Introduction
Since April, when Donald Trump’s tariffs were imposed on the world, their consequences are becoming increasingly apparent. In the second quarter of 2019, General Motors reported a more than one-third drop in profits, with a direct loss of $1.1 billion attributed to new tariffs on vehicles and auto parts. Net income fell from $2.9 billion to $1.8 billion. Ford lost 64% of its quarterly earnings and expects a $1.5 billion hit. Lockheed Martin fell 80%, and RTX (formerly Raytheon) reduced its annual forecast after absorbing $125 million in tariff costs.
Financial Impact on Major Companies
These figures reflect more than just accounting; they show that Trump’s trade strategy is strangling margins, canceling investments, and forcing price adjustments. When imported inputs are made more expensive by decree, companies cut costs, rethink supply chains… or raise prices.
- General Motors: The company has started to pass on the increased cost to consumers, particularly in pickups and SUVs.
- Ford: Price increases will begin in 2026.
- Best Buy, Macy’s, and Target: These companies have already raised prices or reduced promotions.
The impact reaches from automobiles and appliances to toilet paper and canned food.
Consumer Impact
So far, the blow to consumers has been partial. Many companies have absorbed the increases to avoid losing market share and are working with inventories built before tariffs. However, this cushion is running out. Starting in the last quarter of 2025 and during the first half of 2026, price increases will become more visible:
- More expensive cars
- Expensive spare parts
- Appliance price hikes of 5-10%
- More expensive flight tickets due to increased maintenance costs
In Mexico, the impact will be real: industries dependent on US inputs will face higher costs that eventually reach consumers. If the exchange rate weakens, imported inflation will worsen.
Impact on Mexico and US Trade
Starting August 1, new tariffs of 30% will apply to Mexican exports that do not comply with the T-MEC rules of origin. This means goods certified under the treaty are exempt, but many others—especially those with inputs from outside North America—will face this tariff punishment. For Mexico, it means losing competitiveness in sectors like machinery, white goods, or electronics. For the US, it means shooting itself in the foot: many Mexican exports contain non-North American components, excluding them from the T-MEC and exposing them to the new tariff. However, these supply chains are intertwined with US companies. Penalizing them is self-inflicted damage.
Conclusion
Trump’s tariffs aim to protect key sectors like steel or the automotive industry, but they do so at a high and poorly distributed cost. Essentially, they are an inflationary and regressive policy. The balance sheets of GM, Ford, Lockheed, and RTX demonstrate that everyone loses: consumers in both countries who pay more; employees facing layoffs due to falling sales or plant closures; and businesses watching their margins and competitiveness evaporate. An open economy is not defended by tariff barriers but by clear rules, smart integration, and a long-term vision—none of which the US president seems to possess.
