The ongoing US tariff cycle is putting pressure on many industries, increasing risks and uncertainty across the economy. A recent report from Allianz Trade shows that nearly 90% of sectors are now seen as medium or sensitive risk, a sharp rise from before the pandemic when 15% were considered low risk. This shift highlights how changes in trade policy, higher costs, and weaker demand are reshaping businesses’ plans.
Ano Kuhanathan, head of corporate research at Allianz Trade, explained that many industries that were once stable are now facing downgrades. Metals, autos, retail, and construction are among the hardest hit. These sectors are dealing with higher interest rates, tightening profit margins, and hesitation to invest long-term due to ongoing trade uncertainties.
The auto industry, with its complex supply chains in North America, Europe, and Asia, is feeling the strain. Rising costs and delays linked to tariffs, especially involving trade with Mexico and Canada, are causing companies to hold back. Metals producers face similar challenges, relying heavily on parts from Asia but dealing with increased costs and slow deliveries. Retailers, particularly in non-food items, are also under stress, still competing with growing e-commerce alongside new tariff burdens on imports.
Energy is another sector losing momentum. After benefiting from higher prices during the pandemic’s aftermath, oil and gas companies have cooled off. Renewable energy firms now face tough competition, especially from Chinese solar manufacturers. Changes to parts of the US Inflation Reduction Act have made things harder, even for European companies counting on projects in the US. Europe’s auto makers have suffered, too, while pharma, once seen as strong, is under watch amid talks of tariffs and price reforms in the US.
Amid these difficulties, some industries are showing strength. The S&P 500 posted a 12% profit increase year-over-year in the second quarter of 2025, led by big tech firms, including those linked to artificial intelligence, and financials. Semiconductors were left out of recent tariff rounds, helping the tech sector keep growing. AI investments are boosting related construction, like data centers, though residential building remains weak. Still, there’s caution because many companies haven’t yet seen clear returns from their AI spending.
Looking ahead to 2026, there’s hope for a rebound if some larger issues ease. European auto companies and energy firms could see improvements, especially if the war in Ukraine de-escalates – good news for utilities in the region.
One notable trend is how companies are responding to tariffs by rerouting imports. Over 60% of Chinese goods entering the US in July went through countries like India or those in ASEAN. This helps avoid direct tariffs but could lead to higher costs and risks if rules tighten or tariffs are applied retroactively. Companies that move supply chains entirely face huge upfront costs and the challenge of working with new partners.
Businesses today need to be flexible and watch trade policies closely. Whether they reroute shipments, relocate factories, or absorb rising expenses, each choice comes with its own challenges. Staying alert and adaptable is key as the tariff landscape continues to shift.