Risk Quantification: Country Risk Management

Podcast — Apr 26, 2025 The Decisive | Season 3 Ep.17 - Tariff Impact: Trade Relations, Supply Chains, Prices and Economies By Kristen Hallam, Ken Wattret, Aries Poon, Eric Oak, and Thomas McCartin In this insightful episode of The Decisive, host Kristen Hallam moderates a discussion on the potential impacts of the April 2 tariff announcements and their implications for global trade. Featuring expert analyses from S&P Global Market Intelligence's Ken Wattret, Aries Poon, Eric Oak, and Thomas McCartin, the episode explores how tariffs are reshaping supply chains, affecting domestic industries, and influencing economic forecasts. Listeners will gain a comprehensive understanding of the current state of tariffs, including section 301 duties and section 232 tariffs on steel and aluminum, and how these changes are impacting various sectors such as automotive and electronics. Whether you're a business leader, policy maker, or simply interested in the dynamics of global trade, this episode offers essential perspectives to stay informed and prepared for the evolving landscape. More S&P Global Market Intelligence Content: International Trade and Tariffs Insights & News Tariff FAQs Power plays: Themes for 2025 Credits: Host: Kristen Hallam Guests: Ken Wattret, Aries Poon, Eric Oak, Thomas McCartin Produced By: Debbie Taylor, Kristen Hallam Edited By: Marz Marcello Published With Assistance From: Sophie Carr, Feranmi Adeoshun Explore our library of S&P Global Market Intelligence podcasts Listen Now View Full Transcript Kristen Hallam: You're listening to The Decisive podcast, insights and analysis to empower confident decision making. Hello, I’m Kristen Hallam. This episode of The Decisive features excerpts from an April 9 webinar I moderated on the impact of tariffs. I hope you find it insightful. Corporations, organizations, and governments are processing the tariff announcements of April 2, calculating new tariff rates, assessing exposures, and determining how to pivot effectively. The situation is very fluid. Affected countries and companies are offering a wide range of responses from accommodation to reciprocity. Based on the current state of play, underlying structural factors, and the motivations of key actors, in today's discussion, we will identify where the impacts will be felt more immediately and acutely, what knock on effects we should be aware of, and finally, what indicators to watch to understand the direction of travel beyond the immediate horizon. To discuss this, we are joined by the following experts from S& P Global Market Intelligence. Ken Wattret, vice president global economics; Aries Poon, head of APAC insights and analysis; Eric Oak, senior supply chain analyst; and Thomas McCartin, senior principal economist, pricing and purchasing. Eric, can you set the scene for us first? Can we talk about some of the basic issues at play here? What is going on? What happened last week, and what does it look like today? Eric Oak: Great. Thanks, Kristen. I think it's important to just go through very quickly at the beginning, just a quick terminology overview just to make sure everybody's on the exact same page. I think tariffs are taxes on either export or import goods issued by countries. Tariffs have a variety of use cases, both on the political and the economic side. One of the most classic use cases for tariffs is to protect the domestic industry from competition from overseas exports. Tariffs are very good at what they are meant to do, and what they are meant to do is increase the price of the goods, either on the export or the import side. You know, obviously, there's a lot of discussion about the effectiveness of that when it comes to other objectives. But, again, for this discussion, let's just remember that tariffs are very simple. Price increase on, let's just say, imports for now because import tariffs are the ones that we're really talking about. So, again, when you think about these tariffs, what these tariffs are, again, a levy on imported goods usually based on either product or the country of origin. So both of those things matter. The country of origin oftentimes can be a tricky thing to answer, especially with products in the global supply chain that have, you know, multiple inputs, potentially products or or components from multiple different countries across the globe. But, generally, what we see is that customs departments look for a substantial transformation on that last step to determine the country origin. But, generally, what we're going to see is, as these tariffs are applied, an increase in the price of goods that are imported from these countries or products. What we've seen currently and what we're dealing with today, and this could be out of date, you know, as I'm speaking, But we see a few main tranches of tariffs come into play. So the first one to kind of keep in mind is the section 301 duties on China that were applied back in 2019. Those are still in effect, and, actually, they were expanded by the previous administration last year. So that those duties, if you are importing from China, would still be in effect. Again, most kind of companies have understood the