Trump Tariffs 2025: Breaking Incentives and Business Norms
Super-Investor Charlie Munger of Berkshire Hathaway famously declared, “show me the incentive, and I’ll show you the outcome”.
Trump’s new tariffs may have just broken Munger’s maxim, as the responses are varied and unexpected, from the bond markets to a recent CNBC poll showing 61% of companies will relocate supply chains to lower-tariff countries, versus moving back to the US. The exact amount (61%) of respondents say they will raise prices on products affected by the new tariffs.
It’s been a hectic couple of weeks at Scoutbee as we support our clients with fast-action supply chain resilience. We wanted to provide some visibility on what we are seeing and more color around the CNBC poll.
US Tariffs Are Driving New Price Strategies Across Industries
Many companies are responding to the latest US tariffs by raising prices on their products. Firms such as Shein, Temu, Hermès, AutoZone, and Ferrari have all announced price hikes to offset the increased costs from Trump tariffs in 2025. The high-end footwear company Labucq raised prices 10% on April 15 and plan another 10% on May 7, 2025, to remain sustainable under new tariffs.
Passing the Costs: How Major Brands Are Adjusting Retail Prices
Honeywell has started applying a 6.4% "tariff surcharge" on specific building management systems to offset tariffs on imports from China, Mexico, and Canada. Ford plans to raise prices on new gas and electric vehicles starting next month unless there is tariff relief, with price changes affecting future production.
Major retailers like Best Buy and Target have also warned of higher prices for consumers, especially on imported goods affected by the new levies. This approach is widespread across industries, as companies seek to maintain margins by passing at least part of the tariff burden to shoppers.
Businesses are doing their best to keep customers in the loop about how Trump tariffs are affecting prices and product availability. Many are reaching out directly—through emails, signs in stores, or updates on their websites—to explain why some items might cost a bit more or why certain products are taking longer to arrive. They know that being upfront and honest is key to keeping customer trust, especially when everyone’s already feeling the pinch from inflation and uncertainty.
Take Walmart, for example. Even though their whole business is built on low prices, company leaders have said that, with these new tariffs, some prices will probably have to go up. They’re not happy about it, but they want shoppers to understand exactly why it’s happening. By sharing these updates openly, businesses hope customers will see they’re doing everything they can to manage the situation—and that they’re on the same team, weathering these changes together.
Supply Chain Resilience in Action: How Companies Are Adapting
To soften the blow from Trump’s new tariffs in 2025, companies are getting creative with their supply chains. Many are looking for new suppliers and moving their sourcing away from countries hit hardest by the tariffs. Here’s how some businesses are making those changes:
- Hewlett-Packard Enterprise has revamped its global supply chain to increase supply chain resilience against tariffs, including expanding operations in Mexico, Thailand, Indonesia, India, and the U.S., and is prepared to adjust product pricing as needed to mitigate the financial impact of tariffs.
- Alcoa is considering redirecting aluminum production from Canada to Europe to avoid US tariffs and is also evaluating whether shifting output from Australia to the U.S. is financially viable, though the company is cautious about investing in domestic capacity due to tariff uncertainties.
- Target is shifting more of its private-label sourcing from China to countries in the Western Hemisphere, including Guatemala and Honduras, with the goal of reducing its reliance on China from 30% to 25% within a year.
- Kroger is taking proactive steps to diversify its supplier base for fresh products, particularly produce, by identifying commodities that can be sourced from regions less affected by tariffs and shifting purchases to countries not impacted by US tariffs to help keep prices low for consumers.
Going local: the intended consequence of US Tariffs
Some companies are responding by adjusting production or investing in new U.S. facilities:
- Hyundai has established a dedicated task force to address US tariffs and has shifted production of certain Tucson crossover models from Mexico to the United States. The company is also considering relocating some manufacturing from South Korea to alternative sites to mitigate tariff exposure.
- Toyota has increased its U.S. production to reduce the impact of import taxes, and BMW is currently absorbing the cost of tariffs on vehicles manufactured in Mexico, but only as a temporary measure.
- Johnson & Johnson announced a $55 billion investment in U.S. manufacturing, a move celebrated by the White House as part of efforts to boost domestic production, though not exclusively attributed to tariffs.
- Chobani has always manufactured its products primarily in the United States and is not bringing production back from overseas. However, the company is making a significant new investment to expand its U.S. operations. In April 2025, Chobani announced plans to build a $1.2 billion, 1.4 million-square-foot dairy processing facility in Rome, New York.
When Growth Pauses: Companies Hitting the Brakes Amid Uncertainty
Does the Nintendo Switch have a pause button? Initially, after the April 2nd “Liberation Day” Trump Tariff 2025 announcement, Nintendo said it would delay pre-orders of its widely anticipated Switch 2. However, on April 24th, orders were opened up, and Nintendo kept the $450 price point.
Companies that have paused plans include:
- Tesla, for example, stopped sales of U.S.-made Model S and Model X vehicles in China after China imposed a 125% tariff on American imports
- Basic Fun, which makes Care Bears, Lincoln Logs, K'nex, and Tonka Trucks, has paused shipments of its products that are made in China.
- Switzerland was hit with a 31% Tariff. In response, watchmakers, Rolex, Breitling, and others are pausing shipments.
- In the IPO world, companies like Klarna, StubHub, Chime, Hinge Health, and Circle Internet Financial have put their IPO plans on hold. With the markets so jittery, it just didn’t seem like the right time to go public.
Navigating the New Tariff Reality: Strategic Playbooks for 2025 and Beyond
Companies are dealing with Trump tariffs in 2025 in all sorts of ways—some are raising prices, others are tweaking their supply chains, shifting where they make things, or just being extra thoughtful about how they communicate with customers and partners. How each business responds really depends on how much the tariffs affect them, how flexible they can be, and how tough the competition is in their market. All these changes have created a lot of uncertainty, so many companies are making quick adjustments now while also planning for the long haul, doing whatever they can to keep their profits up and stay competitive.
This post was written on April 25, 2025 and the news is changing quickly. Please double-check important details with official sources before making decisions.
