The business of uncertainty: Impact of trump policies across industries

This episode contains audio extracted from a recent webinar. For the full version, including slides and other resources, click here. 

Complex and uncertain: two words that define the current outlook under Trump’s political agenda.

What’s the potential impact of Trump’s policies across industries and the macroeconomic landscape? Is a recession on the horizon? How can companies prioritise decisions or investments in this volatile economy?

Listen for insights into the real implications of US regulatory shifts on your business. Euromonitor experts share data-driven insights on four major concerns right now: tariffs, migration, deregulation and consumer demand.

You’ll leave this session with a clear view of challenges and opportunities ahead to guide your strategic planning.

What you'll learn on the impact of Trump policies:

• Outlook: Economic landscape with updated forecasts
• Tariffs: Disruptions in fashion, automotives and appliances
• Migration: Effects on tourism flows and home construction
• Deregulation: Focus on consumer health and ingredients against the backdrop of Make America Healthy Again (MAHA) proposals
• Consumer demand: Consumption shifts in alcoholic drinks and food

Introducing Opportunity Minded, a new series from Euromonitor International designed for forward-thinking business leaders like you.  Each episode tackles a strategic approach or topic on corporate agendas.  You’ll hear from our experts who share in

For businesses ready to adapt to significant shifts in US policies, opportunities will arise. Bookmark our Trump Policies hub at Euromonitor.com. With tools, expert advice and data-driven perspectives we’ll help you navigate the shifting trade landscape with confidence.  

Transcript

0:34

Hello, everyone. I'm Zora Milenkovic, and I'm a research director here at Euromonitor International. We have an exciting webinar for you today on the business of uncertainty, the impact of Trump policies across a number of industries. The aim is to help you understand what the challenges and opportunities are of a number of Trump administration policies. We'll be looking at it through the lens of a selection of industries that most in the firing line one way or another, trying to understand how supply chains are changing, manufacturer strategies, and, of course, the attendant consumer behaviour changes, short term and long term. And not just China, but and the US, but also beyond. But before we get started, let me share a little bit about us and some housekeeping details. So for anyone new to Euromonitor, we lead the world in data analytics and research into markets, industries, economies and consumers. We provide global insight and data on literally thousands of products and services, in order to empower executives like you to make confident decisions and to explore new opportunities, just as we aim to do for you in this webinar. And now for some quick housekeeping notes, please don't forget to check out the resources section after this session for any additional links to reports or tools that you can use. And finally, thank you to all of those who provided questions. We will cover as many as we can, and we will do our best to follow-up for any that we can't. And today, you'll hear from some of our brilliant research experts who cover several topics in this session. So to begin with, we want to give you a global overview of the macroeconomic environment. We want to follow that up with a conversation on tariffs, migration, deregulation and then consumer purchasing habits and how those are changing. So to kick us off, Lan, let us know what the global picture looks like. Yeah. Thank you Zora for the introduction. So we have been tracking the impacts of changes in US policies on the global economies and using our macro models to simulate different policy scenarios and the implications. So what the global economy is now experiencing is a policy induced shock coming from sharp pivot in trade and other policies from the US, a country that is by far the world largest economy. Particularly, the shift in US trade policy is substantial for the global economy in terms of implications, given the fact that the US is also the world's largest importer. In 2024, it imported, 3.2 trillion US dollars worth of goods, and that's equivalent to the GDP of France, just to put things into perspective. So in our latest macroeconomic baseline forecast, in Q2, 2025, more than ten major economies, including the US and the Eurozone, saw downgrade revisions, to growth projections, for this year and next year. And this is because, higher US tariffs and persisting trade tensions are disrupting global trade and affecting both consumption and production and and investment activities. We have seen this trend particularly in in soft data with consumer and business confidence having weakened across key markets. So global GDP growth is now forecast to slow down from 3.2% last year to 2.9% this year and next year. And global inflation is expected to continue its downward trend, and reach 4.1% this year, thanks to lower energy prices and slowing economic activities. But inflationary pressures, have risen in some countries, where growing import costs, risks supply shortages and higher prices. And besides this baseline forecast, to capture the high level of uncertainty and risks, two new scenarios from our macro model have been introduced to assess the potential impact of either an escalation or rollback of US policy. So under a pessimistic Trump's total agenda scenario, where the US proposed a reciprocal tariff, massive tax cuts and immigration controls are assumed to materialize, we see the global economy would be at risk of a recession, while prices would surge significantly. Meanwhile, a tariff a Trump tariff easing scenario would, on the other hand, boost the global economies because trade efficiency and business and consumer confidence rebound. Under these scenarios, real GDP growth would return to last year's level, while inflation would moderate, on a faster pace compared to the baseline. Now, as economic uncertainty continues and inflation fears increase, consumers will become more cautious and mindful of their expenses. And therefore, we expect global consumer spending to record weak growth rates this year and next year, while an escalation of US policy and global trade war could lead to a contraction of global consumer spending. And changes in US policies, will affect a range of countries and industries. Being the top exporter to the US, the European Union, Mexico, China and Canada are vulnerable to US tariff risks. Trade dependent economies are also affected in case of higher global trade barriers and increasing, protectionism. In terms of industries, machinery, electronics, transport vehicles, raw materials and textiles are among the sectors that would be most affected because the US is heavily reliant on imports of those goods. And given the significant risks of changing trade policies and geopolitical tension, the global supply chain will continue to evolve and adapt. What we have seen is that some global companies have announced plans to reinvest or expand their operations