Donald Trump, a self-declared “big believer” in tariffs on foreign goods, has promised to use them to boost the US economy, revitalize America’s industrial heartlands, and reward the tens of millions of voters who sent him back to the White House.

“Come make your product in America,” the president told top executives gathered at the World Economic Forum in Davos this week, promising low taxes to those who take him up on the invitation. “But if you don’t make your product in America – which is your prerogative – then, very simply, you will have to pay a tariff.”

While Trump has repeatedly asserted that ‘tariffs’ is “the most beautiful word” in the dictionary, economists and US importers have warned that the consequences of his plan – if it’s enforced – will be ugly.

With the new administration threatening to impose sweeping new tariffs as soon as next month, exporters around the world are bracing for an era of disruption and uncertainty.

China

Philip Wen

Kam Pin Industrial was more or less able to shrug off the wave of tariffs it faced during Trump’s first administration.

The building products company makes industrial coatings and metal sheets in Dongguan, the southern Chinese industrial hub sometimes referred to as the “factory of the world” for its role in the manufacturing boom unleashed when China opened its economy to the world in the late 1980s and 1990s.

The ensuing surge in Chinese exports helped build the nation into a global economic force. Tariffs, Trump and his allies insist, can reverse this extraordinary rise – and make America wealthy again.

When Trump imposed a 25% levy back in 2018, however, Kam Pin’s products were still cheaper than those of its nearest rivals, in South Korea and Thailand. US property developers carried on buying – just at a higher cost.

Things are now less rosy. Its US orders have dried up this year, according to owner and managing director Danny Lau, amid a slump in demand in the residential and commercial building markets. China’s own economy also in the doldrums.

“This year is really poor,” said Lau. It might be about to get worse.

Trump has threatened an additional 10% tariff on Chinese goods, which would bring Kam Pin’s costs level with South Korea.

An extra 25% would make even local US manufacturers price-competitive, Lau says. “Of course, any rise in tariffs will affect any products from China. It certainly will affect us.”

The president threatened Beijing with much higher tariffs on the campaign trail, layering uncertainty onto businesses like Kam Pin. “He could change at any time,” said Lau.

There is little such firms can do to mitigate the impact of measures mooted by Trump and his allies. “Even if you move your production line to south-east Asia,” said Lau, “he may start raising tariffs in those countries.”

Mexico

Mie Hoejris Dahl

Trump has threatened 25% tariffs on Mexico and Canada, unless the countries curb migration and drug trafficking to the US.

“There’s a lot of fear and uncertainty right now,” said the chief executive of one of Mexico’s largest automobile companies, who asked to remain anonymous, because “as businessmen, we don’t get involved in politics”.

But politics so often gets involved in business. Should Trump enforce his threatened tariffs on Mexico, the major car firm has calculated that overall Mexican car sales could drop by as much as 12%.

The auto industry is expected to take the hardest hit, said Diego Marroquín Bitar, a North America scholar at the Wilson Center. “The more you’re integrated, the more you’re exposed.”

When a car is manufactured, an auto part may have to cross the border several times – and pay the tariff each time.

Some sectors are less alarmed. “We don’t think much will happen,” said Andrea Urquiza Roiz, chief executive of ZimaFresh, a Mexican pepper and blueberries exporter, despite about 90% of her exports heading to the US.

In 2019, Trump threatened Mexico with blanket tariffs starting at 5%, which were averted after negotiations. Such experiences have led some business leaders to doubt Trump’s resolve. Urquiza sees Trump’s threats as empty, and believes even if agricultural tariffs are imposed, they would not last long due to the US’s inability to meet domestic demand.

Besides, Urquiza said, the agricultural sector is used to uncertainty, from climate to exchange rates and interest rates. “Last year, the exchange rate affected us a lot. Much more than these tariffs would. I lost about 30%.”

Both the car executive and the fruit exporter remain cautiously optimistic. “I think we’ll be fine,” Urquiza said.

But this time, Luis Manuel Pérez de Acha, a Mexican lawyer, warned, Mexico may misjudge the situation. “It only takes a signature for Trump to exit the USMCA,” he said, referring to the trilateral trade deal between the US, Mexico, and Canada that Trump renegotiated during his first term.

“This could choke the Mexican economy,” he said, noting that about 80% of Mexico’s exports go to the US.

UK

Sarah Butler

Last time Trump was in office, London’s Savile Row became a target for his administration’s tariffs.

In October 2019, every bespoke suit sold to the US from the UK was slapped with a 25% tax – part of a list of products targeted with duties in retaliation for the EU giving subsidies to plane-maker Airbus. The tariffs were in place until 2021, well into the Covid pandemic, by which time tailors, and many other businesses, were struggling with a host of other issues.

Huntsman, a Savile Row tailor established in 1879 and an inspiration for the Kingsman films, with an outlet in New York as well as London, chose not to pass on the cost of the duty to its clients.

Sales did not drop, according to Taj Phull, the firm’s managing director. “We had to absorb it so it didn’t reflect on to our customer,” he said. “It had an impact on operating profit in New York.”

The business was partly protected by the ease of travel between New York and London before the pandemic, when US visitors to the UK were able to claim back VAT on goods they took home and “customers wanted the shopping experience of Savile Row”, Phull said.

“We are a destination not an impulsive buy when you need a suit,” he added. “It is thought-through process for a lot of customers, whether an aspirational product someone has saved for, or a longstanding customer.”

Back in 2019, however, sales to the US were only about a quarter of the tailor’s business. Now they account for more like 40%, so such a tariff would have more of an impact.

Phull is nevertheless hopeful that the industry is not in Trump’s sights as a target for future tariff hits. “It was a weird thing when the Airbus tariff came out,” he said. “And I don’t see it being brought up again.”

Canada

Leyland Cecco

For months, Trump has goaded Canada with the threat of tariffs – and suggested one way it could avoid them. “You can always become a state,” he said last week, during his Davos appearance.

Canadian businesses reliant on American exports are drawing up contingency measures. One owner told the Guardian that his firm – which ships pet products into the US – would likely falsely mark down the costs of raw production. This would allow them to pay lower taxes, based a lower value material, rather than be forced to raise prices.

“I’ve run the numbers and we just can’t take the hit,” the owner said. “Is it a risk? Sure. But we’re backed in a corner here.”

The threat of tariffs has sent Canadian politicians and business scrambling for a response. So much of the country’s trade is tied to the US, and exporters are worried the tariffs will harm their prospects.

A recent survey from the Canadian Federation of Independent Business found that 65% of small businesses in the country will be forced to increase prices to offset the impacts of the trade levy; a new reality the industry group called “disastrous”.

In sectors where raising prices can be devastating to the margins of a business, some are looking to cut corners – at times, illegally – to avoid the worst of the tariff pain.