Trump tariffs to raise the costs of companies and harmful exports

Companies around the world faced a future of higher prices on Thursday, commercial agitation and reduced access to the world's largest market after the president of the United States, Donald Trump, confirmed his worst fears of instituting wide tariffs worldwide.

Trump increased his commercial war with rates rates from 10% to almost 50%. He says that taxes will bring jobs to the United States, but company executives focused on increasing prices, reducing shipments or reducing investment activity directly.

“The reality is marked: these tariffs will raise prices to thousands of everyday products, from phones to food, and that will feed inflation at a time when it is already uncomfortably persistent,” said Nigel Green, CEO of Global Financial Advisory Devere Group.

The shipping companies, one of the main ducts of global trade, were among the first to sound the alarm on Thursday, while many other business leaders maintained a low profile while reflecting on the new reality.

“The tariff plan announced by the US administration was significant, and in its current form, it is not good news for (the) global economy, stability and trade,” said Maersk, the second largest container shipping company in the world.

“It is still too early to say with any confidence how this will be developed finally,” added the Danish company.

The German container shipping firm Hapag-Lloyd also said that tariffs could affect the demand, load flows and costs. The fifth largest container coal in the world said it could be forced to adjust its network of services in response.

Those fears were resonated by Dirk Jandura, president of the BGA Association of Germany, representing importers and exporters.

“We will have to translate rates into price increases, and in many cases that means a drop in sales,” he said.

Trump sees tariffs as a way of protecting the United States economy from unfair global competition and a negotiation chip for better trade terms.

The most common method to treat tariffs is to increase prices, transmitting the cost to customers as much as possible. Other companies can try to diversify supply chains, but the additional 34% rate of Trump on China was accompanied by 46% and 49% of tariffs in Vietnam and Cambodia, respectively, all Asian countries where companies had been changing production.

The actions of the Nike, Adidas and Puma Sportswear brands fell sharply on Thursday when Vietnam, Indonesia and China are leading markets to obtain products.

Apple actions fell 7% in Frankfurt, which reflects concerns about the large manufacture of the iPhone manufacturer in China.

In the United States, Target and Best Buy retailers have said they will have to increase prices, but it is more likely that their margins will be squeezed, and Target and Walmart have been trying to negotiate with Chinese suppliers who already deal with a slow economy.

American drinkers will pay more for cocktails, champagne and foreign beers, brands will disappear from bar menus and jobs will be lost on both sides of the Atlantic, the bodies of the beverage industry said.

Some European companies that mainly serve consumers with higher income planned to increase prices even before confirmation of 20% rates in imports of the European Union.

Italy's Illy Caffe and Ferrari have said that prices will raise, calculating that premium coffee drinkers and sports cars buyers will be able to absorb the additional cost.

Lavazza, another Italian coffee maker, said it could accelerate plans to expand its plant in the United States, but the company must first evaluate the impact of possible tariffs on the green beans of Brazil.
Giovanna Ceolini, director of Confindustria Accessori Moda, which represents Italian companies in the footwear, leather, skins and tanning industry, said that US tariffs come when companies are already fighting with greater costs.

“We fear that for our companies there is a deceleration (in demand). It will depend on whether Americans are willing to pay a little more (for our goods),” he said.
Jefferies analysts anticipate a 6% increase in luxury prices in the United States as companies seek to protect margins.

The White House says that tariffs will foster more overshoring, similar to the renewed USMCA commercial agreement that Trump signed during his first term that encouraged the manufacturing activity to pass from China to Mexico or Canada.

The Fanatic and the German EBM-PST motors manufacturer, for example, deliberate whether to build a third production plant or expand their existing site in Tennessee.

The CEO Klaus Geissdoerfer said that I had initially thought of a new plant in Mexico, but “some say: 'Maybe it is better to go to the United States after all because we will have to pay the duty of Customs in Mexico.'”
The most severe risk, according to executives interviewed by Reuters, is that companies simply stop investing.