Section 232 Tariffs: Corporate Strategy and Reactions

Corporate supply chain decision-makers have dealt with a rapidly shifting US tariffs landscape during the first four-and-a-half months of 2025, reflected in the comments made by senior managers in the first-quarter earnings conference calls held between April 1 and May 9, 2025.

S&P Global Market Intelligence analysis of machine-readable earnings transcripts shows there were 26,540 mentions of tariffs in the April 1 to May 9 period across the physical goods sectors, compared with 14,189 in the Jan. 1 to March 31 period.

Overall, firms have become less negative, with the balance of positive and negative mentions improving to minus 5.3% in the April to May period compared with minus 11.0% in the first quarter of 2025. That’s also much less negative than the prior trough of minus 15.4% in the third quarter of 2025.

The improving net-negativity has been the result of a mixture of improved positive mentions of tariffs as well as a moderation in negatives. That may reflect increased corporate confidence that the worst-case scenarios may be averted, for example due to the pause in the highest levels of reciprocal tariffs.

Firms with US sourcing that closely matches their sales are more willing to characterize themselves as “winners” from tariffs, including relative to their overseas-based peers when they have exposure to imports of components or materials.

The use of price increases to pass through additional tariff costs has been outlined as a key tactic across most sectors, although some firms have taken a cautious approach citing the availability of pre-tariff inventory and longer-term demand-destruction risks.

Firms are also utilizing sourcing strategies, focused in the near term on advancing cost-cutting plans, including requesting tariff burden-sharing with suppliers, and shifting sourcing origins to low tariff countries or bringing manufacturing to the US.

At the sector level, there was a marked divergence in the development of tariff negativity.

The materials sector remains the most negative at a net minus 9.2% in the second quarter versus minus 12.3% in the prior quarter. The broader steel and aluminum tariffs as well as new reviews of forestry, copper and critical minerals have all drawn negative comments.

The consumer staples sector saw the smallest narrowing of net negativity, to minus 9.1% from minus 9.9%, likely reflecting retaliatory tariffs by Canada, mainland China and the EU as well as a relative lack of sourcing options compared with other sectors.

The technology sector saw worsening negativity, moving to minus 7.3% from minus 6.1%, likely reflecting the initiation of Section 232 tariff review of the electronics sector even though that review led to higher reciprocal tariff rates being held in abeyance.

The pharmaceutical sector shifted from a net negative position to a net positive, partly reflecting announcements by 11 firms, of which nine are US-based, of increased investments in the United States. The Section 232 tariff review of the pharmaceuticals sector may not end in tariffs but does reinforce the validity of US investments.

National security reviews could change the picture

The situation for US tariffs and trade deals is highly dynamic, with the next three months likely to bring several developments in the Section 232 tariff reviews.

There are now 10 Section 232 tariff reviews underway or completed following the initiation of a review of the aerospace sector. These range from materials (steel, aluminum, copper, forestry and critical minerals) and components (electronics and auto parts) to completed products (trucks, cars, airplanes and pharmaceuticals) and in aggregate account for the equivalent of 41.9% of US imports in 2024, Market Intelligence data shows.

The reviews that have been completed so far (section 232 tariffs on steel and aluminum, and autos) have applied 25% baseline duties with minimal tariff exemptions. While Section 232 tariff reviews have defined maximum timeframes, policy recommendations can be made more rapidly and can include both tariff and non-tariff measures, which can generate significant uncertainty for policymakers, leading many firms to pause their investment plans.

Additionally, their outcomes can be changed as a result of country-level trade deals, as was the case with the recent US-UK deal regarding autos and steel. The largest suppliers of Section 232 tariffs on steel and aluminum-covered products include Mexico and Canada (28.1% of Section 232-covered imports combined), the EU and mainland China.

—With contributions from Vania Alvarez Murakami

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.