Trump’s Tariffs Spark Global Trade Tensions, Raising Costs for Consumers and Businesses

President Donald Trump’s latest tariffs on Mexican, Canadian, and Chinese imports are set to intensify global trade tensions, affecting industries ranging from automobiles and retail to commodities and digital currencies. The new levies now apply to small packages previously exempt, impacting nearly 44% of all U.S. imports.

Automotive Industry Faces Heavy Losses

The U.S. auto industry is one of the hardest-hit sectors. The 25% tariff on parts and vehicles from Mexico and Canada—though Canada has secured a 30-day reprieve—could add a staggering $43 billion in annual costs, analysts at Jefferies estimate. That translates to an increase of $2,700 per vehicle, driving up prices for American consumers.

European automakers with factories in Mexico, such as Volkswagen and Stellantis, are also bracing for impact. Research from Stifel suggests Volkswagen’s operating income could drop by 12% in 2025, while Stellantis faces a potential 40% downgrade. Daimler and Traton (a VW subsidiary) could also suffer, as two-thirds of their vehicles are assembled in Mexico.

Alcohol and Beverage Producers Brace for Impact

The beverage industry is also in the crosshairs. Diageo, which generates one-third of its $20.3 billion annual revenue from North America, imports Crown Royal whisky and Don Julio tequila from Canada and Mexico. While favorable currency shifts and lower agave prices could soften the blow, Goodbody analysts predict the tariffs could still slash $500 million to $600 million from Diageo’s earnings.

Italy’s Campari Group faces similar challenges, as a third of its U.S. revenue depends on imports from Canada and Mexico.

Retail Prices Set to Rise, Weakening Consumer Confidence

The tariffs could fuel inflation in the U.S., leading to weaker consumer spending that may spill over into European and UK retail markets. According to Harvir Dhillon of the British Retail Consortium, the tariffs could cause a global rise in prices, affecting consumer confidence worldwide.

Clothing retailers such as H&M, Primark, and JD Sports could feel the pinch if U.S. spending slows. Meanwhile, the UK Fashion and Textile Association warns that tariffs on Chinese-made materials—whether imported directly or through third countries—could disrupt global supply chains.

Paper and Packaging Industry Sees Mixed Impact

While the European pulp and packaging industry may initially benefit from the U.S. tariffs, Canadian producers could be forced to shut down mills due to rising costs. This could open market opportunities for EU-based companies like Sweden’s SCA.

However, if the U.S. retaliates with tariffs on European goods, those short-term gains could vanish. Additionally, a slowdown in Chinese demand or a decline in global trade could weigh on the industry.

Cryptocurrency Market Plunges Amid Uncertainty

Digital currencies have been caught in a global sell-off, wiping out $500 billion in market value. Bitcoin, the world’s largest cryptocurrency, fell to a three-week low of $91,442 before rebounding to $101,240. Ethereum remains down, trading at $2,706.

Cryptocurrency markets react 24/7 to geopolitical events, and analysts say the tariffs triggered panic selling. Hopes for a crypto boom under Trump—who has pro-crypto figures in his administration—have been dampened by fears of escalating global trade tensions.

Commodities and Energy Markets Face Volatility

Global commodities markets reacted sharply to Trump’s tariff announcement. Shares of major mining companies, including BHP, Rio Tinto, Anglo American, and Glencore, all fell on concerns that a trade war could weaken global growth and reduce metal demand.

Gold, often a safe-haven asset in times of uncertainty, hit a record high of $2,817.23 per ounce on Friday, dipped on Monday, and rebounded to $2,833.90 by the evening. Oil markets remain volatile, with Brent crude priced at $75.59 per barrel and West Texas Intermediate at $72.58, reflecting concerns over both economic slowdowns and supply disruptions.

What’s Next?

The temporary delay of tariffs on Canada and Mexico has eased tensions slightly, but Trump’s aggressive stance on Chinese imports and his willingness to expand tariffs on other sectors suggest further economic volatility ahead.

As companies worldwide adjust supply chains, absorb rising costs, and navigate shifting consumer demand, Trump’s tariff war is only just beginning—and the full impact on the global economy remains to be seen.