Fitch Ratings has warned that a potential increase in US tariffs on imports from Canada, Mexico, the European Union and China would place downward pressure on revenue growth and profitability across multiple sectors, with the global automotive industry among the most exposed.
According to Fitch, the impact of the proposed tariffs will depend primarily on the level of direct trade exposure, though second-order effects — particularly a slowdown in global economic growth — will also weigh on sector performance.
Automotive manufacturers and suppliers are expected to face significant disruption due to cross-border production networks and trade dependencies. US and European carmakers rely heavily on components and finished vehicles imported from Canada and Mexico.
Increased tariffs would expose them to higher input costs and operational delays. Fitch has revised its 2025 forecast for light vehicle sales downward by 300,000 units each for the US and Europe, citing the anticipated economic headwinds.
Asian manufacturers, particularly from Japan and South Korea, will also be affected due to their dependence on US vehicle sales and their limited manufacturing presence in the country.
In contrast, Chinese automakers are expected to face a smaller direct impact given their minimal export volumes to the US market. However, supply chain disruptions across the sector will still be widespread.
Mexican auto suppliers and industrial firms are particularly vulnerable due to their high level of integration with US manufacturing operations. The imposition of new tariffs would lead to increased production costs and pressure on margins.
Broader sector risks extend to technology hardware and chemicals, which, like automotive, are deeply reliant on global supply chains. Fitch noted that European and Asian technology hardware firms export a significant share of their output to the US.
The imposition of tariffs would make it difficult to reallocate supply to alternative markets and would likely raise costs for US-based production as firms seek to offset the effects of the trade measures.
While a full decoupling of US-China trade in high-tech sectors is viewed as unlikely, given China’s role in the supply of components such as circuit boards, displays and rare earths, any shift in trade policy would still disrupt nearshoring efforts and increase costs for companies operating in Mexico.
For chemicals, European and Chinese producers stand to lose from diminished access to the US market and limited alternative demand, particularly in China, where growth in domestic consumption remains weak. Specialty chemical supply chains, which often depend on Chinese producers for critical raw materials and intermediates, are especially exposed.
