PwC’s US Tariff Industry Analysis – Industrial Products and Manufacturing

March 2025

In brief

What happened?

Since taking office on January 20, President Trump has introduced several policies and executive orders. On his first day in office, he issued the America First Trade Policy, which launched an investigation into unfair trade practices, expected to conclude on April 1. A key component of this investigation, "Unfair and Unbalanced Trade," targets countries with significant annual trade deficits in goods, potentially subjecting them to country-specific tariffs. This includes several European Union nations (e.g., Germany, Ireland, and Italy), Asian jurisdictions (e.g., Vietnam, Japan, and Taiwan), and other global trade partners. A review of unfair trade practices by other countries and a consultation with respect to the United States-Mexico-Canada Agreement (USMCA) also are key components of the investigation.

Additionally, on February 13, President Trump introduced the Fair and Reciprocal Plan, designed to evaluate and impose reciprocal tariffs on countries that enforce higher duties/tariffs on US goods, including through a value-added tax or non-tariff barriers. The European Union, India, and Japan have been identified as potential targets due to their tariff policies on American products.

Both the America First Trade Policy and the Fair and Reciprocal Plan are expected to have their investigations completed by April 1 with potential new tariffs as soon as April 2. 

Why is it relevant?

Importers and purchasers across all sectors, including Industrial Products and Manufacturing (IPM), must assess the potential impacts of these new policies on a go-forward basis. PwC’s US Tariff Industry Analysis data reflects that the total tariff impact could increase from roughly $23 billion to $165 billion a year for the IPM industry, even before taking into account potential countermeasures that trading partners may impose, or behavioral adjustments that companies may make, in reaction to US policy changes. IPM may have a more significant impact than other industries given that both country-specific tariffs and steel and aluminum tariffs may apply — and both may apply to a large range of products and materials.

The Trump administration is signaling a new direction to encourage domestic production and has proposed lowering the corporate income tax rate as a direct incentive for businesses to increase domestic output. The anticipated tariff revenue could be viewed as an offset to the cost of these tax cuts.

Action to consider

As tariff rates continue to evolve, it is crucial for US multinational corporations to assess the impact of these trade policies on their business operations and supply chains.

All multinational corporations operating in IPM, including those not currently subject to tariffs, should assess the pre/post impact, including the indirect impacts of the potential tariffs on their earnings per share and overall shareholder returns. Focusing the impact assessment at operating profit potentially could create a drag on earnings per share based on the implication of corrective actions on the statutory model. It is crucial for IPM companies to model the changes to have data-driven insights that inform strategic decisions moving forward. This new trade policy is likely to prompt companies to more quickly reassess their global operational footprint on a longer-term basis.

For more details, read the full Tax Insight linked below.

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Ed Geils

Ed Geils

Global and US Tax Knowledge Management Leader, PwC US

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