impacts and worked those into their calculations at this point. We also seen a removal of the broad-based exceptions for a lot of countries on the 232 reviews on steel and aluminum. So both of those, again, were put into place back in the previous Trump administration back in 2018. Over the years, various exceptions were added based on individual negotiations and work that both administrations previously had done. Those exemptions have been removed, and what the government is now looking to do is put duties on those both steel and aluminum products based on the non-US content of those items. So that's going to be another trend that we'll talk about a little bit is that tariffs while being an additional cost of the goods themselves, oftentimes, how these are implemented will add an additional kind of administrative overhead to your imports. You have to understand different nuances of products that you might not have had to understand previously. This is especially apparent in things like the automotive sector, which has also received a new 232 review in the last week, putting duties for national security reasons on imports of automobiles and parts. The final kind of tranche of these duties is the IEEFA measures is what we call them kind of as a whole. So these are national emergency declarations that have put duties on China, Canada, Mexico, and now the entire world. So there's really I think there's technically four different national emergencies there. And then we put the reciprocal duties with its own notice. And that is, again, 10% on everybody across the globe with very specific additional tariffs for countries that have larger trade deficits with the United States. And those were applied last night, I believe, or today, those went into effect. So a situation in progress. So we really don't know the outcome or what those could be. Kristen Hallam: Thank you, Eric, for that overview. Again, a very fluid and dynamic situation as you've outlined for us there. So I wanted to ask you: what about existing trade agreements like USMCA, Eric? What is happening there? Eric Oak: So what we see in a lot of these duties and, again, it's hard to be specific. But what we've seen is that USMCA specifically, so Canada and Mexico, have gotten carve outs for some of these duties, be it, you know, autos, et cetera, that really tries to put a little bit less strain on the cross-border supply chains, the land cross-border supply chains that the US has with those companies. Especially autos are very important where parts can move across the border multiple times before it's being assembled into a final automobile. What we've seen, though, is that even with, you know, USMCA exemptions, et cetera, the executive orders are looking to do is still put the tariffs in place on the non-US content of goods. And so what we've seen is that the USMCA car routes have been essentially temporary stays of the duties while the Customs and Border Patrol are able to put in place systems to put a levy on the non-US content of some of those goods. So, unfortunately, USMCA countries will still be impacted. Really, any country with an existing trade agreement is going to be impacted by these duties. The one thing you want to look for when reviewing some of these new orders, especially the executive orders, is language around, you know, this is this is in addition to all other applicable duties, fees, levies, et cetera, that that may be issued on this product. So and almost all of these notices are in addition. Almost all of these tariffs are stacking, and there is an exception for the reciprocal IEEPA duties and the 232 duties where products covered under those 232 notices are not going to be subject to the reciprocal tariffs. So that is one exception there that kind of bucks the trend that we normally see with duties and tariffs as we go. But, again, keep in mind that kind of the worst case scenario is absolutely a stacking, you know, everything on top of each other duty for certain products. Kristen Hallam: Eric, how are we thinking about this from a supply chain perspective? What impact is this likely to have on supply chains and global trade? Eric Oak: So I think the overarching thing to keep in mind is that regardless of the specific impacts, that protectionism is going to increase costs in general. So costs will go up, especially if you consider kind of a status quo where you assume that the demand for goods and supply of goods is going to be relatively stable, which could be completely wrong. Again, that's that's not something that that we're trying to predict here. But, again, tariffs will increase costs in a kind of a static simulation. So what you're thinking about from a supply chain perspective is how you can work with your suppliers, how you can adapt and change your supply chain to mitigate some of those costs. We've seen a lot of different strategies that companies have been using over, you know, probably over the last decade to try to mitigate some of these tariff costs, whether if they move their sourcing to countries with lower, either lower tariffs or lower cost of goods production. We've seen, companies pass through prices. That's always an option. Well, although for some