in the US to avoid tariffs. While this reshoring trend may increase in the coming year, the high labour cost, in the US as well as, the its reliance on imported raw materials, can hinder the effectiveness of president Trump's plan to revive, the US manufacturing sectors. The second trend in the global supply chain we have been seeing is that, rerouting of Chinese goods because the country will reinforce, its derisking strategy with the US and further enhance, its export to other markets across, Asia and Europe. And, finally, facing a reciprocal tariff from the US, countries like India or the ASEAN, the Association of Southeast Asian Nations, we now seek to strengthen their trade relationship, with the European Union, with China, and other regions, while continuing to position themselves as alternative production locations for global companies that are seeking to diversify their supply chain. And so, overall, going forward, we think that regional and bilateral trade ties, will gain importance, in this new global trade regime. And this, we offer good opportunities, for business that look into alternative markets. So some of you might have tariffs fatigue. We don't just yet. There's still plenty to say, not least as we're already starting to see things happen on the ground. It's not so theoretical anymore. And we are going to be looking at it through the lens of three industries, apparel, automotive and appliances, handily three a's, that have been chosen simply for the reason that the imports from China make up the bulk of US sales in these industries as Lan has explained. So they're particularly vulnerable, and we have our three experts to talk about these industries and the impact of tariffs on them. US trade tariffs are going to impact a broad range, of goods, everything from various B2B components to, consumer items. For example, imports represented around one third of total US automotive consumption back in 2024, around 75% of apparel consumption, and more than 70% of electronics consumption. So in this section, I'm going to overview how automotive industry is dealing with these challenges, and I'm also joined by Tim and Marguerite. They will review how, appliances and fashion industries, are also coping with the uncertainty. Automotive industry will be one of the first ones to feel, the immediate effects of the trade tariffs, and it will be quite significantly disrupted by it. For example, as of 2024, United States imported around 50% of passenger cars and 30% percent of pickup trucks. So what it means for companies that, at least in the short term, it will be very difficult for them to change, their production networks. So car companies will have to deal with a higher, prices of imported goods. And this could lead to increased price pressures for the end consumer. For instance, average price of the pickup truck could increase by up to$6,000, and average price for passenger car by up to $4,000 because of these, additional trade tariffs. Of course, automotive companies are doing all they can to to minimise, the impact on the end consumer. For example, car companies have stockpiled, more cars before the before the tariffs hit them. They are also leaning on their extensive production networks, to minimise the cost increases. And for example, General Motors claims, that it can absorb from 30 to 50%, of tariff impact by simply adjusting its own, supply chain. But, of course, car companies cannot do this forever, so price pressures and, price pressures on the automotive industry supply chain, are going to remain quite, significant over the long term. What is also interesting that the situation that car companies are dealing with is not completely unique, and there could be some lessons learned from the appliances industry. So, Tim, could you share some examples how appliances industry was coping, with trade tariffs in the past and how it is dealing with the current situation? For appliances, this is not the first time that the appliances industry in the US has seen tariffs. And, it's interesting because we now have a study from, the Federal Reserve Board and the University of Chicago that looks at the impact on of tariffs on washing machines and dryers. And, there are still there are few interesting facts that we can talk about. In 2018, the US imposed a 20% tariff on the first 1.2 million imported washing machines, and, it resulted in a 12% price increase of washing machines. And more interestingly, dryers, though it was un-tariffed, rose by 12% as they were often purchased together, which resulted in, consumers having to pay a lot more, at the retail store. This is because domestic brands, in the US also took this opportunity to raise prices, and this has caused US consumers in total about 1.5 billion more, annually in terms of price hikes. The study concluded that, tariffs caused, significant higher cost, and it largely outweigh the benefits of increased, domestic production. Bringing it back to today, we've seen that, demand, has not collapsed due to the tariffs but remains slow, and, this is particularly compared to pre 2023 levels. Impact of tariffs on Chinese products are expected to raise retail prices, pressure margins for import reliant firms, and, will continue to benefit domestic manufacturers as well as companies that are producing in Mexico. We expect, many different product categories to be affected, some more than the others. Air conditioners are particularly vulnerable due to, it being highly seasonal. And more importantly, most of the air conditioners are being imported largely from China as well, and this makes it very vulnerable to tariffs. A less seasonal but more, stable demand category of fridges, washers and dishwashers, categories where we expect prices to increase, but consumers will have to likely continue to buy rather than repair. Small appliances, in our opinion, is the most vulnerable, just because most of it are being imported. There's very little being manufactured in the US, and, the prices of these products are the expected increase as well. In terms of industry wide, we expect unit sales to, continue declining. But just because of tariffs, just because of inflation, we expect the dollar sales, to remain steady. Over to you, Marguerite, to talk about fashion. Thank you, Tim and Justine, for the introduction. A lot of what you've mentioned, we we expect to see it as well in the fashion sector. I think after weeks of fluctuations around the US tariff policies, even if, this could change again and not all tariffs and ends are going to be fully implemented, a huge uncertainty has been created, and consumers and companies are already reacting to that. In the short term, we've already seen in the US the cost of goods sold increase for fashion companies, and we do expect this to mean rising unit prices for consumers in the months to come. According to, our research, we do expect, for example, a pair of sneakers that retails at $100 in March 2025 to sell maybe around a $120 by September 2025, if the tariffs were to be implemented fully with Vietnam and China where a lot of this production takes place. Another consequence of that from the US consumers' perspective is probably there gonna be a surging demand for