U.S. Tariffs Lead to Corporate Forecast Cuts; China Promotes Yuan Globalization Amid Trade Tensions

U.S. President Donald Trump's tariffs, including a 25% levy on car imports, have led major companies like General Motors, Volvo Cars, Adidas, Porsche, and Electrolux to revise or withdraw their 2025 financial forecasts. The tariffs have disrupted global supply chains, with cargo shipments from China to the U.S. dropping by up to 60%. In response, China is promoting the yuan's international use and expanding its UnionPay network in Southeast Asia. This strategic shift aims to reduce reliance on the U.S. dollar amid escalating trade tensions.

U.S. Tariffs Shake Corporate Confidence

Since early April, the Trump administration has imposed sweeping tariffs on imported goods, including a 25% levy on car imports, with some duties reaching as high as 145% on Chinese exports. The policy has led to widespread uncertainty among multinational corporations, many of which are now revising their financial strategies and guidance.

General Motors (GM), one of the most exposed U.S. automakers due to its cross-border production in Mexico and Canada, has suspended its 2025 earnings guidance and frozen a $4 billion share buyback. GM Chief Financial Officer Paul Jacobson stated, “We’re telling folks not to rely on the prior guidance, and we’ll update when we have more information around tariffs” Reuters - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

Volvo Cars, which ships most of its U.S.-bound vehicles from Europe, is similarly vulnerable. The company has withdrawn its financial guidance for the next two years and announced $1.8 billion in spending cuts alongside a restructuring of its U.S. operations. Its shares fell more than 10% following the announcement The Star - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

Porsche, which has no U.S. production facilities, reported a €100 million ($114 million) hit in April and May alone due to the tariffs. CFO Jochen Breckner warned that the company would need to pass on some of the costs to consumers through price increases. “There is so much volatility, there is so much information coming in, some of which is reliable, some of which is not,” Breckner said Reuters - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

Adidas, despite strong quarterly results, refrained from raising its 2025 revenue and profit forecasts. CEO Bjorn Gulden cited the tariff uncertainty as the primary reason, stating that in a “normal world,” the company would have upgraded its guidance The Star - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

Electrolux, the Swedish appliance manufacturer, also lowered its North American market outlook after reporting weaker-than-expected first-quarter profits. The company attributed the decline to reduced consumer spending and a shift toward lower-priced products. Its shares dropped more than 10% in early trading Reuters - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

Supply Chain Disruptions and Consumer Impact

The tariffs have not only affected corporate earnings but also disrupted global supply chains. Cargo shipments from China to the U.S. have dropped by up to 60% since April, according to port and air freight operators. Retailers such as Walmart and Target are warning of inventory shortages and higher prices by mid-May Yahoo Finance - Trump tariffs live updates: Walmart and Target warn of empty shelves and higher prices amid tariff impact.

The uncertainty has also led to a broader economic chill. At least 40 companies globally have either withdrawn or revised their earnings forecasts in the first two weeks of the earnings season. Analysts estimate that the cumulative cost of mitigating the tariffs for U.S. and European firms could reach $3 billion this year Reuters - Profit warnings and uncertainty as Trump tariffs send a chill through businesses.

China Responds with Yuan Internationalization

As the U.S. tightens its trade policies, China is accelerating efforts to internationalize the yuan and reduce reliance on the U.S. dollar. In April, the People’s Bank of China (PBOC) announced new measures to promote cross-border yuan settlement and financial services. These include expanding the use of its Cross-Border Interbank Payment System (CIPS) and encouraging companies to prioritize yuan in trade transactions Reuters - China ramps up global yuan push, seizing retreating dollar.

UnionPay International, a PBOC-controlled financial services firm, has strengthened its payment network in Vietnam and Cambodia. The expansion includes QR-code payment systems aimed at facilitating transactions for tourists and small businesses, further reducing dependence on the dollar. UnionPay’s network now spans over 30 countries outside China Reuters - China ramps up global yuan push, seizing retreating dollar.

China has also increased the value of its offshore yuan currency swaps with other central banks, reaching a record 4.3 trillion yuan ($591.2 billion) in February. Countries like Argentina and Pakistan have renewed or expanded their yuan swap lines, enabling smoother trade and investment flows Reuters - China ramps up global yuan push, seizing retreating dollar.

Strategic Shift in Global Trade

Chinese officials have framed the U.S. tariffs as an opportunity to accelerate financial and trade diversification. President Xi Jinping’s recent tour of Southeast Asia focused on strengthening economic ties with ASEAN nations. The PBOC has pledged to support Chinese companies investing abroad and to enhance domestic financial infrastructure to withstand external shocks Al Jazeera - In first 100 days, Trump takes hawkish stance on China to new heights.

China has also imposed retaliatory tariffs of up to 125% on U.S. goods and introduced export controls on critical minerals. Officials have criticized the U.S. approach as undermining global trade norms and have reiterated their commitment to building a financial system less dependent on Western institutions Economic Times - Weathering the storm: China's strategy amid US trade war.

References

• UPS cuts 20,000 jobs, GM delays investor call as Trump's tariffs create corporate chaos
• Trump tariffs live updates: Trump poised to soften blow of tariffs for automakers
• In first 100 days, Trump takes hawkish stance on China to new heights
• Weathering the Storm: China's strategy amid US trade war - Background