companies, it may not be a viable option. We've also seen companies start to do things like stockpiling or short-term suspensions in trade to try to handle these duties. Not all these strategies are necessarily effective by themselves in the long term. What we do see is that companies will use a variety of these strategies to try to mitigate the impact of new duties on their financials in the short term. So the long term, again, companies need to adapt. That's really the only option is to adapt their supply chains, adapt what they're selling. And, unfortunately, it does it does mean, again, back to the kind of the gist of this all, it's either extra direct cost or extra regulatory costs. There's really no way around it. Kristen Hallam: Alright. Thank you, Eric. Let's pivot to Aries now and zero in on the Asia Pacific region. Lots to talk about there. What are we seeing from key APAC trading partners, Aries? Aries Poon: Thanks, Kristen. I think let's begin with Mainland China, which is all on the headlines over the past week. And what we can see is April 2 is more like a watershed moment in terms of China's approach or response to the US. Before April 2, it was more targeted. It was more measured. But after April 2, you know, the response is broader. So we are monitoring that very closely for now. So Japan and South Korea, they are major US allies in the region in terms of security. So, their approach would be quite different because when we see this negotiation here, if it fails or if they're going to negotiation, then they tend to sort of go into the space of countermeasures. But if they are not going to go down that path and they're trying to, you know, accommodate, you know, what the US has been requesting, then they're going to the other direction, which is policy rationalization or tariffs rationalization. And this is what we are seeing from Japan and South Korea. One of the considerations of accommodating US request would be, you know, increasing energy imports, actually LNG from the US. And, also, they might be increase their investment in the US, and we see all these technology companies, semiconductor companies, even carmakers, they are making, you know, plans or they are already beginning to build factories in in in the US. So, because of the security concern, Japan and South Korea, they are not, the bilateral relations between US and Japan and South Korea will be much less confrontational. But one thing about South Korea is the negotiation process is further complicated by the government transition because former president Yoon Suk Yeol was just in in formally impeached, and then the country is going into an election in June. So that will complicate some of the policy continuity on the South Korea side. But probably either, you know, regardless of the outcome, I think whoever wins the presidency will likely have a very high incentive to maintain a sustainable and the least possible tariffs relationship with the US. Kristen Hallam: Thanks, Aries. And what would be the knock-on impacts to the wider APAC region such as ASEAN countries and India? Aries Poon: I think there are two rounds for the transmission channel. One is the possibly weaker demand from China and globally, and the other one is possibly weaker flow of FDI, foreign direct investment, into these countries. So let's focus on the China plus one first, because for countries like Vietnam, Malaysia, Indonesia, all these so-called China plus one FDI, meaning that the Chinese firms or foreign firms, they are setting up alternative or additional factories outside of China, and they are going after the lower labor cost and, you know, in places where the labor skills are matching and there might be some other, you know, regulations or infrastructure that are more pro-business. So those FDI has been a major source for economic growth, for many of the ASEAN countries because it also brings in jobs and then, you know, it will increase the consumption power and the wages of those countries. So I think what happens right now is different from Trump 1.0. Now Trump is not just imposing tariffs on China, but also imposing on these China plus one countries, meaning that the incentive for these companies to further relocate or to make in this, you know, destination as offshore factories for their investors or whatever. It is not going to be as lucrative or is not actually as viable as before because of the added tariffs because, you know, Vietnam, for example, it has a very high tariffs. So, I think that will, that will change. However, FDI will still flow into these countries maybe more slowly because, the factories in China or the companies that I mentioned before, they might not be exporting that much to the US because of the tariffs, but they're very incentivized to expand to other emerging markets or Europe. So even though it might if it's not possible to fully fill the gap, but there is an incentive for market diversification for these companies. And therefore, the China plus one FDI will be slowing down, but it's not going to go away. And that means for these countries, they have to rethink how reliant they want to be on FDI. Or if they decide that they continue to want to do this, they