On May 12, the United States and China agreed to a temporary tariff drop, with the U.S. cutting total tariffs on Chinese imports to 30% and China cutting U.S. import tariffs to 10% for 90 days. While the move led stock markets to rally, industries remain cautious about the return of hefty tariffs at the end of the 90-day period. The postponement until July 9 of a 50% tariff on imports from the E.U., originally threatened to take effect on June 1, also caused a boost in markets after an initial dip on May 23 following the tariff announcement. However, uncertainty surrounding trade negotiations between the E.U. and U.S. saw Europe’s main stock index again decline on May 28. Similarly, despite the recent agreement of a U.S.-United Kingdom trade deal and news of progress in negotiations with other trade partners like India, the expected reinstatement of reciprocal tariffs on other countries on July 9 has weighed on manufacturing activity.
Sector-specific tariffs like those on the automotive sector have impacted earnings, leading to layoffs, production halts, and plant closures. Industries like the pharmaceutical sector face financial difficulties as the threat of tariffs and pricing regulations forces suppliers to rethink operations. The U.S. agri-food sector has highlighted the risk of tariffs on critical inputs, as well as the risk of retaliatory tariffs from export markets. Although semiconductor manufacturers and semiconductor-dependent sectors like aerospace may have experienced blunted impacts from tariffs so far due to exemptions, these groups could see large financial losses if sector-specific probes result in tariffs in the coming months.
Tariffs on automotive sector impact OEMs in the U.S. and abroad
On March 26, U.S. President Donald Trump announced 25% tariffs on imported automobiles and auto parts, which were set to come into effect on April 3 and May 3, respectively. The measure stirred uncertainties in the U.S. automotive industry, and six of the top policy groups representing the industry joined forces to lobby against it, warning of potential production halts and financial consequences. In response, the U.S. President introduced a new measure on April 29 to allow vehicles that go through final assembly in the U.S. to qualify for reimbursements for two years, while the previously announced 25% tariffs continue as planned. The reimbursements include offsets of 3.75% of the value of a U.S.-made car assembled before May 1, 2026, and a lower amount of 2.5% of the value until April 30, 2027. Canada- and Mexico- based automakers have also been able to pursue tariff reductions dependent on the proportion of U.S.-made components per vehicle, with the Mexican economic ministry claiming that tariffs on finished Mexican vehicles stand at around 15% as opposed to the 25% imposed on vehicles manufactured in other countries.
Despite these measures, the tariffs still impacted the industry financially. Automotive companies have reacted with temporary layoffs, production halts and/or shifts, shipment suspensions, and import adjustments. This is reflected in Everstream Analytics’ data, which shows elevated counts of layoffs, plant closures, and insolvencies amongst U.S.-based automotive companies between February and May. On April 3, Netherlands-based Stellantis announced that it temporarily laid off workers at five U.S. facilities and paused production at assembly plants in Mexico and Canada. Germany-based Volkswagen suspended rail shipments of vehicles from Mexico to the U.S. and held vehicles arriving by ship at U.S. ports after April 3. Companies such as Nissan, Honda, Hyundai, and Mercedes-Benz are trying to shift parts of their production capacity to U.S. sites. Automakers are also considering potential pricing adjustments after counting in the tariff impact.
Pharma sector reacts to uncertainty from tariff threat, pricing executive order
On April 14, the U.S. began a probe into pharmaceutical imports that will allow for the imposition of tariffs if the review concludes that the U.S. has an extensive reliance on foreign drugs. Pharmaceutical manufacturers have rushed to import medicines ahead of the possible tariffs. In March, pharmaceutical imports exceeded $50 billion (€45 billion) – 20% of total pharmaceutical imports in 2024.
