Blanket tariffs from Trump drag down industrial prospects | Industry Forecast Highlights

The impact of global tariffs, a high degree of policy uncertainty, and higher for longer interest rates are expected to hit industry—we have pushed down our 2025 global industrial production growth forecast by 0.5ppts since our Q4 2024 update. While not all of the downgrade can be attributed to Trump’s trade and tariff agenda, it is playing a substantial role.

What you will learn:

• US industry itself is relatively insulated from tariff impacts, as it is less interconnected with its trade partners due to the sheer size of its domestic market. The biggest hit to US industry will come through the impact of policy uncertainty on business investment.
• For Canada and Mexico, the broad tariffs we expect from April will drive both countries into an industrial recession. Export-dependent sectors like mechanical engineering, electricals, and furniture are at the forefront of the downturn.
• We expect that 10% across-the-board tariffs will be levied on Europe. While the impact should be more contained because of a lower reliance on US demand, any hit on already-struggling sectors like automotive will hurt. We have become more pessimistic in our view about European industrial competitiveness and have therefore pushed back the speed and magnitude of the recovery.
• We expect that the external pressure on China will keep building, limiting the extent to which exports can continue carrying industrial growth.