need to really remove more red tapes and sign more agreements. And, maybe there have been some, you know, measures in place to control labor costs to make sure that the labor pool is, you know, in terms of skill, they are capable of attracting these because the cost of staying is higher now for these countries. And, the other thing is, if FDI grows more slowly, what happens is it might have a knock-on impact for the private investment and consumption locally because oftentimes, this smaller SME locally, they might be further outsourcing jobs from these China plus one factories. So if they are reducing their presence, then for these SMEs, they might be reducing they might be seeing reducing business as well. So there will be the whole cycle of reducing jobs and reducing domestic demand, reducing weaker GDP growth. And it will be more consequential if the countries have weak fiscal position, for example, Bangladesh, Sri Lanka, Pakistan. And so there will be a knock-on impact along those lines. Kristen Hallam: Alright. Thanks, Aries. And then just really quickly to wrap up our APAC segment, which countries in emerging Asia would be most impacted, Aries, and how are they likely to respond? Aries Poon: So based on pre-negotiation, because almost all ASEAN countries are trying to negotiate, but Pre-negotiation, Vietnam is the most exposed because our calculation shows that around 9.9% of Vietnam's GDP would be exposed to the reciprocal tariffs and related impacts if the rate stays at the current level. And after Vietnam, there will be Cambodia, Taiwan, Thailand, and Malaysia. And the impact on the GDP ranges from 2.5% for Malaysia to 5.6% for Cambodia. And for India, the estimate is only 0.5% GDP being exposed and mainly because it has preemptively done a lot. For example, it has already pursuing some of the manufacturing related tariff rationalization, and, also, it has prepared to increase defense purchase and energy from the US. However, India is very likely to be resistant to offer concessions in agriculture. In fact, among all the countries, Vietnam has gone the furthest in its response in order to make sure that the negotiation can use to not countermeasures, but the other side, which is having rate reduced by exchanging concessions. King is already seeking a forty-five-day postponement and is proposing a mutual zero tariff with the US on the bilateral trade. And Vietnam has also preemptively reduced tariffs of some of the industrial goods. And one thing I want to bring up is we are seeing increased effort for ASEAN countries to sign up more FTAs, I think, because, you know, they need to make sure that they have plan B or plan C in place. So what we can see is, for example, Indonesia, Malaysia, the Philippines, and Thailand, they're all right now as various stages of negotiating FTAs with the EU. And Singapore and Vietnam, they already have the FTAs in the EU. And, also, the ASEAN will likely to, aim at to expedite the ongoing talks to upgrade the ASEAN trade in goods agreement, ATIGA, to facilitate intra-ASEAN trades. And, also, lately, Malaysia's Prime Minister Anwar is chairing ASEAN in 2025. They have been working alongside with Brunei, Indonesia, Philippines, Singapore, and Vietnam to come up with a coordinated joint response. So we do see this is what we are talking about, trade regionalization of APAC, which will be something down the road that might be happening. Not soon because, you know, everyone's still figuring out tariffs for now, and we're still adjusting. But probably down the road, say, maybe after a year and a half, if the direction goes this way, we might be starting to see there will be some noticeable shift in the trade and investment patterns among Asian countries, because of the US tariff policy. So I think that is, what we would expect, you know, beyond still one year outlook. Kristen Hallam: Thank you, Aries. Let's pivot now to Ken. Let's talk about Europe First. Can you give us the picture for Europe, Ken? Before this announcement, Germany was one of our bright spots in the EU, but now what? Ken Wattret: Hi, Kristen. Hi, everybody. Yeah. Germany was one of the bright spots because they announced to sea change in fiscal policy. You know, that contributed to a more positive assessment of our economic outlook for Western Europe as of our March update. Now, of course, we're having to deal with another adverse shock. So we're in the process of reviewing all our forecasts. Currently, we'll be revising down our growth projections across Europe to reflect these latest developments. Now it might be helpful to start by clarifying our assumption on how the EU and the UK, for example, are responding to reciprocal tariffs from the US. In brief, they're taking a pretty cautious approach. They're looking to negotiate if they can. That's because economic conditions are already fragile, and they really want to avoid an escalation. So possible routes forward in that respect include maybe some exemptions for EU exports to the US in exchange for reduced tariffs on US imports into the EU; a commitment to import more US defense equipment as part of the, you know, the wider shift towards increased defense expenditure; and also more purchases