Brand-name pharmaceutical manufacturers are likely to suffer direct financial losses from tariffs as patented drugs are typically set at the highest market-accepted price, reducing companies’ ability to meaningfully increase drug prices to counter financial losses caused by tariffs. The risk to this carve-out of the pharmaceutical sector is reflected in March import figures; pharmaceutical product imports were about $20 billion (€18 billion) higher than in February, with much of this increase stemming from Ireland, the top drug exporter to the U.S and a major branded pharma hub. Companies including Pfizer and Merck have reported stockpiling inventory to mitigate tariff impacts, with the latter suggesting it has imported enough inventory as of April to safeguard profits until the end of 2025.
Efforts by large pharmaceutical providers to skirt import tariffs may prove less successful in the face of an executive order signed by President Trump on May 12 that gives pharmaceutical companies one month to lower the prices of prescription drugs in the U.S. to match prices in other countries. The Trump administration threatened regulatory action if drugmakers fail to comply. While the effectiveness of the order remains in question, drugmakers indicated that the executive order may prove extremely harmful to operations as it appears to apply to all medicines, unlike efforts under the Biden administration’s Inflation Reduction Act that only sought price negotiations of drugs within Medicare.
The main U.S. trade group representing biotechnology companies, BIO, indicated the order would particularly harm small- and mid-size biotech companies, and some drugmakers have suggested international reference pricing of drugs could be more disruptive than tariffs. One analysis estimated that the implementation of international reference pricing for the highest-spend drugs could lower the 2028 net income of pharmaceutical companies by 8%. The order also allows for the Department of Commerce to consider export restrictions if a company is deemed to be supporting anti-competitive actions inflating U.S. drug prices, further dampening global companies’ profits. Roche Holding AG, which had announced plans for a $50 billion (€45 billion) investment in U.S. pharmaceuticals and diagnostics in the next five years in April, stated it may rethink these investments given the executive order’s potential to impact funding.
Against this backdrop, biotechnology companies have reported a near-halt to initial public offerings as investor interest has slowed. Public biotech companies have indicated that they are worth less than their cash holdings due to depressed stock prices. As a result, many drug companies are cutting costs through layoffs to maintain operations or are facing investor pressure to liquidate and return cash to shareholders.
U.S.-based agri-food produces suffer losses from tariff-related costs, market losses
The farming and agriculture sector, which often works with tight operating margins when compared to other industries, is particularly susceptible to financial losses in the face of tariffs. Pesticide producer Nutrien Ltd. has indicated its products are likely to cost at least 7.5% more due to tariffs on China and India. And despite the necessity of fertilizers for agricultural production, according to producer Mosaic Co., phosphate shipments into the U.S. have dropped from 2024 levels. Tariffs on metals have also pushed up the costs of manufacturing agricultural machinery, dampening first quarter sales of tractor makers like CNH Industrial NV and AGCO Corp. who have had to raise prices.
Even as agricultural producers look to delay purchases to avoid tariff-related cost increases, global trade uncertainty has impacted farmers. In the first quarter of 2025, Archer-Daniels-Midland Co. and Bunge Global SA reported combined operating profit losses of about $750 million (€665 million), while internal Everstream Analytics data shows that counts of agri-food industry plant closures and layoffs have climbed in the first half of 2025.
Soy, the U.S.’s top agricultural export in 2024, has thus far dodged fallouts from tariffs given that the steepest tariffs were initiated near the end of the export season. However, risks remain if the U.S. and China do not reach a trade deal. As the tariff reduction deadline falls in August during the harvest period for soy, U.S. growers could face impacts on shipments to China, the largest buyer of American soybeans, with analysts predicting a 20% drop in soy exports without a trade deal. U.S.-based livestock producers have already seen portions of their profit shares shift abroad. Smithfield Foods, Inc., a pork producer, effectively lost access to the Chinese market due to retaliatory tariffs on U.S. goods. Minerva SA, a Brazilian beef supplier, noted that tariffs helped drive increased Chinese demand and higher export prices for South American beef during the first quarter of 2025. If higher tariffs are implemented, U.S.-based agri-food producers could see more of their market share shift to other parts of the world permanently.
Everstream clients are receiving more detailed insights and recommendations about this risk.
Don’t miss key supply chain risk updates! Subscribe now to get supply chain news, weather updates, forecasts, and other insights.