resale and secondhand items because this is a way to avoid increased unit prices. In terms of another short term impact of, the tariff policies, what we have seen is Chinese manufacturers looking to diversify their export strategy. In fact, 25% of the textile goods produced in China are exported to the US. So should, these exports be more limited in future, Chinese manufacturers will need to sell these goods elsewhere. We've seen, growing interest by Chinese players, in large emerging economies like India, Brazil, Indonesia. For example, Shein, the fast fashion player from China, has reentered the Indian markets last February after a five year ban. And, increasingly, we hear as well of new trade deals, new trade agreements, and different export strategies in different parts of the world. We've also seen the EU already putting measures in place to limit the penetration of Chinese made fashion items in the near future as they want to safeguard their economy. And, one last impact that will be significant caused by the uncertainty, is the shift in supply chain. There's already been a lot written and told about the supply chain shifts in the textile industry. The reality is it's, today largely reliant on Asia centric supply chains and more particularly on Vietnam and China. In the short term, because of the very significant investments required by both the private and public sectors to develop a production cluster to bring incentives for companies to relocate, to upscale the population and so on, I do believe we will see movements within the Southeast Asian region. I've already mentioned India being, an increasingly, targeted market for production and retail. But I also think we are gonna see near shoring movements. Brazil, Mexico, some companies in the US have already announced a shift in some of their production there or have plans to shift more of their production there to better serve Latin America and the US from these new production hubs. However, I think this is gonna be a longer term development compared to the rise in unit prices or the new export strategy by Chinese players, which we are already seeing. So, in terms of supply chains, I think that's something we're going to observe across the board, Justina, isn't it? Yeah, indeed. And we anticipate long term changes across the supply chains, and it's not going to only affect fashion or automotive industries. It's going to affect, the broader manufacturing sector as a whole. So some of the key trends we are seeing is that the companies are investing into production near shorting, so it simply means they want to be, closer to the end consumer. We're also seeing that companies are investing more into more efficient production methods, into production automation just to better shield and manage all the all the cost pressures. And lastly, one of the long term trends that we are observing is that companies are investing more into vertical supply chain integration, so they want to control more stages of their supply chains, and we are seeing some examples of it happening already, in the automotive industry. So for companies, this this period of uncertainty, it means that they will have to pay more attention towards these trends. It will probably require more financial investments to adjust supply chains, but, basically, adjusting supply chains is the only way, how the companies could shield from similar disruptions, in the future. So this is the summary from from our side, and we will move on, with the overview how migration policy is changing. So migration, policies to limit US immigration or to expel existing migrants has a knock on effect on, travel destination flows as we've already seen, as well as on, the construction industry, any new build, and then, of course, any purchases that we make in the home and garden sector to fill in those homes. And we have two experts to speak to that on travel and on home and garden. Caroline and I come at migration policy from the lens of travel and home impact as the sectors that are most directly impacted by this change in policy. In a nutshell, these changes are affecting where people physically want to be, and that's having a number of side effects into demand. This gets into transport and destination choices, and the demand impacts that are being felt now today in travel from them. But it's also about the labour market, And there are job locations within the US where migrants now face higher risks from physically attending their workplace. This has ripple effects into both of our industries. So Caroline, can you get us started in how the policy shifts are affecting travel so far, please? Hi, everyone. Yes. Thank you, Nick. Definitely, what we're seeing from the travel and tourism perspective is a softening of demand, particularly to the US. The recent International Trade Administration data from March 2025 shows a decline of eight point one percent. Our travel forecast model for Q1 versus Q2, looking at the annualised yearly data for 2025, expects a drop of 7% in terms of trips and 9% in term in terms of value. So we are definitely seeing that the migration policies, the fact that there are reports of people being stopped at the borders, the much stricter deportations, much more difficult to get into the US, is having a negative impact. And rightly, you say that, it's impacting as well the Hospitality market in terms of labor demand. We can see that in the US already a third of the migrant a a third of the labour supply is made up of migrants. So you're talking, you know, of that ten million, a third of that are migrants. So, of course, with challenges and, bottlenecks in terms of labour, that's having a knock on impact on travel and tourism demand and spending. And, of course, it's not just in terms of migration. It's not just in terms of labour. It's also in terms of construction. We're seeing that, for example, hotel companies that really need to gain scale very quickly, they're really struggling in terms of finding, you know, getting those new construction and new builds built. So in terms of, you know, pipeline development, instead, they are looking at conversions. So you must be seeing something similar from the home and tech side, Nick. Absolutely. I am. You're talking about the construction giving way to alternatives. They're seeking ways around it. I've got exactly the same dynamic going on within house building, and that's affecting new build. And from a consumer products perspective, we know that there are types of demand vulnerable if something goes wrong in the housing market. So most of the direct links are to products like homewares and furniture. It's an obvious, causality. But this is also about renovations. It's appliances. It's electronics. It can even be food and drink to an extent. It's any sector where shopping journeys get triggered and need cases are created by the act of moving home and creating a new household. New build homes are around 15% of all home transactions each month in the US, and each new build is linked to about four other home transactions of existing properties due to the chain. And the the new build is generally at the top of the chain, and any impact that goes wrong within the new build is gonna cascade down through the chain. So if something happens in there, the actual impact of it's a lot bigger than people might expect. And building construction's the most vulnerable sector in the US to migration policy. 