Can Brands Absorb the Shock?

The markets have spoken and so they’re not completely happy. We’ve simply seen the most important international drop since COVID. A pointy, gut-level response to what would possibly go down as one of the economically turbulent strikes in a long time: blanket tariffs from the US, with Asian markets taking the toughest hit. May this become one of the consequential financial selections of our time? Probably. Nevertheless it’s too early to say. 

What’s sure is that this: uncertainty has been re-injected into the veins of world commerce. This isn’t only a headline. That is real-world volatility: pensions bruised, costs rising, shopper confidence shaken. Inflation could be the subsequent hit.

The fallout has barely begun. China’s already retaliating. Japan’s on the defensive. And for manufacturers, the subsequent few weeks are a minefield. Keep tuned. This isn’t only a bump. It could be a reckoning.

President Trump has utilized a default 10% baseline tariff on all imports into the US, efficient 5 April.

Increased charges have been utilized to round 60 nations, together with China, Japan and EU nations, that already apply greater tariffs or different non-tariff obstacles to commerce, akin to quotas on imports, subsidies or different measures that act to forestall US commerce in these territories.

Mexico and Canada had been notably absent from the brand new announcement. Each nations are already topic to 25% tariffs on all items exported to the US exterior of the scope of the United States-Mexico-Canada Settlement (USMCA). The USMCA is a free commerce settlement that permits tariff-free import/export between the three nations of most agricultural and textiles items.

Along with the territory-specific tariffs, President Trump additionally introduced a 25% tariff on all foreign-made cars. This can have a disastrous impact on automobile exports into the US, as revenue margins within the trade are inclined to vary round 6-7% and really hardly ever attain 20%. In impact, exporting vehicles to the US will probably be a loss-making endeavor normally.

Bluntly, companies importing items from affected territories pays the respective tariff as a share of the worth of the products being imported. The likeliest impact is that the elevated price will probably be handed on to shoppers by way of greater retail costs. Initially, this may apply solely to US prospects, because the tariffs will solely immediately have an effect on items coming into the US.

Nevertheless, it’s attainable – and in some territories very doubtless – that affected nations will retaliate by making use of their very own elevated tariffs on US items coming into their economies. This may have the identical impact on home shoppers there, pushing up the price of US items.

Already, we’ve seen inventory market falls. The market doesn’t like uncertainty, nor, usually, restrictions on commerce, so we’ll doubtless see additional instability within the quick time period. This can immediately affect buyers and retirement/pension savers, however the actuality is that this may imply little or no for the common shopper.

Extra impactful would be the results of any improve in inflation as a fallout of the brand new tariffs. First, greater costs would imply higher pressure on family funds – or at the least an extension of the restoration from the cost-of-living disaster. Secondly, an increase in inflation would ordinarily delay deliberate rate of interest cuts. Within the worst-case state of affairs, it might result in greater rates of interest. This may be a lift for savers, however trigger extended hurt for debtors.

Nevertheless, given the grave projections for what these tariffs imply for GDP, the market’s preliminary response was as a substitute an expectation that central banks will probably be compelled to hurry up charge cuts to advertise spending and shield progress.

Anticipate to see forecasts change ongoing, particularly as responses to the tariffs from different nations turn into clearer. 

The response from manufacturers will depend upon the choices accessible to them. If various sources exist, we might see a flip in direction of extra home manufacturing and manufacturing, or higher imports from different nations the place tariffs are decrease. Within the case of the US, higher home manufacturing and manufacturing will nearly actually end in greater prices than earlier than new tariffs had been launched.

There’s a risk that the very excessive tariffs utilized to Chinese language items might see extra Chinese language merchandise routed into UK/EU markets, providing a path to changing costlier US ones if retaliatory measures are introduced. On this state of affairs, costs might really fall, although this will probably be delicate to the make-up of particular person classes and merchandise.

Elsewhere, the roles of staff in essentially the most uncovered classes will probably be in danger. If employers lose out by being unable to promote into the US market and fail to switch that enterprise, job losses are inevitable. Automobile producers are essentially the most clearly weak to this within the UK and Germany, given the moment imposition of the 25% tariff. Unemployment charges in most superior economies have been low and secure for a chronic interval. A sudden rise in unemployment, even when restricted to pick out industries, would have a unfavourable affect on shopper confidence.

