Summarize and humanize this content to 2000 words in 6 paragraphs in English 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. Picture Credit: Fitch Ratings 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. In related sectors, US homebuilders may face rising costs for materials such as lumber and gypsum, while weakening consumer confidence and affordability constraints could limit their ability to pass on higher costs. Meanwhile, deflationary trends in China are expected to delay a recovery in the property market, reducing demand for construction-related goods. Fitch categorises the tariff impact as moderate for consumer-facing sectors such as retail, restaurants, and air travel but highlights that natural resources and metals producers could face indirect consequences. As goods are redirected away from the US, global competition may increase, putting pressure on prices and export revenues. “Tariff hikes set to disrupt global auto sector: Fitch” was originally created and published by Motor Finance Online, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
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