29% of construction workers are migrants overall, and that gets up to 40% in some of the largest areas of the country for house building, and there's a particularly large mix of undocumented inside of that. So the National Association of Home Builders started warning around January that the immigration and customs enforcement agents having quotas, which is one of the new things inside of policy this year for deportation, is gonna hurt construction particularly. And it's because a building site becomes a very tempting environment for auditing purely for the numbers game. And there are multiple reports this year in a rise in ICE raids, two building sites, two and the NAHB is now reporting a related rise in absenteeism because, of course, people don't want to be there. They don't wanna take the risk of being there. That means delays. It means property is not starting on time. It means disruption. It could mean house price rises in the future. US census data in March, in and April this year have started to make that warning a little bit more solid in terms of some numbers, and we can see it's starting to reflect inside of, new house builds. So homes for sale that are not started yet but are offered, for sale, they're they're rising in number. Homes under construction are dropping. So all in, we can see about 11% of the new home constructions have been impacted so far. That was in March, and we saw a slight rise in April. For the households affected by that last minute delay to a house move, their immediate needs are gonna be into things like temporary storage solutions. It's containers, but that also potentially means rental services. And if they're gonna be staying longer than they intended to in their own home, they're also gonna need some products. And that's getting into cleaning, maintenance and also just general replacement for all the FMCG and consumable products that may have actually been disposed when they were thought they were moving home. The other side of that is, of course, there's demand triggered by that house move, which is no longer gonna gonna be there. And calculating that through the new build and the cascade into existing transactions, it's looking like any demand directly triggered by a house move is facing a-7% volume pressure. And that's gonna either be lost or it will be delayed until later in the year. Some of it we're feeling already. I mean, the the the impulse purchases that are attached to it are happening right now. But if we think about something like a kitchen or a bathroom renovation, that impact tends to land about six to 12 months downstream of a delayed house move. So just like you, Caroline, I think there are aspects of this topic that we're feeling and we're living right now, but there are also aspects that we're only gonna really start to feel from 2026, and that's coming from what we can already see happening today in Q2. I mean, one of the positives that we're seeing in travel is the interest in staycations just as we saw during the pandemic. And that really was a buffer from some of the volatility that we saw at the time during COVID. And, it's very interesting. I was looking at the numbers for domestic tourism spending, and it's around 1.3 trillion. So it's 86% of total tourism spending. So when we see international tourism demand, so key markets such as, China, Canada, UK, Mexico shifting to alternative destinations, if anything, you know, that staycation effect is gonna keep travel businesses, reassured, for the moment. Do you see staycations as a opportunity as well for home and tech? So inside of the pandemic time period, we saw a very strong causal link from staycations towards spend within the garden, and it was the social aspect and having more need for, hanging out within the garden. So storage, it was furniture, it was, decorative aspects as well. There was a lot of extra spend that kicked in due to staycation. So if that does come around again, then there are gonna be some winners inside of that as well. So, yeah, it's an interesting thing. I think with all of these situations, there's gonna be positives and negatives and opportunities to find inside of it. We're gonna pass over to our colleagues to talk about deregulation. Thank you. Deregulation. So changes to current regulations like DEI, foods, ingredients or chemicals amongst other areas. There are policy drives that will affect the production of consumer health categories and, of course, the ingredients that go into those categories as well as categories in foods and beverages. And here to talk about ingredients and consumer health are our two experts. The Make America Healthy Again movement, also known as MAHA, is a major component of the first few months of the Trump administration, especially when it, relates to health policy and health regulations. Today, I'm here with, Ina, who's gonna be talking about the implications of MAHA for ingredients, and then I will step in and talk about how it's going to potentially affect the market for supplements and over the counter drugs. And I wanted to ask, first of all, about the MAHA movement and, and potentially its effects on on food ingredients, especially around ultra processed foods. So what do you think, this is, the effect is gonna be here on on ingredients in the United States? I think, Matt, that's a very, very important question. You know, my stance on ultra processed food has been very, very strict. The administration has also proposed a lot of bans on synthetic dyes. And alongside that, you know, there's a lot of pressure on food and beverage companies, to sort of reformulate or remove all the synthetic dyes and artificial colours from, their reformulations. That said, I think, there are a lot of practical challenges that are gonna restrict a complete overnight shift. And, the biggest of all is the regulatory ambiguity because as of now, though, these are only proposed bans. There are no blanket bans, which means that a lot of companies that are trying to just phase out, artificial colours, they are doing it on a wall free basis. Right? And then we've also heard, PepsiCo and couple of other companies just announcing plans, but doing it on a voluntary basis to sort of remove the artificial colours. PepsiCo specifically has announced to remove artificial colours from their popular brand, Lays, by the end of 2025. So, yeah, it's a it's a mixed shift. So when you're thinking about, what this means for ingredient supply specifically around these dyes or maybe some of these alternatives for ultra processed foods? How is that gonna work, like, functionally, either this year or in coming years? Maybe let's start with the supply. Right? So firstly, I think there's not gonna be enough supply, of natural alternatives immediately. So let's say if all the brands were to ship to natural alternatives or natural colourants tomorrow, the supply chain wouldn't just keep up. At the moment, a lot of companies are exploring alternative, colours like the plant based extracts of butterfly