Tariffs on Pause, US Manufacturing Declines, Retailers Warn Price Hike

Welcome to CrossDock’s Weekly Dispatch,

We’re back with the key stories shaping supply chains, e-commerce, logistics, and retail. From a tariff pause on selected goods from Mexico and Canada to American liquors being removed from shelves in Canada, here’s a quick overview of last week’s biggest developments

Big News 📣

President Donald Trump’s new 25% tariffs on imports from Mexico and Canada went into effect on Tuesday, alongside additional tariffs on Chinese goods. According to experts, this move could disrupt $2.2 trillion in annual trade and fuel trade wars that may slow economic growth and push prices higher for Americans already struggling with inflation.

• Tariffs incoming 💵: In a congressional address, he warned of more tariffs coming on April 2, including reciprocal tariffs

• Canada hits back 🇨🇦: Canadian Prime Minister Justin Trudeau retaliated with 25% tariffs on C$30 billion ($20.7 billion) of U.S. imports, targeting orange juice, peanut butter, alcohol, coffee, appliances, and motorcycles

• Wait and act 🇲🇽: Mexican President Claudia Sheinbaum promised retaliation but withheld specifics, stating that Mexico’s response would be announced on Sunday

US Trade Deficit Soars to All-Time High

According to the latest data from the Commerce Department, the U.S. trade deficit soared to an unprecedented $131.4 billion in January 2025, a 34% increase from December's revised figure of $98.1 billion. This surge is primarily attributed to businesses accelerating imports ahead of President Trump's newly imposed tariffs on goods from Canada, Mexico, and China.

• Incoming ⬅️ Imports escalated by 10% to $401.2 billion, driven by significant increases in industrial supplies, consumer goods, and capital goods

• Outgoing ➡️ Exports experienced a modest 1.2% rise, totaling $269.8 billion, thereby widening the trade gap
  

• GDP loss🔻: The Atlanta Federal Reserve is currently forecasting GDP decline at a 2.8% annualized rate this quarter

Trump Grants One-Month Tariff Exemption for USMCA-Compliant Cars

The White House announced a one-month reprieve from 25% tariffs on Mexico and Canada for USMCA-compliant cars. The decision follows requests from Ford, GM, and Stellantis, whose executives urged exemptions for trade deal-compliant vehicles. The tariff exemption applies to all automakers meeting USMCA rules, not just Detroit-based companies. White House press secretary Karoline Leavitt said Trump is open to more exemptions.

We've explored the potential impact of Trump's tariffs on the U.S. auto industry in depth. Read our full analysis here: The Impact of Trump’s Tariffs on the American Auto Industry

Retailers Warn of Price Hikes as Trump’s Tariffs Take Effect

Shoppers should prepare for rising prices as major retailers Target and Best Buy warn of immediate cost increases following President Donald Trump’s tariffs on Mexico, Canada, and China. Target’s CEO Brian Cornell said grocery prices, particularly fruits and vegetables, could rise within days due to reliance on Mexican imports.

Best Buy’s CEO Corie Barry also expects higher costs for electronics, as China and Mexico are major suppliers. The tariffs, which include a 25% tax on Mexican and Canadian goods and a 20% levy on Chinese imports, are already sparking global trade retaliation. Analysts warn that retail profits could shrink, and consumers will feel the impact as retailers adjust pricing strategies.

TLDR 🗓️

China's Export Growth Slows Amid U.S. Trade Tensions

China’s export growth in the first two months of 2025 was weaker than expected, as rising trade tensions with the U.S. weighed on shipments. Exports rose just 2.3% year-over-year in January and February, falling short of the 4.5% growth predicted in a Wall Street Journal survey of economists.

The slowdown reflects the impact of new U.S. tariffs and global trade uncertainties, which have disrupted supply chains. Analysts warn that continued tensions could further dampen China's export performance, posing risks to economic growth targets for the year.

Key Takeaways from Costco’s Q2 Earnings Report

✅ Q2 revenue rose 9% year-over-year to $63.72 billion, beating Wall Street’s estimate of $63.13 billion

✅ Net sales increased 9.1% year-over-year to $62.53 billion, while net income reached $1.79 billion, up from $1.74 billion in Q2 2024

✅ Earnings per share (EPS) were $4.02, below Wall Street’s expectation of $4.11.

✅ Comparable sales grew 6.8% year-over-year, with U.S. sales up 8.3%, and e-commerce sales surged 20.9%

✅ One-third of U.S. sales come from imports, with less than half sourced from China, Mexico, and Canada

✅ Membership revenue rose 7.2% year-over-year to $1.19 billion, with 78.4 million paid members and 140.6 million total cardholders

✅ CEO Ron Vachris warned that tariffs on Mexico, Canada, and China could impact prices, though Costco aims to minimize cost increases for members

✅ Foot traffic increased 5.7% year-over-year, with U.S. traffic up 5.6% despite the extreme weather in February affecting store visits

Trump Orders Tariff Probe on Lumber and Copper Imports

President Donald Trump signed an executive order to boost U.S. lumber production and assess the national security risks of lumber imports, potentially paving the way for new tariffs on Canada, Germany, and Brazil. The move aims to ensure domestic supply stability and reduce reliance on foreign lumber.

Earlier, Trump issued an executive order to protect U.S. copper imports, strengthening the domestic copper industry by assessing the national security risks of foreign supply. The investigation could lead to a 25% tariff by late 2025, as officials push for increased U.S. production to support electric vehicles and military hardware. China has opposed the copper probe, calling it a threat to global trade.

