Facing tariffs and uncertainty, more firms look past US markets

A manufacturer of capsules and tablets in the pharmaceuticals industry is scouting Asia for new partners. A steel component maker, with a client base in the United States stretching back 35 years, is telling customers to expect to pay higher prices. Another company that produces sports products are expanding their presence in the European market.

US President Donald Trump's tariff war is upending decades of global trade and prompting many manufacturing firms to revise their long-term business strategies.

'We need to pivot'

Canada, the US's close neighbor, which has historically depended on US markets for 75 percent of its exports, was one of the first countries hit by Trump's tariffs.

In March, Trump imposed a 25 percent tariff on all steel and aluminum imports coming into the US and then slapped another 25 percent tariff on cars and parts that did not comply with a North American free trade agreement, although he stopped short of a broad reciprocal tariff imposed on some countries in early April.

Experts have said that adding reciprocal tariffs on Canada would have spiked bankruptcies in the manufacturing sector. Canadian Prime Minister Mark Carney has repeatedly said the old relationship with the United States is over.

PNP Pharmaceuticals, a contract manufacturer for drug makers in British Columbia, responded to Trump's tariff moves by trying to find customers in Asia, Alan Urmeneta, Partnership Sourcing Manager, said in an interview.

"We are now venturing into other markets as we see that we need to pivot," Urmeneta said. He declined to identify specific countries.

While it does not currently face tariffs, LabelPak Printing Inc., a British Columbia-based distributor of packaging products sourced from Asia, is considering focusing exclusively on the Canadian market and gradually reducing the 15 percent in sales that come from the US.

"If he (Trump) gets mad ... and decides to throw a 50 percent tariff on Canadian goods... it's going to really put us out of the market," Ken Gallie, the company's founder, said. "We are going to put more emphasis on the Canadian business."

Even if the US forges a new trade agreement with Canada, Trump's erratic policy and the uncertainty of doing business with the US will persist, according to interviews with more than a dozen companies, advisors, trade lawyers and associations.

"If you are a smart, savvy business person, you are not going to jump right back into another arrangement where you are totally reliant on a US partner," said Mike Chisholm, who runs a consultancy for Canadian exporters.

"Owners want stability, banks want stability, private equity funds want stability," he said. "They are just going to be very, very careful."

German retailers redirect their focus

In the wake of mounting trade tensions and an increasingly unpredictable tariff regime in the US, a growing number of German retailers and consumer brands are also redirecting their focus from the American market toward Europe and other regions.

Zalando, a leading Germany-based online fashion retailer announced on Tuesday that the company is intensifying a push into the European market, with active negotiations underway with new potential partners across the region.

David Schneider, co-CEO of Zalando, noted that the company's website has observed a clear shift in attention from both brands and retail partners toward Europe. Schneider explained that they're looking to create additional demand in Europe as a buffer because the US market has become more difficult to navigate.

Zalando is not alone. German high-end fashion brand Hugo Boss has also adjusted its global strategy in response to shifting trade dynamics.

The company has moved production of China-made products away from the US to serve other markets instead. According to CEO Daniel Grieder, the company has adopted a cautious stance toward American consumer behavior, citing a "certainly diminished" US shopper appetite during the first quarter of the year. In the first quarter, Hugo Boss's sales in the US declined 1 percent from last year.

These developments highlight the far-reaching implications of US tariff policy on the global flow of consumer goods. Tariffs have forced many firms to reconsider where and how they allocate their resources, away from the traditionally lucrative American market and toward regions perceived as more stable and predictable.

Adidas, one of Germany's flagship sportswear companies, has also expressed growing concern about the ripple effects of American trade policy.

Speaking last week, CEO Bjørn Gulden acknowledged that while the company posted robust growth in the first quarter of 2025, uncertainty surrounding future US tariffs is already influencing strategic decision-making.

He said that in a normal world, the company would have raised its full-year revenue and operating profit forecast. However, given the unpredictability of the current US policy landscape, the company has chosen a more conservative path. Adidas is also preparing moderate price increases for its US products to offset potential cost pressures linked to future tariffs.

(With input from Reuters)