pea flower or calcium phosphate, which, by the way, both have gotten approved by the FDA to get used in formulations. But, again, the question remains if there's gonna be enough supply ever. So maybe it it is gonna be, at at a later stage. But right now, the question for companies is should they be, thinking about reformulating now, or should they be waiting for the supply of their desired ingredient to reach a point when it's stabilised and then start about, then start thinking about reformulating? And do you get a sense that there's a lot of consumer momentum behind this? I mean, is MAHA reflecting consumer sentiment in this in this way? Yeah. We can say that, Matt. But I think the other thing to also think about is, again, from the consumer standpoint, the moment there are gonna be reformulations, they are also gonna impact the taste. And then by that logic, also the consumer acceptance. You know, if I, and and maybe you you would be able to recollect this back in 2016 when, General Mills had actually done a reformulation for their very popular cereal brand Trix. It just, wasn't really accepted well by consumers. A lot of consumers complained about the dullness and the colour and the taste, and the company was, sort of forced to go back to their original formulation. So the point I'm trying to make is that, you know, even even if companies do want it, firstly, they would not be compromising I'm sorry. If consumers do want it, they wouldn't be really compromising on the taste. And the second bit is also going to be the cost. Let's say we bring in a lot of natural colourants, through the supply chain, into the formulations, the cost is gonna increase. So, yes, consumers do want clean labels, but at the same time, they're not gonna be willing to pay really high prices, for the same formulation. So that is something that has to be kept in mind. So what do you what do you think is gonna happen, maybe over the the next few years if if this MAHA movement is is really intent on making these changes? There are two things that are gonna happen. Firstly, rather than brands, going or doing immediate reformulation across all their SKUs, I think we're gonna see a lot of brands launching parallel product lines using natural colourants. Now what this does is it allows consumers to have more choices, and it also allows brands to sort of optimise the taste and also secure stable supply chain. So, which is, I think, gonna be a very, very important thing. And then secondly, I think brands are also gonna start, exploring reshoring and near shoring as options. And then, you know, regions like Latin America and Canada, they're gonna emerge as very viable midterm solutions, because of the agricultural compatibility that these region regions have and also the regulatory stability as well. I'm hearing a lot of similarities to the markets, for instance, vitamins and dietary supplements, but also some important differences, from what you're saying for the markets for food and bev ingredients. Just on a first blush, you know, MAHA movement, I think, the industry of of vitamins and dietary supplements believes very strongly that MAHA will be will be bet ultimately very beneficial for the industry. It's a it's a philosophy that really foregrounds, like you're saying, a lot of these natural orientations, that will that kind of that is tied to the wellness universe. So they're very, interested in supplements writ large. Right? So I think the baseline expectation, from the industry perspective is that these structures and this philosophy is going to result in stronger sales for vitamins and dietary supplements. But what you're saying, Ina, as kind of these push and pull factors, from the ingredient side is definitely the case in vitamins and dietary supplements. Right? So one chief kind of friction here is that the philosophy, I think, is there, but, like, the nuts and bolts right now are creating some headwinds for the industry. So instrumentally, I think this is mostly around the around tariffs. Right? So we do know, I think historically, vitamins and dietary supplements were thought of as being recessionary recessionary protected. Right? People would gravitate towards supplements in periods of of higher economic insecurity. That didn't happen in 2022. And, in fact, we're actually in a period of slower growth for vitamins and dietary supplements. In constant value terms, the the category hasn't grown. It's -2% over the last four years, and that and that in constant value terms. So all the growth has just been in pricing in the last few years. And so if consumers have already been, reluctant to engage with these products, if prices increase again, I think that's gonna be a real tricky aspect for them, and and the uptick for for for engagement with vitamins and dietary supplements. And then one other quick point, and I'll throw it back to you, Ina, is, that what you're saying about onshoring or nearshoring, and that might be beneficial medium term for, for ingredients, that's not necessarily gonna be the case for vitamins and dietary supplements because the cultivation of herbal and botanical products, it's there's gonna be some inconsistencies there. So you can't, for instance, onshore or nearshore to Mexico. Products are being made in India or grown in India and in China. So there's going to be a lot of, problems for those kind of fast moving herbal ingredients and herbal, supplements, that have really supported the market in the last few years in the United States. So, Mark, we've spoken about supplements and deregulation overall. What do you think is gonna be the impact of deregulation both on supplements and OTC? Yeah. I think the story for OTCs is a little bit different because we we do know that MAHA, at least rhetorically, is supportive of supplements, and is not supportive of pharmaceutical based products, chemically derived products, which which are basically over the counter drugs. Now the main pipeline for innovation over the counter drugs is so called switch pipeline, which goes from, pharmaceutical to over to over the counter. And in the first Trump administration, this was a big, big component of the FDA commissioner at that time, really fast tracking, the approvals of OGC switches. And even the Trump administration right now, they had an executive ordering in April where they basically outlined that they were still really supportive of a really aggressive switch process, really trying to fast track these products, into the consumer market. That's that's great, but I think that does create some friction, with the expressed aims of the MAHA movement, which we've already talked about. And right now, I think industry is trying to wait and see what this actually means. Right? If the executive order is actually gonna have any teeth, if, regulatory, the, the the the health and human services and and FDA establishment are going to be putting a lot of muscle behind this, or whether, MAHA and the MAHA movement's going to maybe slow walk this, and in fact, then you're gonna have a situation where OTC innovation will start to dry up, and you'll see start start to see some downstream effects on sales in that category in the in the coming years. So it does seem like