of agricultural and energy products, maybe also a relaxation of regulatory requirements that affect US exporters into Europe. So there are a few channels that can be used to try and, you know, mitigate this trade shock. The second thing to think about when we're talking about, you know, how bad the outcomes might be is to think about direct effects on economic performance and indirect effects. You know? So the direct effects, we can calibrate. We just had for APAC. You know, some crude countries have much bigger export shares in GDP and much bigger direct trade exposure with the US. You know? We can incorporate that into our forecast adjustments, and then we have to think about the indirect effects, and they're a bit more difficult to quantify. You know, we're thinking about impacts on demand in other export markets for European countries. We're talking about potential reductions in the propensity of consumers to spend or businesses to invest given the high levels of uncertainty. Currently, we're talking about movements in exchange rates impacting on competitiveness, and in some countries, negative wealth effects from, you know, declining equity prices. So there are a lot of different things to consider. We also have, you know, this issue of crosswinds. So as we mentioned at the start, you know, we had this big shift in German fiscal policy. We became a little more optimistic about growth prospects in Germany specifically, but also some spillovers to the rest of Europe from 2026 onwards. Now we're having to factor in, you know, a more immediate shock. So, you know, the bottom line for our growth forecast is they were already pretty low for, you know, many parts of Western Europe, for the EU as a whole prior to this, we're now revising down. And for some countries in the region, you know, unfortunately, they're going to be materially impacted. You know, you have big countries like Germany, which are very export dependent. They're going to be hit by, obviously, the impact of tariffs on their exports into the US, but also weaker demand conditions globally. And on top of that, they're a big auto exporter, and the tariffs on, you know, that sector are particularly high. You know? So it's not a uniform effect across the region. Some are going to be more affected than others, some are the bigger ones. And then there are internal, you know, supply chain linkages within Europe. So if Germany is very adversely affected through the auto sector and through exports more generally, then, you know, the countries that they trade with, you know, for parts and so on in Europe will also be impacted. And that means, you know, many in Emerging Europe. But the bottom line is we were already pretty pessimistic, and now we're revising down our forecasts even further. Kristen Hallam: Alright. Thanks for that insight, Ken, into how you approach the forecast. What does this mean for US growth? Are we headed for a recession there, Ken? Ken Wattret: Yeah. I mean, that's the big question at the moment. Are we headed for a recession, obviously, you know, both in the US and elsewhere? I think it might be helpful, first of all, to be more clear about how we define a recession, particularly in the US instance. Now, there's a difference between a short-lived technical recession, which is defined as consecutive quarter-over-quarter contractions in real GDP, and a period of broader, more persistent output contraction leading to large-scale job losses and then a kind of feedback effect, a vicious cycle, and more widespread economic weakness. Now, we've just updated our US forecasts, and we've cut our annual real GDP growth projections for this year and next substantially by about half a percentage point in both years. So they're now sitting at around 1% for 2025 and 2026. Now that doesn't sound too bad, but annual rates can be a bit misleading because of carryover effects from one year to the next. If we look at the quarter-over-quarter forecasts, we're not quite predicting a technical recession in the US this year, but it's a really close call. The growth profile looks pretty soft through most of the year. We already have quite a lot of data for the first quarter, and our tracking estimate is suggesting minimal real GDP growth in that quarter. If business confidence weakens — and it's pretty likely that it will — but if it weakens more than we've assumed in the subsequent quarters, impacting on investment and employment, then technical recession becomes the base case. To meet the more formal definition of a recession, the bar is higher because that definition looks at the depth, the duration, and the diversity of output losses. So that's a bit more difficult to get to. And as with our forecast for Europe, what we assume about tariffs and countermeasures is pivotal. Long story short, we've assumed in this forecast that the reciprocal tariffs persist with some carve-outs here and there along the lines of what Eric was talking about at the beginning. If that's too pessimistic and the economic disruption or financial market volatility that we're seeing recently leads the US administration to roll back a bit, then recession risk diminishes. Alternatively, if there's a ratcheting up, and