S&P Global — 5 February 2025
Daily Update: February 5, 2025
Tariffs Delayed, Not Canceled
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Tariffs of 25% were set to be imposed on US imports from Canada and Mexico on Feb. 4, with an additional 10% tariff on imports from China. But on the morning of the target date, only the tariff on Chinese goods was imposed. After last-minute negotiations between Canada, Mexico and the new Trump administration, proposed tariffs were delayed for 30 days. But tariffs delayed are not tariffs canceled. For reasons related to trade, industrial and fiscal policy, it is likely the Trump administration will revisit tariffs against Canada and Mexico in the coming months. If it does, the impact on prices, inflation, manufacturing and trade may create challenges for companies and investors, regardless of the country they call home.
President Donald Trump said the tariffs against Canada and Mexico were necessary to curtail migration flows and trafficking of drugs such as fentanyl into the US. Two federal statutes allow the US president to implement economic tariffs in the event of a national emergency. The president has also said he views the trade surpluses of both countries with the US as unacceptable and evidence of unfair trading policies.
The tariffs have raised some of the greatest concerns for the auto sector. Automobile supply chains are tightly integrated across borders due to the United States-Mexico-Canada Agreement, the successor to the North American Free Trade Agreement negotiated during Trump’s previous term. According to S&P Global Mobility, virtually all automakers and suppliers would be impacted. Of the approximately 5.3 million light vehicles built in Canada and Mexico each year, about 70% are sold in the US. If a tariff of 25% was applied to the average $25,000 cost of a vehicle from Mexico and Canada, $6,250 would be added to the consumer price. However, even the price of US-manufactured vehicles would increase since many of them use Canadian- or Mexican-sourced propulsion systems and component sets, which would also be subject to tariffs.
S&P Global Mobility believes that the impact of 25% tariffs on light-vehicle sales would peak in 2026 because the tariffs would not be in place for all of 2025. S&P Global Mobility experts expect global light-vehicle sales to decrease by about 793,000 units in 2025, with a peak impact of 1.05 million units in 2026.
Trump suggested that Canadian gas, power and minerals could be subjected to a lower tariff of 10%. However, even this more modest tariff would lead to price increases for US consumers. According to S&P Global Commodity Insights, natural gas imports from Canada accounted for 89% of supply to the Pacific Northwest in 2024 and 185% of total consumption, with most of the excess gas flowing to Northern California. Canada is generally a net electricity exporter to the US due to the vast hydroelectric capacity in Quebec. The total value of Canadian electricity exported in 2024 was about US$1.9 billion.
While Canada would be hurt economically by heavy tariffs, Mexico would likely fare far worse. The US accounts for over 80% of Mexican exports, primarily in manufactured goods. S&P Global Market Intelligence estimates that the implementation of 25% tariffs on Mexican exports would push the Mexican economy into a recession, with reduced private investment and manufacturing, decreased external demand and rising fiscal pressures from slower revenue growth.
Today is Wednesday, February 5, 2025, and here is today’s essential intelligence.
Uncovering Companies' Climate Resilience
Climate resilience refers to the ability of a system to anticipate, prepare for and respond to the impacts of climate change. As the world grapples with the adverse effects of a changing climate, climate resilience stands front and center in collective efforts from governments, corporations and the investment community alike. This blog is the first of a two-part series exploring a forward-looking framework to assess companies’ climate action across different dimensions.
—Read the article from S&P Dow Jones Indices
How US Tariffs Could Shake Up Mexico's Economic Landscape
The US accounts for over 80% of Mexican exports, primarily in manufactured goods. S&P Global Market Intelligence explores the scenario that US President Donald Trump’s new administration imposes a 25% tariff on the country to contain migration or reduce drug trafficking. Its forecast assumes that Mexico would respond with 10% tariffs on a limited range of goods, primarily targeting metals and select food items.
—Read the article from S&P Global Market Intelligence
Japan Insurers in 2025: Things Are Looking Up
S&P Global Ratings expects the creditworthiness of the Japanese insurance industry to remain stable in 2025. There are, however, uncertainties. Significant financial market volatility, driven by factors including unknown geopolitical events, and changes in U.S. policy under the presidency of Donald Trump, could rapidly diminish the stability of credit quality for the industry.
—Read the article from S&P Global Ratings
China Navigates US Tariff Challenges, Seeks Cheap Canadian, Mexican Crudes
China's petroleum industry expects Beijing to be cautious about imposing countermeasures on energy imports from the US in response to Donald Trump's additional10% tariff on Chinese goods while monitoring the market to capture opportunities to bring in more Canadian and Mexican crudes at competitive prices, multiple sources said Feb. 3.
—Read the article from S&P Global Commodity Insights
Sirius Project: A Beacon for Colombia's Gas Market?
The discoveries made by the Sirius-1 and Sirius-2 wells in the Lower Guajira Basin mark a pivotal moment for Colombia's energy sector. The Sirius project is a joint venture between Ecopetrol and Petrobras Colombia and Brazil's national oil companies, respectively. As announced on Dec. 5, 2024, by the operator, Petrobras, the Sirius 1 gas field is poised to significantly increase Colombia's gas reserves, with the broader block potentially holding more than 6 Tcf of gas. Previously known as Uchuva, the field is part of the GUA-OFF-0 block, formerly referred to as Tayrona.
—Read the article from S&P Global Commodity Insights
Fuel for Thought: A More Practical Future for Autonomous Vehicles
In this podcast episode, S&P Global Mobility experts discuss the landscape of autonomous vehicles coming out of the 2025 Consumer Electronics Show, or CES, that was held in Las Vegas at the beginning of the year. After years of ambitious announcements and hype around fully self-driving cars, it appears that companies are shifting to a more pragmatic approach. Their conversation explores how tech companies and traditional automakers are now aligning their expectations, focusing on incremental developments and practical applications of autonomous vehicle technology.
—Listen and subscribe to the podcast from S&P Global Mobility
AI in the Markets (New York City | Feb. 12, 2025)
In today’s rapidly evolving landscape, artificial intelligence is a transformative force revolutionizing business, the economy and society. The disruption created by AI and generative AI presents an opportunity for leaders to drive innovation and solidify their position on AI’s opportunities and risks. Join us for a half-day event offering a balanced look at AI’s complexity. AI in the Markets will provide you with best practices, peer experiences and industry-leading research and insights on the impacts of AI. After AI in the Markets, you’re re invited to join S&P Global and IBM for a fascinating session on Quantum Computing: Opportunities, Risks and Implications for Enterprises.
—Register for the in-person event from S&P Global