it's gonna be a wait and what story across ingredients and supplements as well. With that, we're gonna move on to consumer behaviour. So consumers, how are they changing their shopping choices? What are they putting in their baskets in terms of food categories? And how are manufacturers maintaining the cultural capital that is particularly relevant to industries like alcoholic drinks? So over to our two experts on foods and beverages. Alright. So we're talking about the consumer. We We need to finally think about the long term of this. Right? So if you look at Euromonitor data, the number one concern of the consumer is things cost too much. Current surveys, about three quarters of global consumers, agree this is a major problem for them. So from talking about what consumers doing in response to Trump policies, it's really just the next step in a long term, procedure. So that was, you know, the post pandemic supply chains, and then we had the war in Ukraine, and now we have the Trump policies. And all these things just move prices up and up and up, which means that the responses we're seeing in many cases are just kind of what we've been seeing before, food, private labels, things like that, taking a new form. And Spiros you have picked up a term you like to use when describing this. There was a term that I've you know, as as we discussed previously, Matt, it could potentially sound to a laymana like a little bit too negative or pessimistic, but I think it is the best way to encapsulate this kind of overall environment that we're describing right now and and the volatility of of the Trump policies that are just at the latest step in the very long process that we described. And I think that then is the state of perma-crisis. The idea that we have a a series of interconnected crisis, as you mentioned yourself starting, you know, around what, 2020 or some some would suggest even before that, with the pandemic, then the logistical, disruption that followed that, the massive boom at least in alcoholic drinks after people were allowed back outside and then, the inflationary spikes, geopolitical issues, and, the Trump policies that are still ongoing changing the, the chessboard, so to speak, all the time. And I think that state of perma-crisis is informing everything else that we're gonna be discussing very quickly about today, from the from the excise taxes to, you know, immigration policies to, you know, trade agreements to, even ultimately the state of, mind of the consumer, their confidence levels that actually have an impact across the board and all that. Are there any particular areas that you think should be the priority or you're looking at right now, as as under, you know, with a big question mark or a big exclamation mark where we should focus on? Well, I think the key thing is unpredictability. Right? The reality is we don't know what tomorrow is gonna bring. So I'd like to focus on is the long term perspective. What do we know it's gonna be true tomorrow? And I think the key to look at is deglobalisation. Right? That's the real trend here. Trump, in many ways, is the symptom. He's not the cause of this. We go back to Brexit or we go before that. So we can go to, the collapse of the Doha Round of trade talks or Russia being included from the G8. As we look, globalisation peaked ten, 15 years ago, and this is just the next phase of deglobalisation. So we have food industry as we're come by reliance on globalisation to keep prices low, keep variety high, bring those global flavours and variety to consumers. We gotta look at the fact the next couple years, no matter what happens in DC, we're gonna see less globalisation take place. That's just the long term trend. And so we gotta prepare ourselves what that's look like for the consumer. There's something we know are gonna take place. Obviously, compensation, we know wellness is gonna be a big deal because as the world comes uncertain, people try to prepare themselves by eating healthier and, you know, optimising themselves and the affordable indulgence. The the world's stressful. I mean, I can't buy, you know, the nice outfits. I can't get the trip, but I can buy the chocolate bar. I can get the coffee. Right? There's a lot of interest in those small indulgences. And I know in your industry, of course, that's that's huge. And that is that is exactly what my industry is about. And, affordable indulgence, of course, includes the element of affordability there, and I think that is one of the major casualties potentially of the environment that we're describing now because as some of our listeners potentially know, the, alcohol industry has been driven for the last couple of decades by the concept and mantra of premiumisation, the idea that people drink less, but better quality, aspirationally, more sophisticated drinks moving forward in terms of value if volume still remains largely subdued. Now the question, of course, is within the environment of perma-crisis that we described now, can premiumisation continue? And I believe that partially it will, but not in the way that we know and we have been accustomed to until now. There will be depremiumisation forces, some trading down, and some polarisation replacing this kind of mono dimensional premiumisation mantra. And on the other point that you also mentioned, which is the the the forces of deglobalisation, basically, alcohol is always reflective of this undercurrents in society. And I think we start seeing something similar in alcoholic drinks. International brands potentially can face significant problems moving forward, at least in the short to medium term, as consumers are shifting inwards, rediscovering their own local specialities at the same time that they take a step back from this kind of, you know, as I said, massive focus on international aspirational brands, westernisation, the idea of, emerging markets adopting western brands. And, ultimately, that that is, the bigger concern I have here, which is beyond the logistics, beyond the economics, beyond all all of all of the numerical, quantity is it is it quantitatively or at least assess, the points that we're making, what happens when it comes to the cultural capital, the soft power, and and the fact that some of alcohol drinks brands encapsulate, and reflect the values or at least are perceived as reflecting the values of the countries that are coming from. Bourbon, would be obviously reflective of all things Americana or, vodka, but Eastern European markets would be iconic for them. Kasasa in Brazil or Beijing in China. These products have the potential to resurface as local specialities rather than just international. We of course, it will continue, but it will we will be taking a step back from this kind of inter massive internationalisation stage that you kind of alluded to as well. Would you agree to that? Right. I mean, symbolically, it's such a difference between drinking bourbon versus eating an American potato. Right? I think the cultural resonance is so important here. And as we kind of retreat into ourselves a little bit, as countries, it's gonna be harder to have these international brands really succeed. Not impossible by any means, but it becomes a lot more