\n\n\n

Over the last five years, the world has seen increased conflicts. Investors use watchlists to monitor opportunities for potential trading and investing. Watchlists capture how conflicts are distinct and how contemporary conflicts are often transnational.<\/p>\n\n\n\n

The proposed tariffs will likely increase the price of electronics, smartphones, and other tech devices. The tariffs will also affect vehicle batteries, renewable energy equipment, and industrial machinery. <\/p>\n\n\n\n

This will increase businesses’ costs and reduce consumers’ purchasing power. Tariffs offer short-term protection for domestic industries and government revenue, but over the long term, they exacerbate trade wars and reduce economic efficiency. <\/p>\n\n\n\n

Trump has also proposed a 10% tariff on imports from China. However, the cost of these tariffs on U.S. companies may be high enough to become economically and politically unsustainable.<\/p>\n\n\n\n

This will be even more problematic if Mexico retaliates, as Mexico\u2019s President Claudia Sheinbaum has threatened. While tariffs on China can be justified, a tariff-first approach to address U.S. issues with Canada and Mexico undermines the role of trade and investment across North America anchored by the United States-Mexico-Canada Agreement (USMCA). <\/p>\n\n\n\n

Mexico hosts over 1,000 electronics manufacturing services facilities occupying tens of thousands of square feet of production space. Leading global providers like Foxconn (Hon Hai Technology Group), Flex, and Jabil manufacture advanced electronics for industry sectors, including automotive, medical, and aerospace applications.    <\/p>\n\n\n\n

The regional agreement significantly reduces U.S. dependence on Chinese supply chains and secures alternative sources of critical minerals. U.S. companies are mounting campaigns to soften the president-elect\u2019s trade policies, but the Trump team assures them he is serious.<\/p>\n\n\n\n

How are companies and countries reacting? A case in point is China, which has banned exporting raw materials<\/a> such as gallium, germanium, antimony, and superhard materials. This shift will significantly affect the production of semiconductors. According to the U.S. Geological Survey (USGS), China\u2019s export restriction of gallium and germanium to the United States is estimated to negatively impact the U.S. GDP<\/a> by $3.4 billion. <\/p>\n\n\n\n

How Tariffs Make Electronics Procurement Even More Expensive<\/h3>\n\n\n\n

If adopted, new tariffs could create expensive challenges when procuring electronic components in 2025. Semiconductor tariffs have increased this year after the Biden administration raised the tariff on semiconductor imports from China to 50% to reinforce its investment in US-based electronic component production through the CHIPS & Sciences Act. <\/p>\n\n\n\n

If the incoming administration continues with the proposed 10% increase, semiconductors from China would see a 60% import tariff. According to the United States International Trade Commission, China and Mexico are the two largest electronics exporters to the United States as of 2023.<\/p>\n\n\n\n

China is the largest exporter of electronics to the U.S., with $145.9 billion worth of electronics imported annually, which accounts for 24.7% of all electronics imported into the U.S.<\/p>\n\n\n\n

Mexico is the second largest exporter of electronics to the U.S., with $103.4 billion worth of electronics imported. Mexico controls 17.5% of all electronics imported into the U.S. China and Mexico together account for 42.2% of all electronics imported into the U.S. <\/p>\n\n\n\n

Second only to Taiwan in semiconductor exports, South Korea is also feeling tariff impacts, compounding the nation\u2019s political instability of late. According to the Bank of Korea\u2019s Composite Business Sentiment Index (CBSI), the outlook for January 2025<\/a> represents the most significant month-on-month decline since April 2020. South Korea accounts for over 50% of DRAM production globally and contends with U.S. export restrictions to China on high-bandwidth memory (HBM).<\/p>\n\n\n\n

Tariffs and overall trade upheaval ensure that even accounting for inflation and higher-cost advanced technologies, electronic component pricing alone will not revert to pre-pandemic levels. Year-over-year through November 2024, the Supplyframe Commodity IQ Price Index<\/a> across semiconductors, passive devices, and interconnect components rose by 18%, nearly 40% higher than the same period in 2019.       <\/p>\n\n\n\n

The Pros and Cons of Tariffs<\/h3>\n\n\n\n

A sizable portion of electronics are imported to the U.S. from Mexico and China, which means prices will rise if the incoming administration follows through on the proposed tariff hike.<\/p>\n\n\n\n

The proposed tariffs range from 10% to 20% on imported goods and up to 60% for imports from China. While the tariffs can introduce challenges, they also bring potential benefits to the U.S. economy, especially in the manufacturing sector.<\/p>\n\n\n\n

Here are four examples:<\/p>\n\n\n\n