**Global**: As geopolitical tensions rise, the 2025 global economy faces a ‘fractured’ landscape with increasing tariffs and supply chain disruptions, driving price hikes for consumers and upheaval in corporate strategies, notably affecting the US, China, and beyond.
In 2025, the global economy is facing significant challenges as geopolitical tensions cultivate what is being referred to as a “fractured” economic landscape. This reconfiguration is marked by increasing tariffs, disruptions to supply chains, and shifts in investment patterns among major trading powers, predominantly the United States and China. Companies worldwide are grappling with the ramifications of these developments, and experts suggest that they will significantly influence both consumers and businesses in the coming years.
The World Economic Forum’s chief economists have recently projected that this fragmentation will lead to price increases for consumers as well as escalating costs for businesses over the next three years. They contend that trends in the United States will have a profound, long-term impact on the global economy, with many analysts positing that US domestic policy changes will create lasting disruptions rather than temporary adjustments.
Suzie Petrusic, a Senior Analyst at Gartner’s Supply Chain Practice, provided insights into US trade policy in an interview, stating, “In the past it’s usually been like taking a scalpel to the tariffs—market by market. But these new tariffs are broadly applied, so it’s actually hard for me to imagine an industry that’s not impacted.” The sweeping scope of these tariffs is expected to profoundly affect traditional supply chain structures globally.
The anticipated tariffs on imports from Europe, for instance, are projected to reduce the European Union’s GDP by 1.5% in 2025 while leading to a decrease of 1.6% in US GDP. Additionally, a substantial 25% tariff on Canadian exports is forecasted to drive the Canadian economy into recession.
The changing dynamics of global corporate investment are also noteworthy. Research from Ernst & Young indicates that deteriorating US-China relations could push significant Chinese corporations to seek initial public offerings (IPOs) in alternative markets, such as Hong Kong and Europe, as a response to recent regulatory actions like the US ban on the popular social media app TikTok.
Particular industries may experience varied impacts as a result of these tariffs. Ford CEO Jim Farley articulated concerns regarding the repercussions on the US automotive sector, noting, “Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.” He predicted that such measures would favour South Korean, Japanese, and European car manufacturers, while implied benefits for American firms, like Alcoa’s boosting stock prices following Canadian tax announcements, hint at a complex economic landscape.
Companies are preparing to navigate this uncertain environment with various strategies. Hendry Lim, CFO of MP Biomedicals, outlined his company’s approach, mentioning, “Companies like ours will continue to adjust sourcing strategies to countries not impacted by the tariff, which allows for diversity of supply and reduction of risk.” The company is shifting its focus to countries like India and Singapore for sourcing raw materials and altering its production routes to avoid tariffs.
As firms adjust their strategies, leading entities like General Motors and Walmart are reportedly stockpiling inventory in anticipation of potential price hikes. Meanwhile, Petrusic highlighted that companies reacting to these changes at the last moment may find limited options available to mitigate the financial impact. She remarked on the importance of scenario planning amid the volatility of the current environment.
Rizwan Khan, Managing Partner at Acclime Vietnam, also underscored the significance of technology in navigating production costs in light of the tariffs. Khan emphasised that, “Data is king” in the present context, stating that companies must leverage technological advancements to enhance cost efficiencies, as global competitors also strive to adapt to the evolving trade climate.
With tensions rising and trade walls being fortified, many organisations are assessing how best to position themselves for the uncertain landscape of 2025. The ability to understand and adapt to these changes will be critical for businesses aiming to thrive amidst a rapidly changing global economic environment.
Source: Noah Wire Services
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