challenging because everything becomes so politically coded ultimately. So we we obviously acknowledge that this was extremely brief, and we try to capture a a fast moving situation from a number of different angles. But, obviously, we will continue doing so. We acknowledge the levels of uncertainty out there and and the fact that things can change every day or every week, following a single tweet sometimes. But we're there here using our strategic intelligence, our experience for many years to actually navigate this extremely interesting, and, challenging times and, hoping to continue these conversations moving forward quite often. Thanks to those of you who have submitted questions for us. We've gone through them, and we're gonna select a few representative ones. So over to the Q&A now. We've had a couple on we could group into, say, geographies, categories and industries. So maybe we start with the geographies, the specific interest, in LATAM and Brazil. Maybe, Lan, you want to take that one? So the broad impacts of policies in LATAM, and how will Brazil specifically be affected by them? Yes. Thank you, Zora. That's a a good question. So, Latin America is heavily linked, to the US in many aspect, including trade and migration. And therefore, obviously, the impact of changes in US policies is significant, for the region. For example, countries like Mexico will be hit hard by US tariff, because more than 80% of the country's exports, go to the US. So any decline exports, in key sectors like automotive and machinery due to tariff, can wait on Mexico overall economic growth prospect. Now about Brazil. Why the country is not a major target, for US targets? It can be affected, by global trade tensions, given its large export sectors, especially those, involving China, which is the key trading partner of of Brazil. So Brazilian ex key exports, such as crude oil and iron ore are highly sensitive to changes in, the Chinese economic performance. So if China's economy weakens due to US tariffs, its its demand for Brazilian metal and iron commodities may fall. And on the other hand, US tariffs may also create some opportunities for certain exports, from Brazil, such as soybean, for example, because China would replace its, US sourcing, with other countries, such as Brazil. So, overall, I think Latin America's countries is also under Trump's pressure to tighten, their own immigration enforcement. And a decline in migration to the US means, there would be some excess labour, and unemployment may rise in Latin American countries in the short and medium term. So this would be important for Latin American countries to strengthen its domestic economies and create, enough jobs, for its population going forward. Thanks, Lan. And then to the category specific questions, quite a few of them on food and drink. What categories of food and drink, excluding alcohol, will be most affected by trade disruption and what order of magnitude in terms of volume sale change in the context of imports and exports? One for you, Matt. Yes. We're talking about the United States. You have to look at categories that really can't source domestically realistically. So coffee and tea jumped out to me as big ones. There's just really no domestic production capability there. A lot of produce to be affected. A lot of that comes from overseas. Truly out of season. If you're looking to eat year round produce, you gotta go overseas for that. And that's for exposed to tariff risk. Seafood is another one. A lot of American seafood comes imported, as well as many of the trendier cooking oils. So the olive oils, the avocado oils. Lots of people really trying to move forward these days, are actually very exposed tariff risk. Look at the other side of things, what category is more expected outside the United States, it's gonna be really iconically American products. They're exposed to boycott risk in many cases. Although, that's gonna depend on targeted sanctions, many cases we're seeing that tariff retaliation is being done systematically to target certain products from certain areas over others. So there's a big question as to what specifically those are gonna be, and that's gonna be subject to political winds more than anything else. But for sure, more visibly American product is probably the more reason it has to worry overseas. So a little bit less so things like commodities, you know, soybeans, potatoes, things of that nature. Thanks, Matt. And linked to that, you know, the point of provenance is also part of our next question here. Are American retail chains still interested in European products, or are they just fine in trading American foods and beverages? Spiros, if you wanna look in here That is a great question, and I think it's a a reminder for everyone that, alcohol is not just simply interchangeable. So it's not that someone will just shift very easily from drinking a Californian wine from Napa Valley to a French one and the other way around or simply can, replace, their their local product, you know, their bourbon, the tequila with their local bourbon or the other way around. There is a significant, status and symbolism associated with these products. And just as Mark just mentioned about other categories as well, the soft power, the cultural prowess of this kind of products and the associations, linguistic, cultural associations that that people have with them, even if it is not, centrally controlled boycott per se, we will start potentially seeing, some, ripple effect from all of this that some consumers are avoiding some of these products coming from these countries. That doesn't mean that they don't want them anymore, but the combination of the pricing, the combination of the, animosity in the air, and the the general environment of the trade and how it evolves, of course, it will have an impact. It's just very important to remember that it's not just gonna be every loss, will be a gain for local producers. It can be made like that, and I would actually suggest that many of them can double down on their local expertise, their local credentials, hyper-local even sometimes to capitalise on this disruption. But at the same time, it's not a given that the losses from Europe, the losses from Mexico, the losses from Canada will definitely be a gain for, local producers de facto. It's just a process that we need to keep a a keen eye on. So onto some industry specific questions. We've had a few of these, particular interest in apparel. Is near shoring a feasible option for the USA? Would you expect growth in Central America? And also another one on the effect of margins in the apparel industries. This is one for you, Marguerite. In the short term, I expect the margins to erode in the US due to the higher cost of, importing the apparel and footwear items will be sold in the country knowing that 80% of these is import driven. So I think in the short term, US consumers are very likely to face higher prices as as brands and retailers, we need to pass on these, extra cost to consumers. And that means we might also see a surge in demand for secondhand, which will be seen as a cheaper alternative to the primary markets. Outside of the US, in the short term, I also expect Chinese manufacturers