Tariffs drive foreign companies to expand in the US, while small businesses and oil firms feel the strain
Foreign investment and shifting supply chains are accelerating in the United States as global companies and policymakers respond to US President Donald Trump’s tariffs—a development with far-reaching implications for North American markets and cross-border business strategies.
According to Reuters, major non-US firms are announcing significant new investments in the US to counteract the impact of tariffs.
AstraZeneca, for example, plans to spend US$50bn on a new plant in Virginia and expansions in several other states. Air Liquide has flagged up to US$200m for Louisiana and over US$50m for the US semiconductor sector.
Novartis and Roche, both Swiss pharmaceutical giants, have outlined plans for US$23bn and US$50bn respectively in new or expanded US facilities.
Automakers are also adapting.
Honda is shifting some car production from Mexico and Canada to the US, aiming for 90 percent local production, while Hyundai and Nissan are weighing similar moves.
This wave of investment is not limited to manufacturing.
As reported by ABC News, Trump claims US$17tn in new investment commitments, though the White House’s own figures list US$8.8tn and some of these pledges remain speculative or overlap with previous administrations.
Adam Posen of the Peterson Institute for International Economics notes that while the public commitments represent a “meaningful increase,” the actual sums are in the hundreds of billions, not trillions.
He cautions that “twisting the arms of governments to then twist the arms of their own businesses is not going to get you the payoff you want.”
However, the tariffs are creating acute challenges for smaller businesses.
The New York Times reports that many small US importers, lacking the resources to diversify suppliers or absorb higher costs, are experiencing deteriorating profit margins and, in some cases, layoffs.
Brandon Mills, CEO of Total Promotion Company, describes the situation as “hard to breathe,” citing the erosion of margins and the need to cut staff and seek additional credit.
Jerome Powell, chair of the Federal Reserve, observed that companies “that sit between the exporter and the consumer” are bearing the brunt of the tariffs, often unable to pass on costs to customers.
The energy sector is also undergoing significant restructuring.
According to CNBC, US oil companies have cut thousands of jobs in response to falling crude prices, higher tariffs, and industry consolidation.
Exxon Mobil, Chevron, and ConocoPhillips have all announced major layoffs, while hiring in the sector has slowed dramatically.
Shale executives warn that the combination of low oil prices and increased input costs due to steel tariffs could “kneecap US producers,” with one executive stating, “The oil industry is once again going to lose valuable employees.”
Despite the administration’s claims that tariffs are driving record production and investment, the actual impact on business investment as a share of US GDP remains muted, with figures holding steady at around 14 percent, as per ABC News.
Some of the investments cited by the White House were announced during previous administrations or are linked to ongoing trends such as the artificial intelligence buildout.