there are major spillovers to various transmission channels — confidence effects, financial markets, and so on — then a broader-based, deeper, longer-lasting recession would become the base case. For the moment, we have kind of a fifty-fifty chance, we think, of a technical recession in the period ahead, subject to the assumptions we've made about trade policy. Kristen Hallam: Thanks for that, Ken. Now what indicators are you looking at, and what should we be watching for with regards to US inflation expectations? Ken Wattret: Well, yeah. I mean, as you can imagine, we're looking at every indicator which is available because this is really going to be pivotal to how the central bank can respond to what is a pretty difficult set of circumstances to deal with for monetary policy. We've got indicators that take a bit of time to materialize, and then we've got indicators that are more timely. We prefer to look at the more timely ones at the moment to see if there are any signs, on the growth side, that the reciprocal tariffs and related market turbulence are materially impacting behavior. We include our Purchasing Managers Indices (PMIs) in that group. The PMIs give us a steer on what's happening to prices. There are also lots of other measures produced in a timely fashion that we're keeping a good close eye on, particularly measures of policy-related uncertainty. They can be quite significant for business investment and can be a key swing factor in determining whether recessions are averted, referring back to what we were just talking about. Trade policy uncertainty in the US has been really remarkable recently. We've seen those indicators soar to unprecedented levels — and that's even before the announcements of reciprocal tariffs and the carnage in financial markets over the last few days. With regard to inflation, we get consumer price inflation prints in the US and most countries pretty quickly, and we should be able to gauge the impact of some of these trade policy changes relatively swiftly. For inflation expectations, there are two broad categories of measures that we keep an eye on: one is market-based measures, like breakeven inflation rates — they've been relatively stable so far, which is a relief — and the other is surveys, such as households’ expectations. Those haven't been as encouraging. For example, the University of Michigan's long-run consumer price expectation survey, beyond five years, has really spiked in the latest print — an increase the likes of which we haven't seen since the 1990s. Again, that was before the reciprocal tariff announcements, which is a bit worrying. The reason we focus on inflation expectations is because, in theory, tariffs represent a one-off change in the price level — they don't imply persistent higher inflation. But in practice, if inflation expectations become unmoored, the inflationary effects can persist. One route through that would be pressure for higher wages to compensate for the increase in prices, leading to a broader increase in costs and underlying inflation. That's something the Fed is going to be hugely sensitive to. So if we continue to see more evidence of inflation expectations shifting upwards, that will give the Fed less room to respond to the weakness in economic activity that's beginning to materialize. They’ll have to be focused more on inflationary risks, and that, in turn, would increase the probability of recessions. Kristen Hallam: Is there anything more you can tell us about the Fed's potential response there? What have they been signaling, Ken? Ken Wattret: Yeah. I mean, they've been signaling basically what we've been signaling in the direction of travel of our forecast. Inflation forecasts are being revised up and growth forecasts are being revised down. The Fed has a dual mandate — it has to balance delivery of price stability with labor market conditions — and that complicates the assessment of what the Fed will do. Now, financial markets have made a decision. Futures markets are currently pricing in about a hundred basis points of Fed rate cuts this year. That's because the view is, look, markets are in turmoil, the Fed's sensitive to that, economic prospects are deteriorating, and the Fed's sensitive to that. So we should expect a stream of rate cuts, and that should happen quite soon. We're a little skeptical about that. For reasons partly explained, inflation's expected to pick up. We're now thinking of a peak for core PCE inflation — which is the Fed's target measure — later this year at about 4%. That's double the target. Can the Fed really be slashing interest rates in that environment? That's questionable. So we think for the moment, the Fed will be worried about inflation, signaling that there probably is some scope for easing, but that easing is going to come later. We only have an initial rate cut in our base case in the final quarter of this year, but then we expect a stream of rate cuts in 2026 as inflationary concerns diminish. The wildcard in all this is if financial market turbulence really starts to get out of hand and the feedback effect of that into the real economy looks like producing a severe recession more quickly. Then the Fed would think