The tariff rulings still stand in court, but companies are bracing for higher prices and supply chain disruptions anyway.
US President Donald Trump suffered a courtroom setback at the end of August that could shake one of the prominent elements of his economic agenda.
Earlier this year, Trump announced sweeping tariffs on foreign goods, claiming emergency powers that would allow him to bypass Congress in the name of protecting American jobs and boosting the economy. The US Court of Appeals for the Federal Circuit was not convinced. In a 7-4 decision, the court largely upheld a lower federal trade court ruling that Trump exceeded his authority to declare national emergencies to justify tariffs on nearly every country in the world.
But the ruling has not begun yet. The court delayed issuing its mandate until October 14, giving the government time to appeal to the US Supreme Court. If the Supreme Court takes up the case, the legal battle could extend into next year, prolonging uncertainty for companies around the world.
For companies, the question isn’t just whether Trump’s tariffs are legal. It’s about whether they can ignore them.
Companies in sectors ranging from luxury goods to automobiles to consumer goods are adjusting pricing, sourcing and sourcing strategies to navigate a changing landscape. The bottom line for companies is clear: The battle over tariffs is not just legal but economic, and the stakes are high for both profits and consumer prices.
“Keep it up”
“I don’t think the case brought by the recent federal appeals court is sitting well with most companies at this point,” says Olu Sunola, head of US economic research at Fitch Ratings. “They’re basically trying to move on. They know the Trump administration will look for other ways to impose tariffs if the Supreme Court eventually overturns the lower court’s decision. Most companies are reacting to what’s in front of them, rather than hoping for relief.”
In other words, even a court victory does not mean the battle is over for companies that rely on imported goods. From electronics to consumer products to heavy machinery, companies are now being incentivized to take new approaches to sourcing, change supply chain strategies and, in most cases, pass on costs to consumers.
In electronics and gaming, the impact is clear. Sony, Nintendo and Microsoft have all raised prices on their consoles and games to offset new import costs. Manufacturers of household and consumer goods – such as Procter & Gamble, Hershey and ConAgra Brands – are either adjusting product prices or turning to alternative sourcing methods. Retailers like Walmart and Home Depot, two companies whose business models are based on offering affordable options to the average shopper, expect further price increases across multiple categories for the rest of the year.
And these aren’t the only companies grappling with tariffs: far from it.
A New York Federal Reserve Bank survey in May found that nearly 75% of businesses – whether in manufacturing or services – passed on at least some of the costs associated with tariffs to customers. Gartner reports that nearly 45% of supply chain leaders plan to shift new tariff-related costs “fully or almost completely” to customers.
“We don’t see importers cutting prices on goods coming into the United States,” Sonola says.
Manufacturers are particularly vulnerable, including companies based in Europe with a global presence.
CNH Industrial, based in London, relies on imported steel, aluminum and specialized machinery. Although the impacts during that period were modest, more significant impacts are expected in the second half of 2025, CFO Jim Nicholas warned in his second-quarter financial report.
“It’s a new element of the business that didn’t exist 12 months ago,” Nicholas tells Global Finance. “We have large teams of people trying to understand it and mitigate the effects of the tariffs. In the short term, there are headwinds, no doubt. You do what you can to offset them.”
CNH’s US-based competitor, Deere & Co, expects the tariffs could cost the company $600 million by the end of the year. A Deere spokesman declined to comment.
European luxury brands are taking advantage of pricing power to offset the new duties. Paris-based Kering, whose brands include Gucci, Yves Saint Laurent and Balenciaga, in July announced increases in global prices and the possibility of further rises in the fall. Hermès raised prices in the US in May, while LVMH has steadily increased prices to protect profit margins.
“Tariffs delay some sourcing decisions, and perhaps some manufacturing decisions,” Nicholas points out. “We really don’t know until policy stops moving, and we know it’s still moving.”
For many companies, uncertainty is as costly as the tariffs themselves.
CNH is taking what Nicholas calls “tactical measures.” For example, the company, which sells agricultural machinery and construction equipment, is temporarily halting shipments from its operations in India to the United States. Why? “Because a 50% tariff rate makes these products uncompetitive.”
Recently, the Trump administration doubled tariffs on Indian imports to 50% as punishment for India’s purchases of Russian oil.
This does not mean that CNH is exiting India. “We believe India is an excellent growth market for us,” says Nicholas. “But tactically, in the short term, until we get certainty, we are pausing shipments from India to the US.” CNH is also looking to reduce shipments from Brazil, which was also hit with a 50% tariff, to the United States.
Bad signs, good omen
The automotive sector illustrates the dual pressures of tariffs and inflation. Customs duties on imported cars and parts have pushed up vehicle costs by up to $6,000 in some cases. GM is absorbing more than $1 billion in tariff costs rather than passing it on to consumers, but expectations are that prices may continue to rise. Models assembled in Japan could see an increase of 9%, and vehicles assembled in Mexico by about 10%.
“The automotive sector is one I will definitely be watching,” Sonola says. “Imports of cars, parts and other transport equipment are down about 20% compared to 2024 levels, while the effective tariff rate on these goods is now about 18% and rising. This will amount to about $60 billion in additional costs that the industry will have to deal with. The 15% cap on cars and parts announced in the deal with Japan may be a good omen going forward, but not “The certainty still remains.”
Volkswagen CEO Oliver Blume says US tariffs have cost the company “several billion euros” in 2025 alone. Across Europe, automakers are bracing for the impact of 15% tariffs on many goods exported to the United States, which could mean higher prices for American consumers.
The retail sector is another front line in the tariff battle. Clothes, shoes, toys and games imported from China, Vietnam and Bangladesh see duties ranging from 15% to 145%.
Adidas, the German sportswear brand, warned that US tariffs would cost it an additional 200 million euros ($231 million) in 2025, and confirmed plans to raise prices for US consumers.
“While we face direct and indirect impact from tariffs, we have effectively offset the impact through flexible sourcing, disciplined purchasing closer to the market, and selective pricing adjustments that maintain our value proposition,” says CEO Björn Gulden. “The challenge is to predict whether these tariffs could lead to significant inflation in the US market.”
Economists point out that although tariffs are not inflationary in the monetary sense, they do increase the cost of goods and raw materials.
“Strictly speaking, tariffs are not inflationary because inflation is a monetary phenomenon,” says Philip Magennis, a senior fellow at the independent libertarian Institute. “But they do lead to increases in the prices of certain commodities and increased costs of many raw material inputs.”
Harvard Pricing Lab data shows that prices at major U.S. retailers rose between April and August, a pattern that is likely to continue if tariff pressures persist. The Consumer Price Index for August showed a 2.9% year-over-year increase, the fastest since January, as Trump’s import tariffs seeped into the economy.
Right now, companies are trying to absorb some costs while preparing to pass others on to consumers.
“In the short term, some companies may try to absorb the double whammy of inflation and tariffs by keeping prices low as a strategy to retain consumers,” Magennis points out. “Beyond this time horizon, the situation becomes more difficult to sustain, and we will see price increases passed on to consumers.”
Until the Supreme Court rules, or the administration reviews its policies, companies are operating in a state of constant recalibration. As Nicholas puts it: “You just want to say, ‘Okay, where is this going to end?’ So, I can really plan.
