Preview: Threat of tariffs will loom large amid auto, tech glitz at CES

Panasonic Holdings

03/01/2025 11:00

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      CES to focus on tariffs amid tech showcases
    

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      Companies may shift production to avoid tariffs
    

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      Suppliers face challenges with tariffs and EV policy
changes
    

  
    By Abhirup Roy
       SAN FRANCISCO, Jan 3 (Reuters) - Auto and tech giants
showing off their latest innovations at the CES trade show in
Las Vegas next week can expect a barrage of questions on a topic
that is usually not central to the consumer-focused event:
tariffs.
The gathering is one of the largest of manufacturers, analysts
and suppliers in the United States and comes days before the
inauguration of President-elect Donald Trump, who has pledged
big tariffs on imports from Canada, Mexico, China and other U.S.
trading partners. This has sparked concerns about spiraling
costs for businesses as well as consumers. 
    "This will be a hot topic," said strategy consultant Deborah
Weinswig, CEO of Coresight Research, who said the proposed
tariffs have come up in almost every conversation she has had
with clients ahead of CES. "This is going to be something that
definitely senior leadership is going to have to address." 
CES 2025, formerly known as the Consumer Electronics Show, runs
Jan. 7-10 and is used to debut products ranging from new
automotive technology to quirky gadgets, as well showing new
ways to use artificial intelligence. Among the highlights this
year is a keynote speech from AI chip giant Nvidia's  NVDA.O 
celebrity CEO, Jensen Huang. 
    While AI will still be the buzzword on the show floor, the
issue of tariffs will be top-of-mind in policy sessions, press
conferences and on the sidelines. 
    Companies may be asked about changing suppliers and moving
production to the United States to mitigate supply-chain
disruptions - moves that take time and are expensive, analysts
have said.  
Honda  7267.T , for instance, sends 80% of its Mexican output to
the U.S. market. It has warned it would have to think about
shifting production if the United States were to impose
permanent tariffs on vehicles imported from the country.
    Nearly half of new cars sold in the U.S. as well as a
significant share of parts on the rest are made elsewhere,
according to estimates from Edmunds. European and American
carmakers could lose up to 17% of their combined annual core
profits if the U.S. imposes import tariffs on Europe, Mexico and
Canada, according to an S&P Global report. 
     
    PLANNING IN HYPER MODE
In addition to tariffs, Trump has said he plans to begin
rescinding policies meant to promote the adoption of EVs.
    Many suppliers, already struggling because of weaker than
expected EV demand, are operating on "razor-thin" margins and
will have to radically adapt their cost structure this year in
the face of potential tariffs, said Felix Stellmaszek, global
leader of the automotive and mobility sector at Boston
Consulting Group.
    "Add to this supply-chain uncertainties and labor shortages
and it's clear that many suppliers are in dire straits," he
said. "The scenario planning is in hyper mode." 
    Between responding to potential tariffs, automakers and
their suppliers - including Honda  7267.T , Toyota  7203.T ,
Bosch, and Continental  CONG.DE  - are expected to provide
updates on their race to develop cars with software-driven
enhancements, self-driving technology and AI that makes vehicles
easier and safer to drive.  
    Among the speakers will be Delta Air Lines  DAL.N  CEO Ed
Bastian, Volvo Group  VOLVb.ST  CEO Martin Lundstedt, Panasonic
 6752.T  CEO Yuki Kusumi, and X Corp CEO Linda Yaccarino. Every
industry is likely to face questions about tariffs. 
    "'How are companies going to work together from a
supply-chain perspective?" said consultant Weinswig. "How are we
going to mitigate rising costs? Can technology solve this?
There's still so much that's not known, we've seen that
everyone's trying to figure out every possible scenario." 

(Reporting by Abhirup Roy in San Francisco; Editing by Peter
Henderson and Matthew Lewis)
((mailto:abhirup.roy@thomsonreuters.com; +1 415 941 8665;
@abhiruproy30;))