S&P Global Market Intelligence examines unprecedented tariffs, with U.S. imports, exports, and consumer prices set to face major shifts

The widespread tariffs rolled out yesterday by President Trump have had a major impact on the global economy and the freight transportation, logistics, and supply chain sectors in a very short period. That sentiment can be applied to how the financial market has reacted so far today, with the Dow falling significantly, talks of a possible recession amplified, spooked consumers, and the expectation of retaliatory tariffs from other countries, too. In short, things have become very different in a short amount of time on the global trade front.

That said, there is a lot to take in and examine, given that while uncertainty was, and has been the word of the day, in freight transportation, logistics, and supply chain circles, in relation to the flurry of tariff actions since President Trump returned to office.

Paul Bingham, S&P Global Market Intelligence Economist, explained that these new tariffs are not surprising, given what was expected—except that some of the individual country levels are higher than initially estimated.

“Our analysis was already that these tariffs will likely result in reduced U.S. trade volumes, and that will be not only for U.S. imports but also exports, taking into account likely tariffs imposed on U.S. exports in response by trade partner countries, some of whose leaders have already made statements that they will be imposing tariffs on U.S. exports,” he said. “The trade volume declines will be because final prices for consumers (and for businesses buying imported components and inputs to manufacturing) will be higher, and those higher prices for imports will dampen demand for those goods. 

The timing of monthly trade volumes in 2025 will also be affected as some US imports have already been “pulled forward” by importers in Q1 in advance of these tariffs.  That pulling forward of imported goods may dampen the immediate impact on selling prices of imported goods paid for by consumers until those pre-tariffs imported goods in inventory or on store shelves or dealer lots are sold and newly imported goods subject to the tariffs are needed to meet subsequent demand.”

As for the what these tariffs mean for consumers, Bingham said he expects them to see inflationary impacts, with the reason being that the importing companies having to pay the new tariffs will pass through at least some of the tariff costs they will now pay.  And he added that despite efforts of U.S. retailers and other importers to pressure their foreign suppliers to cut their selling prices to offset the tariffs, the profit margins of some foreign exporters won’t enable reductions in selling prices to entirely offset the tariffs added at the expected levels. 

“In addition to U.S. retailers already having pushed their foreign suppliers to cut prices to offset the tariffs, retailers have also warned that there are likely tariff impacts they can’t offset with supplier price reductions,” he said. “They’ve already said that this will force them to raise retail prices.  That will affect U.S. inflation as soon as the existing pre-tariff inventories of goods already imported are drawn down.  And retailers have been modifying their sales estimates knowing their customers purchasing behavior will be affected by the higher prices.”

In a research note published by Bingham’s colleague, Chris Rogers, Head of Supply Chain Research, for S&P Global Market Intelligence, Rogers said that the tariffs announced yesterday are unprecedented both in their scale and their scope.

A key takeaway of Rogers’ analysis was that the exclusion of sectors, including metals, chemicals, and goods, which have their own tariffs, means that the supply chains expected to be most impacted are those related to consumer goods, like clothing (28.3%-to-36.9%), toys and videogames (30.4%), smartphones (27.0%), which he said will face additional duties, at around 27-to-30 percentage points on a weighted average basis.

As for steps shippers can take going forward, Rogers was direct.

“Corporate supply chain managers are likely to incorporate the new duties into their pricing and cost negotiation strategies in the near-term, with options to reshore sourcing limited due to the sheer breadth of coverage of the duties,” he said.

The firm explained that the 10% reciprocal tariff, coupled with additional rates, will result in around a 20.5% increase to the average import duty—or tariff.

Given that the new tariffs were announced roughly 24 hours ago, there is a lot to assess and analyze for industry stakeholders, no question. Change was expected, but to what degree was not clear. Either way, it was expected to be significant, and that is clear. What is also clear is that this was not a negotiating tactic, at least not so far at the outset. Can that change? Sure. But as for how and when? That part is not so obvious. In the meantime, supply changes will need to adjust and adapt, with all links in the supply chain, and, by extension consumers and the global economy will, be along for the ride.