While Iconic Brands Feel Tariff Pain, Corporate America Braces for More

“We don’t know where it’s going to hit hardest, but it will hit companies like suppliers, transportation, retailers -- a lot of different people,” said Bob Phibbs, head of the Retail Doctor, a consulting firm for retailers. “It will take months to assess what that means for the supply chain and just how it will escalate. There is no safe harbor.”

In addition to American motorcycles and bourbon, the EU is also targeting a variety of products from tobacco and fruit juice to apparel and playing cards. The potential impact from these duties spans the corporate landscape, from packaged-food and soft-drink companies such as Hormel Foods Corp. and Coca-Cola Co. to consumer-goods conglomerates like Newell Brands Inc. and closely held jeans maker Levi Strauss & Co.

Sixty Percent

Companies must also contend with Mexican tariffs on items including U.S. pork, steel and whiskey, while Canada has honed in on steel, food, home appliances and household goods. China is primarily slapping duties on agricultural products and cars, and India has raised levies on items such as chickpeas, walnuts and some hot-rolled steel.

Taken together, the EU, China, Mexico, India and Canada are the destination for more than 60% of U.S. exports. Currently, only a small portion of this flow is the target of duties. But the rapid escalation of trade tensions follows a prolonged period of relative stability in the global movement of goods, and companies are now scrambling to get ahead of the new supply chain challenges that loom.

“The current rhetoric around trade is worrying,” Coke spokesman Scott Leith said. “If strict tariff policies implemented in one country are mirrored in others, the world will become more insular, goods and services will be less affordable for consumers and that would have a negative impact on global economic prosperity.”

Only a few companies have disclosed those risks publicly so far. Harley-Davidson said it is shifting production of motorcycles destined for the EU market out of the U.S. to avoid 31% tariffs -- a move that prompted a backlash from Trump on Twitter. Brown-Forman, which produces Jack Daniel’s, Woodford Reserve and other spirits, will have to hike whiskey prices in the EU by about 10% and has stockpiled supplies there ahead of the tariffs going into effect.

Commodities Impact

In the commodities market, China and Mexico make up two of the largest export destinations for U.S. farm products, so tariffs have left agricultural goods mired in a slump. Soybeans fell to a two-year low last week and prices for many grain, meat, cotton and dairy products have also declined.