CEOs from Airbus, Honda, and Puma are already talking about the impact of Trump’s tariffs

• Donald Trump campaigned on enforcing a 10% minimum tariff on all goods imported by the US.
• Months before Trump’s inauguration, tariffs are already on the lips of global business leaders.
• Executives from Ralph Lauren, BMW, Airbus, Ikea, and others have commented so far.

As soon as Donald Trump won a second presidential term, CEOs worldwide discussed his plans for a new era of global tariffs.

Though inauguration day is two months away, the leaders of consumer giants such as BMW, Ikea, Airbus, and Ralph Lauren were asked about the plans by the press and on earnings calls this week.

Trump has vowed to impose a minimum 10% tariff on all goods entering the US and up to 60% and 100% on goods imported from China and Mexico.

He also floated a 100% tariff on imported vehicles and said he’d impose a 200% tariff on the machinery giant John Deere if it continued with plans to move some production to Mexico.

Asia

During Trump’s first term, the US and China imposed tariffs against each other on billions of dollars’ worth of goods. Now, the potential for renewed trade disputes has concerned some business leaders in Asia. Chinese stocks dropped after news of Trump’s election victory.

Shinji Aoyama, a global executive vice president at Japan’s Honda Motors, said on a Wednesday earnings call that new tariffs on Mexico would have a big impact on Japanese companies. Honda, for instance, has production plants in Mexico.

“If the tariff is a permanent one — I suppose it could be not permanent — maybe we would go for the production elsewhere, which is not subjected to the US tariff that we could do it,” he said.

Aoyama said he didn’t expect tariffs to be imposed soon but added that it would not be easy to stop production quickly in Mexico.

“Whoever the president could be, we should not be too much swayed around by them,” he said.

Piyush Gupta, the CEO of Singapore’s top bank, DBS, said during a media briefing on Thursday that he found it hard to believe Trump would follow through with his proposed tariffs.

“The better thing to do is to wait and see what policy they actually come up with,” Gupta said. “It’s very hard to make projections at this point in time.”

Instead, he highlighted the impact Trump’s policies could have on Federal Reserve rate cuts. Fewer rate cuts would boost net interest margin — a key metric for banks.

“I think a higher interest rate environment is generally better for DBS,” Gupta said.

He added that DBS would be focusing on the legal and regulatory risks associated with the Trump administration.

“They could come up with different kinds of sanctions and other policies — you have to be on top of that.”

Europe

Trump has repeatedly said he sees the European Union’s trade policies as unfair.

During his first term, he imposed tariffs on key European industries, including steel, aluminum, and certain luxury goods. Europe responded in turn with tariffs on goods including bourbon whiskey, Harley-Davidson motorbikes, and Levi’s.

The US is Europe’s top trading partner, leaving its businesses highly vulnerable to tariffs.

Sectors like automobiles, pharmaceuticals, and chemical products, which represent the lion’s share of European exports to the US, would probably experience the biggest economic hit.

Shares in BMW, Mercedes, and Volkswagen all fell in response to Trump’s victory. The US is by far Germany’s largest export market, with goods worth $170 billion sent in 2023, per Germany’s statistical authority.

On Wednesday, Oliver Zipse, the chairman of BMW, downplayed fears over tariffs during a third-quarter earnings call, citing the company’s large US business.

“We have a strong footprint there, which kind of protects us against anything which might happen on the geopolitical side,” he told analysts.

Zipse also told reporters, per Reuters, that BMW “shouldn’t be too nervous about what might happen.”

Arne Freundt, the CEO of the German sports brand Puma, took a similarly relaxed attitude to the prospect of tariffs. “We can shift volumes to other countries swiftly in case of tariffs increase in certain countries,” Freundt said.

“Politics is politics,” Ikea’s CEO, Jesper Brodin, told Business Insider when asked about how Trump’s tariffs would affect international business.

“So we work with longer-term cycles and investment frames, and so on. In Ikea, we are very clear on our direction.”

Guillaume Faury, the CEO of the airline Airbus, expressed more concern about how tariffs might affect prices.

Addressing Trump’s tariff proposals during Airbus’ third-quarter earnings call the day before the election, Faury said the cost of any new tariffs would be passed along to Airbus’ airline customers, as in 2020.

“We don’t believe that’s helping aviation and the competitiveness of the airlines and the aviation industry, but it’s something we would be able to manage,” Faury said.

During his first term, Trump and the European Union were locked in a long-running dispute over aircraft subsidies, which the US said put Boeing at a disadvantage, and 15% tariffs were imposed on aircraft imported from the EU.

Soon after Trump’s departure from the White House, the two sides ended their dispute and axed the tariffs, but renewed tariffs could lead to issues once again.

Martin Sorrell, the executive chairman of the UK-based advertising company S4 Capital, described the president-elect as “good news” for North American businesses and companies.

“Whilst US business doesn’t like to talk about it, basically US businesses wanted to see a Trump administration because it means low tax and low regulation,” Sorrell said during an earnings call Thursday.

He added that Europe would be more challenged because of the threat of tariffs.

US

While tariffs are intended to protect domestic industries by making imports more expensive, companies whose supply chains include foreign contractors could see their costs rise.

Justin Picicci, Ralph Lauren’s CFO, said that over the past seven-plus years, the fashion brand had diversified its sourcing and developed alternative production for its key products.

“Our global sourcing and supply chain is agile and well-positioned,” Picicci said Thursday during an earnings call.

“So we’ll wait and see what, if any, future policy ultimately gets passed. But we’ve navigated tariffs successfully before, including not so long ago.”

The costs of tariffs are often passed on to the consumer in the form of higher prices. But as demand for domestic goods increases, consumers see higher prices across the board.

Timothy Boyle, the CEO of Columbia Sportswear, said in an interview with The Washington Post published on October 30 that the brand was set to raise prices if tariffs were imposed.

“It’s going to be very, very difficult to keep products affordable for Americans,” he said.

Correction: November 8, 2024 — An earlier version of this story misspelled the name of a Honda executive. He’s Shinji Aoyama, not Shinju Aoyama.