Mapping the impact of tariffs on supply chains

Peter Maloney, Federal Market Specialist at Bloomberg contributed to this article. The original version appeared first on the Bloomberg Terminal.

Background

President Donald Trump set Feb. 1 as the start date for 25% tariffs against Mexico and Canada, with a 10% tax on all Chinese imports potentially starting on the same day. Knowing which companies will be impacted by tariffs requires knowing where they source their materials.  

Trump’s tariffs on his northern and southern neighbors would disrupt almost $1.5 trillion in trade, particularly hitting automakers like Stellantis NV, General Motors Co. and Ford Motor Co. A Sino-US trade war, affecting bilateral trade of about $600 billion, may be even harder to manage for the at least 612 US domiciled companies with facilities in China. Trump said the EU is also “in for tariffs.” Bloomberg Economics baseline estimate is that a global trade war will knock 0.3% from US gross domestic product by 2028.  

The issue

US multinationals — ranging from consumer brands like Apple Inc. and Tesla Inc., to machinery stalwarts like Cummins Inc., and Honeywell International Inc. — will need time and money to overhaul global supply chains. Stellantis North America head Antonio Filosa said new production decisions are on hold until tariff policy is clear, but the carmaker did seek Trump’s good graces by recommitting to a 1,500-employee pickup project in Illinois, as well as a next-generation SUV in Detroit.

Pain can be seen in auto supply chains. Stellantis, Ford, Ontario-based parts maker Magna International Inc. and Michigan-based counterpart Lear Corp. have seen their shares fall in the past three months despite a general “Trump Trade” rally. The threat of global tariffs exposes automakers, especially GM and Stellantis, to weaker profitability, Joel Levington, Bloomberg Intelligence director of credit research, wrote. That puts $1.2 trillion in debt at risk of downgrades.  

Tracking

Run Bloomberg’s SPLC to surface a company’s exposure to various geographies, use Geo-Exposure tab to see where vendors’ facilities are located. 

As location will determine the extent of potential tariffs, using Stellantis as an example, let’s see how their impact can be mapped out: 

Canada and Mexico rank fourth and fifth in terms of Stellantis global facilities (11 and 10 respectively) and in the top 8 in terms of supplier facilities (602 and 1,082 respectively.)  

Stellantis has a number of suppliers with a double-digit count of facilities in Canada, including Cummins, Amphenol Corp. and PPG Industries Inc. GM Canada President Kristian Aquilina said “disruption” would hurt the US and drive up prices. Democrat Michigan Governor Gretchen Whitmer said China would “love to watch us cripple America’s auto ecosystem.”  Stellantis cross-border facilities are close to each other: 

Notably, BE’s Chief US Economist Anna Wong’s baseline GDP impact forecast assumes US overall tariffs rise to 8% from 3%, with Trump planning an External Revenue Service to fund fiscal spending. Progress on stemming the flow of migrants and drugs may allow the Art of the Deal author to reach a settlement on those national security issues. China’s pledges to expand imports may not be enough to avert action over unfair trade, which involves a separate 60% tariff threat by Trump. The EU dispute is also focused on deficits. 

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