inflation will be lower in the future and start cutting rates sooner. But for the moment, that's not our base case. Kristen Hallam: Alright. Thanks, Ken. And in the interest of time, I'll just pose one more for you before we pivot to Tommy. What does all of this mean for global growth, Ken? Can you zoom out and give us that picture? Ken Wattret: Yeah. Sure. I mean, I think as everybody's probably concluded from what's been said so far, it's not good. So it's a question of potentially how big the downward revisions to global growth are, assuming this shift in US trade policy is not dramatically reversed in the immediate future. We've been doing some preliminary calculations based on most of the large economies we forecast, and we're proposing to revise down our annual global real GDP growth projections for this year and next by around half a percentage point. That would imply growth rates of about 2% annually, broadly speaking, for both years. Now you might say, well, that's not too bad. 2% global growth sounds quite decent, but they would be the weakest global growth rates we've seen outside of the COVID-19 shock since the global financial crisis back in 2008–2009. So 2% global growth is normally the kind of outcome you see during a pretty severe shock. As already mentioned, the same kind of caveats apply surrounding these base case forecasts. Uncertainty is very high, particularly related to trade policy. If our assumptions about tariffs and countermeasures are incorrect, the outlook could be significantly different one way or the other. But it looks increasingly to us going forward as if the risk distribution is tilted towards weaker rather than stronger. Kristen Hallam: Thank you, Ken. Let's zero in now on which industries are most likely to be impacted. Tommy, what can you tell us about that? Thomas McCartin: Thanks, Kristen. In the US, we've already seen the Section 232 tariffs on steel, aluminum, and fabricated metals, which took place in March. Those are already in place at 25%. We had automobiles just in the past week face 232 tariffs, and already set for early May is for auto parts. What's also been signaled is potential Section 232 action on copper, lumber, semiconductors, and in the pharmaceuticals market. At the general country-level tariffs, looking at categories heavily import-dependent in the US, it's non-electrical machinery, electrical machinery — which faces long lead times and shortages in some pretty key categories already — and then consumer electronics, a major one. Toys as well, though I won't focus on that one. For consumer electronics like laptops and smartphones, the majority in the US market come from China. These goods were left unimpacted by the Section 301 tariffs the US put on China in 2018–2019. But already, we've seen two 10% increases and the reciprocal tariffs announced last week and implemented today — all impacting laptops and smartphones from now on. So those categories will see the single biggest increases. It's really your electronics. Kristen Hallam: Thanks, Tommy. And what impact are we seeing on US manufacturing? Thomas McCartin: The clear thing is costs are up. The cost of manufacturing in the US is already up significantly. A lot of things are made with steel and aluminum. There are machinery products that include fabricated metal components. For about a month now, all of those have faced higher pricing. The key point is, while we're seeing higher costs in the US, it’s not necessarily higher costs in other regions. In some cases, it's more flat or even slight declines in manufacturing costs elsewhere. So while there is a lot of doom and gloom from a US sourcing perspective — much higher costs — there are also buying opportunities and better leverage for sourcing in other regions. Kristen Hallam: Alright. Thanks, Tommy. Which specific sectors do you believe are most vulnerable to the tariffs, and what are the underlying reasons for that susceptibility? Thomas McCartin: Something we saw in 2018 with the steel and aluminum Section 232 tariffs is that they increased protection for US producers of steel and aluminum. But for manufacturers using steel and aluminum as inputs, they faced higher input costs but still faced import competition. Now, with fabricated metals also under the 232 tariffs, anything downstream — industries using steel, aluminum, and fabrications — faces higher input costs but less protection. So those sectors that have higher input costs but aren't readily able to pass those costs along in pricing are most vulnerable. And any US-based manufacturer that relies heavily on components from China — where as of today we've seen a 104% increase in new tariffs this year — those supply chains become pretty untenable. It's tough to pass along those costs. Kristen Hallam: Alright. Thank you. And that's all the time we have for today. We've given you a lot to think about, and we're committed to continuing the conversation. Thank you to Aries, Ken, Eric, and Tommy for sharing their insights with us, and thanks to you for engaging with us today. Thank you for listening to The Decisive podcast from S&P Global. Please subscribe and join us for next week's episode. Until then, stay curious and stay informed.