With the election upon us and a polarized electorate throwing additional uncertainty into the political atmosphere, financial executives can rest assured there is bipartisan agreement on one issue: a continued deterioration of the multi-decade global trade order.
Corporate leaders and industry analysts agree that no matter who wins the 2024 presidential elections that trade battles and tariffs will define the administrations of either former President Donald Trump or current Vice President Kamala Harris.
The only difference will lie in degree if trade flare-ups and the industries and sectors of the US economy that will be targeted.
“For U.S. importers, preparing for potential disruptions under either administration is crucial,” a recent report from KPMG says. “Ultimately, staying agile and informed will be essential for U.S. importers to adapt to the evolving trade landscape, regardless of the election outcome. “
Since 2017, global trade tariffs and disputes have surged, marking a significant shift from previous decades of increasing economic integration. The U.S.-China trade war catalyzed this trend, with reciprocal tariffs affecting billions of dollars in goods, disrupting supply chains worldwide.
In the U.S., tariffs were implemented across a wide range of products, including steel, aluminum, electronics, and consumer goods, with these tariffs cost U.S. businesses billions annually. Companies relying on imported materials have faced difficult choices: absorb these rising costs, pass them on to consumers, or pivot to new suppliers. Additionally, retaliatory tariffs from other countries have squeezed American producers, making it harder for them to compete in international markets and maintain pricing stability.
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The sectors most affected by these tariffs include technology, automotive, agriculture, manufacturing, and consumer goods. Technology companies, for example, that rely on Chinese-manufactured components have faced increased costs and significant supply chain challenges. U.S. agriculture has also taken a major hit, as on products like soybeans have disrupted exports to one of their largest markets.
Manufacturing and automotive industries have grappled with rising production costs due to tariffs on raw materials like steel and aluminum. Similarly, consumer goods companies have felt pressure as higher import prices impact retail costs and demand. , these tariffs have added significant financial strain across sectors, highlights the broader economic repercussions for American companies and consumers.
US multinationals are already preparing for potential shifts in trade policy. Black & Decker, for instance, has developed contingency plans that include potential price increases and supply chain reorganization, particularly focused on moving production from China to other parts of Asia or Mexico. The company acknowledges that returning manufacturing to the U.S. faces significant challenges due to cost considerations and labor availability.
“I feel like we have a playbook on the shelf ready to go, depending if this scenario plays out,” said Black & Decker CEO Donald Allan, Jr. on an investor call earlier this month. “And then obviously, we've been working our government relations activities very significantly over the summer into the fall to educate a variety of different politicians about this industry and the dynamics of supply chain and how we serve our customers and how this would actually play out over the next two years.
The scale of potential change is significant. Current tariffs affect approximately $300-400 billion in imported goods, primarily from China. However, proposals for new tariffs could impact up to $3-3.5 trillion in trade, with suggested rates ranging from 10% to as high as 100% on specific products and companies.
Some industries see potential benefits in increased tariffs.
Kaiser Aluminum, for example, views stronger North American manufacturing protections as potentially beneficial for their business, particularly given their focus on domestic markets.
“The majority of the businesses that we participate, I would say, with other than on the aerospace side and on semiconductor, we're mainly focused on North America for our customers and the outlets for our products,” said Kaiser CEO Keith Harvey to analysts last week. ”So quite frankly, additional tariffs, I believe, will help -- anything that helps strengthen the North American manufacturing is going to be a big positive for us. I think you've seen some momentum move on those tariffs.”
However, other companies like BASF express concern that increased trade barriers could lead to slower global economic growth overall.
“At the end of the day, economies, especially in our current day and age, grow fastest when there is free trade,” said BASF chairman Markus Kamieth last week. “If I look across my setup that I have both market-wise as well as supply chain-wise, I feel much better than most companies should feel in this environment where quite drastic tariff regimes might be established in a very quick period of time.”
The distinction between the candidates' approaches is clear, according to Moody’s Chief Economist Mark Zandi during presentation last week.
Harris advocates for a multilateral approach emphasizing international cooperation on trade disputes while Trump favors a more U.S.-centric stance. This divergence creates planning challenges for companies, who must prepare for either scenario while maintaining competitive positions in global markets especially trade and tariffs sit almost exclusively with the President.
“At the end of the day, if a president wants to impose tariffs, he or she'll take his chances and the courts will be adjudicated many months, years down the road,” Zandi said. “Practically speaking, the president has a lot of authority here and can impose tariffs pretty much at will.”