The quick affect for shoppers will probably be felt within the US, with worth fluctuations. Speedy will increase in prices for merchandise imported into the US, significantly for low-margin items, are doubtless, as there will probably be little selection however to go them onto shoppers and improve costs.

Solely as soon as different nations problem their measures will we all know the extent of the affect in, for instance, the UK, Germany and elsewhere. Nevertheless, we nonetheless should be ready in these nations.

That is the place Mintel’s understanding of shoppers is uniquely invaluable: our analysis from March 2025 reveals that 62% of US shoppers say rising costs because of tariffs will make them rethink loyalty to sure manufacturers. The price-of-living disaster is a current (and ongoing) precedent for the way we are able to count on shoppers to reply to rising costs. For instance, we all know from our analysis that savvy procuring exercise ramped up, shoppers traded down the place acceptable and more and more turned to low-cost retailers. We all know, too, that buyers will nonetheless discover house to deal with themselves the place they’ll, and the lipstick impact has been seen throughout the financial system. As we speak’s tariff state of affairs isn’t the identical, however we are able to look to examples throughout classes for a information on what we are able to count on from consumers.

Questions you’re in all probability pondering that Mintel can reply:

One vital factor to keep in mind is that affected nations will see this announcement – or at the least will wish to see this announcement – as a place to begin for negotiations. 

For instance, the UK has acquired off as evenly because it might with a ten% charge, however is in negotiations over a brand new commerce settlement that the UK authorities hopes will end in zero tariffs. The UK has, to this point, tended to take a cautious strategy to responding to President Trump’s bulletins. Even so, UK Enterprise Secretary Jonathan Reynolds has introduced a session on which merchandise might be used as a part of a tariff response, which can finish on 1 Could.

On 3 April, Ursula von der Leyen, the President of the European Fee, introduced that the EU wished to barter to “take away any remaining obstacles to transatlantic commerce” however was “ready to reply”. The EU has already responded with retaliatory tariffs on as much as $28bn of US items after the US utilized a 25% tariff on metal and aluminium. The EU has dominated out additional retaliatory tariffs for 4 weeks, however is prone to announce some on the finish of April if no progress is made on negotiations with the Trump Administration.

China has been extra bullish. The Commerce Ministry said that “China firmly opposes this and can take countermeasures to safeguard its personal rights and pursuits.” The 34% reciprocal tariff introduced for Chinese language imports to the US is along with a 20% levy already utilized by President Trump, that means China’s charge is, in impact, 54%. On 4 April, China introduced its personal 34% tariff on all imports of US items, to take impact from 10 April. In the meantime, there may be an expectation that there will probably be different non-tariff reactions from China that can affect on commerce with the US, akin to extra export controls on crucial minerals, or enhanced scrutiny on US corporations working within the nation.

Japanese Prime Minister Shigeru Ishiba has promised help for Japan’s home industries, expressing disappointment on the information. Japan’s auto trade accounts for round 3% of GDP.

Many different nations lack the flexibility to current a significant pushback towards the tariffs with their very own measures towards the US. Nonetheless, they may as a substitute look to barter commerce offers and/or realign with different commerce companions to guard their economies. International locations like India and South Korea look amongst these nations prone to negotiate as a primary precedence.

There’s nonetheless a component of ‘wait and see’ across the response from the US’s commerce companions. My colleagues and I’ll proceed to observe the state of affairs and supply steering primarily based on any retaliatory measures.

We’ve forthcoming Mintel skilled opinion items discussing how shoppers are prone to be impacted, serving to our consumer perceive the implications on their markets and industries.

In case you’re a Mintel consumer, our class consultants are already exploring the tariff implications for imports into the US within the following articles. I encourage you to verify them out:

In case you’re not a Mintel consumer, my colleagues have shared some compelling, related insights in different Highlight articles. Value a learn, however when you’ve got particular questions or are focused on chatting with a Mintel Analyst, please do get in contact.