Supermarket group Ahold Delhaize NV and Siemens Energy said yesterday that US import tariffs will lead to higher prices as they pass on the costs, while specialty steelmaker Voestalpine AG urged Brussels to retaliate for duties threatened by US President Donald Trump.
Executives around the world are scrambling to offset the cost of the US president’s move to impose 25 percent tariffs on aluminum and steel and keep up with changing US trade policies that threaten to upend industries from autos to consumer goods to energy.
Trump’s trade advisers yesterday were finalizing plans for the reciprocal tariffs the US president has vowed to impose on every country that charges duties on US imports, ratcheting up fears of a widening global trade war.
Photo: Reuters
Trump said on Monday he would announce reciprocal tariffs over the next two days on all countries that impose duties on US goods, and said he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals.
Trade ministers of the 27-country European Union were preparing to meet later by videoconference to determine their response after European Commission President Ursula von der Leyen said moves against
the bloc “will not go unanswered.”
Siemens Energy expects to take a hit from tariffs with its network in Mexico the most exposed to extra charges on power equipment supplies.
CEO Christian Bruch said he could not quantify the impact, but that price increases would be passed on to customers, echoing comments from other executives in recent weeks.
Trump’s trade policy has dominated conference calls with media and investors during the fourth-quarter earnings season.
Supermarket group Ahold Delhaize expects US tariffs on Mexico and Canada to lead to price increases for food and vegetables as well as paper products, group CEO Frans Muller told Reuters.
The company which runs US chains including Food Lion, Stop & Shop, and Hannaford, is considering sourcing more products from the West Coast and states such as Florida, should Mexican products become less competitive, Muller added.
“If there would be tariffs on Mexican fruit and vegetables or Canadian paper products, then we will have an inflationary effect in those categories,” Muller said in an interview.
Barclays PLC’s European equity strategists said yesterday that the tariff threats are for now looking more like a negotiation tool, although there is still some risk for stocks exposed to tariffs and foreign exchange, such as autos and consumer staples.
“Both could therefore see some relief if tariffs aren’t as bad as feared,” they said.
The bank’s back-of-the-envelope calculations suggest European companies could take a 5-10 percent hit to earnings from 10 percent tariffs in a “worst-case” scenario.
Steelmakers in Europe are worried about a potential fresh flood of cheap steel into the EU as happened in 2018 under the first Trump presidency.
Austrian specialty steelmaker Voestalpine called on the European Union to take immediate countermeasures and start negotiations with the US regarding tariffs.
French steelmaker Aperam SA on Tuesday called on Brussels to intervene to curb imports if US duties on all steel and aluminum imports prompt companies to ship more to the European Union instead.
Hon Hai Precision Industry Co (鴻海精密) chairman Young Liu (劉揚偉) yesterday said the world’s largest contract electronics manufacturer and Apple Inc’s main iPhone maker can adjust its production around new US tariffs.
Trade experts say structuring the reciprocal tariffs that Trump wants poses big challenges for his team, which may explain why the latest duties were not announced on Tuesday.
Damon Pike, a trade specialist and principal with the US division of accounting firm BDO International, said the reciprocal tariffs that Trump envisioned would result in a monumental undertaking, given that each of the 186 members of the World Customs Organization had different duty rates.
“At the international level, there’s something like 5,000 different descriptions at the 6-digit (product subheading) level, so 5,000 times 186 nations. It’s almost an artificial intelligence project,” he said.
Trump also could use the same International Emergency Economic Powers Act used to justify the tariffs imposed on China and pending for Canada and Mexico.
“Absent IEEPA, there would need to be some kind of agency action first before any trade remedy tariffs can be imposed … but everything seems to be on the fast track,” Pike said, adding that normally tariffs would be done by Congress.
William Reinsch, a senior fellow at the Center for Strategic and International Studies, said imposing reciprocal tariff also ceded control of the US tariff schedule to other countries, following whichever tariff rate they set, and could lead to counterproductive results.
“For example, if Colombia has a high tariff on coffee in order to protect its industry, we would put a high tariff on Colombian coffee to match theirs, even though we don’t grow coffee. The only people hurt would be US consumers,” he said.
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