to diversify their export strategy and look for new export markets to sell their surpluses. And that's why we have seen Shein, for example, the Chinese fast fashion giant reentering India in the last few months. In general, we will see new trade agreements that will be signed, new retail routes that will develop, and some countries may raise tariffs, take some special measures to protect their economy against Chinese imports. That's the case in the EU, for example, that has already taken measures such as imposing a flat fee on parcels value that's less than 60 Euros, that come from outside of the block. And in terms of the near shoring and reshoring, of the supply chains, I think, yes, there has been a growing interest into, South America and Central America as a production hub for the textile industry in the last few weeks. The reality is then that there is, at the moment, a capacity and infrastructure constraint in the region, which will not be able to absorb all the volumes produced in China and Vietnam in the immediate future. For nearshoring to take off, we will need to see a significant amount of private and public investments take place to really develop a new cluster of production. This will be, also involving regulators and tax incentives as we have seen in the past, for example, in the special economic zones in China. We have a question here on reshipping, reselling goods originally from China. Nick, do you wanna take that one on? Super. Thanks, Zara. Two thoughts to share on this. The countries in 2025 who have the largest tariffs landing after the 90 day pause coincides with the same list of countries that were major reshipping hubs for Chinese product that last time around when we did tariffs back in 2018. We've got Cambodia facing 49%, Vietnam, 46%, Thailand, 36%. The list is quite long. Mexico, there was an attempt to apply 25%, and that got caught up in USMCA. And this is all against a backdrop of a 10% tariff across the world. This is no accident, and I suspect part of the tariff negotiation happening now is gonna include more barriers to reshipping. For everyone making deals this summer, this is how the wording is gonna come out. So the first observation is that reshipping barriers are rising and the penalties of being seen reshipping are overtly more painful within US trade relationships. The second thought is that the US agreement with Canada and Mexico, the USMCA, articulates an active US view of what constitutes reshipping in a trade agreement. There are product specific complexities, and there are exclusions, there are special rates. So there is no substitute for the due diligence of looking at the specific case for yourself. But having said that, putting the rules of origin as simply as I can manage for a SKU not to be viewed as reshipped within that existing agreement. 60% of the customs value on entry into the US needs to have come from value add from the materials or from the processes in the country you are shipping from and calling the origin. If that threshold isn't met, if you're just doing something like assembly or repackaging and the value add is five, 10% of what gets shipped onto the US, then by that USMCA trade rules, that's reshipping. And that means a different origin country comes into play. And for example, if this is a Chinese product being reshipped, the Chinese tariff will kick in. So I think the trade barriers around this are rising, and I think the penalties of getting it wrong are rising. Thanks very much. Much. We have a couple more here on, M&A activity. Has anyone seen an uptick in M&A activity in their industry as a result of the challenging operating conditions? I think maybe in apparel, we've already seen that the most. Marguerite, do you want to take that one? I think there's been an uptake late lately, because, private equity firms and businesses with the cash are looking to acquire distressed assets. But in the mid and longer term, I think we will continue to see, interesting movements when it comes to M&As, and this will multiply, either to gain access to new markets or to, complete strategic verticalisation and control better one supply chain. I think also some businesses will be looking to make economies of scale or gain new skills, especially when it comes to AI and technology, which will be essential to maintain a competitive edge and maintain profitable margins as well in this, challenging environment. Thanks, Marguerite. And probably our last question now, we have we've had quite a few actually on the longer term outlook. So looking beyond the next four years, what would be the implications of these economic changes beyond Trump's tenure ending in four years? Another one, will it be possible to reverse these policies and so on, linked to deglobalisation? Obviously, Trump hasn't invented deglobalisation, but certainly accelerated it. Will this continue beyond? Matt, do you wanna take that, given your categories of arguably the least discretionary spend? Yeah. I mean, I'll talk about food, but I think it's broadly speaking true across CPG industries. So if you look at overall global consumer expenditure, at the end of the cold war, it starts falling almost every year as globalisation kicks off. Right? So the 1990s, 2000s, it's falling, it's falling, and it stops actually about about two decades ago now and starts to reverse, which shows us that it's not really just Trump that's pushing these prices up. It's degloballisation. It's geopolitics changing. It's climate change. And we go over the last two decades or so roughly. Every year, people spend more money of their of their total incomes on food. And other essentials, I think, is probably speaking true of. Right? Things like health care, housing, many cases, also gonna have a cost. So if we look, you know, past, the Trump administration itself, there's no reason to believe that this is gonna reverse. If you look at the long term drivers, things like population growth, climate change are still gonna be issues, which means that if you're the food industry, you're dealing with high prices for the foreseeable future. Barring some massive technological breakthrough, which is unlikely to take place in the short term, there's just a lot of pressures on the supply chains from various angles and a lot of demand, and that's not gonna change things. So I'll be looking at a world in which we're in more, you know, cut off trade blocks. Stuff's hard to move around the world. It's more expensive than it does, and there's a lot more supply chain disruption in origin. And that all points to a world in which we're just spending more of our incomes on essentials like food and beverage. And I think we can wrap up with that. But before we do, remember this was just a quick preview of how Euromonitor can help you unlock worlds of opportunity. Don't forget to explore the resources tab below and join our community for even more insights to help you make those confident data driven decisions. So thanks again to all of our speakers for sharing your expertise with us. And most importantly, thank you, listeners, for joining us today. Enjoy the rest of your day, and we look forward to seeing you at future Euromonitor webinars and events. Thank you.