China

Tariffs are inevitably injecting a lot of uncertainty into the Chinese economy. The full impact is still to be played out, but at a minimum it is expected to accelerate the decoupling of China and US trade and related supply chains. This is clearly a material impact and one which will create stress within the economy, which is already grappling with economic growth challenges linked to areas such as the property sector and demographic profiles.

However, there remain matters that will become clearer only over time. For instance, the capacity of China to absorb economic challenges and over what time frame (linked to a relatively centralised policy and planning approach); and China diversifying its demand and supply chain via greater emphasis on a circle of trade partners across Asia, Europe and Africa. Another factor is pressures within the US from consumers seeking goods at the (relatively low) prices they expect, as well as impact to the US from China’s relatively strong position on certain rare earth minerals relevant particularly to technology and innovation.

At an individual level, there may be impacts and concerns in relation to the feasibility for global career development for those in China or for those in companies that are heavily reliant on sales into the US market.

European Union (EU)

A significant issue perceived is that of uncertainty, sudden changes in policy direction and a related cautiousness. With a general preference towards a pragmatic approach to any countermeasures. While the effect is broad across the economy, some specific areas for impact such as pharma and life science have been mentioned as sectors that are bracing themselves. The EU has more internal resilience due to its single market, it remains one of the world’s largest exporters, and therefore export competitiveness remains crucial to economic growth. Organisations will be seeking to adjust their financial planning and supply chain strategies; however the EU may seek to accelerate trade with partners across other regions of the world to reduce potential tariff impacts.

Canada

From a risk management perspective, Canadian businesses face a delicate balancing act - staying in Canada risks competitiveness in the US and the consumer market but moving to the US risks long term brand value and stakeholder trust. The latter is particularly true as it relates to other geopolitical factors, such as Canadian sovereignty. There have also been highly visible impacts in areas such as travel and tourism. Even with the pause of tariffs for 90 days, geopolitical risks and uncertainty remain an issue between the Canada-US relationship. Canadian policy makers appear to be looking to re-align and deepen relationships with other strategic partners/countries, such as CANZUCK (Canada, Australia, New Zealand, UK alliance)

US

Unsurprisingly, there are impacts across the economy, and in the short-term this has been visible in the reaction of the financial markets. However, looking more broadly across the economy, there is a risk of SMEs feeling overwhelmingly burdened by tariffs with the uncertainty and sudden changes to the tariff landscape also causing distress. While much attention is spent considering sectors like manufacturing, automotive, and energy, there is also a major impact on certain services sectors like hospitality and tourism. In order to support the stated goal to revitalise manufacturing in the US to shore up supply chains and ensure economic and national security, there is consideration needed so that tariffs do not threaten the welfare and operating status of many US businesses. There will be a need for stability and time for new manufacturing facilities to take hold within the US.

UK

While impacts are likely to be felt across the economy, initial feedback from ACCA members suggests that the main concern is difficulty in projecting/forecasting in such a volatile situation. Another key issue raised from members involved in manufacturing and exporting to the US was on how much of the tariff to absorb at the UK end, and the implication on the profitability of organisations and investment profiles going forward. There are a number of sectors closely tracking developments relating to tariffs in the UK, particularly the automotive and agriculture sectors. While the financial services sector is less directly affected by tariffs, a global slowdown could reduce business confidence and activity.

India

The impact in India is still being considered and would become clearer over time across sectors. As an example, though, one area where India has a strong presence is Global Capability Centres (GCCs). These operate in the service sector, so tariffs on goods do not directly impact their core operations. However, they may face indirect impacts. One such area is cost-competitiveness, particularly through increasing input cost. For example, high-end technologies used in GCCs, especially those involved in 5G and semiconductor design may rely on U.S.-licensed technologies embedded in components sourced from third countries. If these components become subject to tariffs or export controls, input costs could rise. Additionally, global trade tensions and spillovers can disrupt supply chains or delay investment decisions, further affecting GCC operations in India.

Africa

African countries are not exempt from the effects of U.S. tariffs, though the impact will vary from one nation to another. This development raises fresh concerns about the future of the African Growth and Opportunity Act (AGOA) — a U.S. law that has, for nearly 25 years, allowed certain African goods to enter the American market duty-free.

The announcement of new tariffs further highlights the urgency of strengthening intra-African trade. However, as more countries implement their AfCFTA (African Continental Free Trade Area) tariff commitments, stakeholders must also confront the potential risks to intra-African trade.

South Africa

The overall impact of tariffs depends on the extent to which these costs are passed on to domestic consumers and businesses. There will be losers across the eco-system including specific sectors such as agriculture. In the short to medium term, inflation increases are to be expected, with additional loss of work in manufacturing and the commodities market. However, there is a consideration on whether to use this moment to refocus on domestic manufacturing industries and reduce the reliance on cheap imports or the dumping of products that has resulted in the rapid de-industrialisation of many African countries. The South African market, however, faces challenges on competitiveness and current levels of regulation makes the cost of business high. More generally across African markets, there may be a case to explore the opportunities that AfCFTA (African Continental Free Trade Area) offers as an alternative market.

Mauritius

There is concern around the impact on trade between Mauritius and the US, in terms of exports falling, given Mauritius is being used as a production platform by foreign companies that transform or produce out of Mauritius. This decline may also affect local SMEs as they make up more than 50% of industries. There is concern around the impact on foreign exchange as changes in tariffs are expected to affect the rate of the USD.

ASEAN

The China+1 strategy benefited markets like Vietnam and Cambodia; with these markets now targeted as well, extra pressures are presented across the region. The uncertainty created by the tariffs is debilitating and makes formulating a robust economic policy response challenging. There’s potential impact on availability of funding as well for some companies as providers of funds (e.g. private equity) may be affected by the market turmoil themselves/ see opportunities for higher potential returns elsewhere amid the chaos. There are questions around how helpful FTAs like RCEP (Regional Comprehensive Economic Partnerships, CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnerships), ACFTA (Asean – China Free Trade Area) will be in promoting intra-regional trade, how bilateralism features and the extent to which they help reduce dependence on the US in the future.

Caribbean

For small island developing states, economic vulnerability is significant. With their heavy reliance on imports, any added costs from tariffs could really increase prices. And where they do have exports, the added barriers from tariffs could make the small island states less competitive. This can be concerning for Caribbean small island state economies that already depend so much on tourism and trade.