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The Trump administration’s tariffs could cost US companies $989 billion, or nearly a trillion dollars per year, new analysis by PwC shows. Prior to the election, US companies paid $76 billion in tariffs on imports. If the tariffs go through without any changes, the “implied average tariff rate,” PwC wrote, “would jump from 2.5% to 32%.”
That’s “about a 13-fold increase from where we’re at today,” Chris Desmond, principal for customs and international trade at PwC, said at a recent webinar. He described the results of the analysis as “pretty staggering.”
PwC estimates that the tariffs will have a $468 billion additional impact on dutiable goods, and a $445 billion impact on goods that were once duty-free.
The accounting firm’s estimates are based on where the tariff situation stood as of April 15. That situation is in flux, as countries are expected to negotiate to bring their tariff rates down, and states have filed lawsuits to prevent the tariffs from taking place.
Where the impacts will be greatest: Imports from China will see the brunt of the tariffs, the PwC analysis found: Chinese imports could potentially be hit with an additional $653 billion in tariffs. Companies that import from Mexico could face an additional $64 billion hit, and those that import from Canada could pay an additional $60 billion.
Technology, media, and telecommunications is the industry PwC expects will be hardest hit by tariffs, potentially facing a $311.2 billion increase in tariffs, even accounting for exemptions on products like smartphones and laptops.
The industrial products and manufacturing sector, which relies on “deeply interconnected global supply chains” and components “sourced from multiple countries,” as the PwC report notes, would see a $245.5 billion increase. PwC predicts that “higher prices for business-to-business transactions and ultimately consumers for some period” might occur, as well as “disruption to trade, potential shortages, or delays.”
The consumer goods sector could see $144.4b in additional tariffs, leading to “increased consumer prices and softened demand,” PwC wrote.
Sectors that historically haven’t been subject to tariffs, such as pharmaceuticals, are now facing them. Executives in these sectors are uneasy, Desmond said. “Historically, they don’t have teams equipped to even deal with this, and they are desperate to find [out], how are you dealing with this?,” Desmond said.
How companies can prepare: Desmond said he’s seeing companies doing three main things to respond to tariffs. They start with what he calls “no-regret” planning, where they look at tariff mitigation strategies they can readily implement such as duty drawbacks, First Sale for Export, and tax and transfer pricing planning. The second step is dynamic modeling, he said, and the third is using the results of that modeling to “put together short-, medium-, and long-term plans with a cross-[functional] team.”
Missteps to avoid: Be sure all your teams are working with the same data sets, Desmond counseled. He said he’s seen companies where different teams, such as the finance, tax, and customs groups, are “pulling the data three separate ways and coming up with three separate results.” He recommends that companies use US Customs ACE data and integrate it with their ERP data.
Desmond also suggests getting “the right people in the room” to handle tariffs. “Some companies are just having a siloed conversation,” he said.