Can tariffs bring U.S. copper production back to life? We break it all down in our deep dive: Coppering America

Walgreens to Go Private in $24 Billion Deal

Walgreens Boots Alliance is going private in a deal worth up to $23.7 billion, ending nearly 100 years as a publicly traded company. Private equity firm Sycamore Partners will acquire all shares at $11.45 each in cash, with the total deal value including debt.

Walgreens’ market value has plunged nearly 80% in five years, struggling with declining prescription reimbursements and store closures. The company closed 1,200 stores and plans to shut one in seven locations by 2027. CEO Tim Wentworth said going private will allow Walgreens to focus on long-term recovery without public market pressures.

​BlackRock Leads $22.8 Billion Acquisition of CK Hutchison's Ports Business​

A consortium led by BlackRock has agreed to acquire a majority stake in CK Hutchison's ports business for $22.8 billion. This strategic move includes control over 43 ports across 23 countries, notably the Balboa and Cristobal terminals on both ends of the Panama Canal.

The acquisition is viewed as a significant shift in global port operations, potentially reducing Chinese influence in this sector. President Donald Trump has praised the deal, highlighting it as a step toward reclaiming critical infrastructure. The acquisition excludes CK Hutchison's ports in Hong Kong, Shenzhen, South China, and all other ports in China.

TSMC to Invest $100 Billion in the United States

​Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, has announced a substantial $100 billion investment to expand its chip manufacturing operations in the United States.

This initiative includes the construction of three new fabrication plants, two advanced packaging facilities, and a research and development center in Arizona. The decision comes amid escalating tariff threats from President Donald Trump, who has proposed increasing tariffs on chip imports up to 100% to encourage domestic manufacturing.

TSMC's expansion aims to diversify its manufacturing footprint, reduce reliance on Taiwan, and address U.S. national security concerns by producing advanced AI chips domestically. This move is expected to create between 20,000 to 25,000 high-paying jobs in the U.S.

U.S. Manufacturing Growth Slows Amid Rising Costs and Tariff Concerns

In February 2025, the U.S. manufacturing sector's expansion decelerated, influenced by escalating costs and apprehensions over impending tariffs. The Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) registered a reading of 50.3, a decrease from January's 50.9 and lesser than the 50.7 that economists had expected.

ISM Chair Timothy Fiore attributed these challenges to the new administration's tariff policies, stating that companies are experiencing the first operational shocks, leading to backlogs, supplier delivery issues, and inventory impacts.

Canada Pulls U.S. Liquor from Shelves Over Tariffs

Canadian provinces, including Ontario, have removed U.S.-made alcohol from store shelves in retaliation to President Donald Trump’s 25% tariffs on Canadian goods.

The Liquor Control Board of Ontario (LCBO), one of the world's largest alcohol buyers, removed all US-made alcoholic drinks from its shelves. Jack Daniel’s maker Brown-Forman called the move “worse than a tariff”, as it completely cuts off sales in affected regions.

Despite the impact, Brown-Forman’s CEO remains confident, stating that Canada accounts for just 1% of its global sales. However, the company is closely watching Mexico, which made up 7% of its 2024 sales.

​DHL to Cut 8,000 Jobs

DHL's parent company, Deutsche Post, has announced plans to eliminate approximately 8,000 positions within its Post & Parcel Germany division by the end of 2025. This reduction, affecting about 4% of the unit's 187,000 employees, aims to save over €1 billion by 2027. The decision comes in response to declining mail volumes and increased operational costs, including recent wage hikes following a labor agreement.

Despite a 3% revenue increase to €84.2 billion last year, Deutsche Post's operating profit fell by 7.2% to €5.9 billion, prompting the restructuring.

Amazon’s Haul to Go Global

Amazon is planning a global expansion of Haul, its discount storefront competing with Temu and Shein, according to news reports. The company aims to launch Haul in Europe later this year and is also preparing for an entry into Mexico.

Haul, which debuted in November 2024, features low-cost products priced at $20 or less, similar to Chinese e-commerce platforms. Reports indicate that Amazon is hiring staff to support Haul's international rollout.

Toy Prices Set to Rise in the U.S.

Toy prices in the U.S. are expected to increase by 15-20% by fall as President Donald Trump’s new tariffs on Chinese imports take effect, industry experts say. Nearly 80% of U.S. toys are sourced from China, making the industry particularly vulnerable to rising costs.

Greg Ahearn, president and CEO of The Toy Association, said price hikes of 15-20% are expected on games, dolls, cars, and other toys by the back-to-school shopping season. Toy makers are renegotiating prices with retailers and considering alternative production locations to offset costs.

Tidbits 🍿

• Google launched Vision Match, an AI-powered feature in its Shopping tab that allows users to find clothing items by describing them in their own words

• Novo Nordisk launched a $499 cash-pay option for its weight-loss drug Wegovy, including home delivery

• Albertsons announced that Susan Morris, EVP and COO, will become CEO on May 1, 2025, following Vivek Sankaran’s planned retirement

• ​Uber and Waymo have launched a driverless ride-sharing service in Austin, Texas, allowing users to hail autonomous vehicles via the Uber app

• ​Kroger's Chairman and CEO, Rodney McMullen, resigned following an internal investigation into his personal conduct

Reading List 📚 :

This week's top book picks from CrossDock 📖:

• Ninety Percent of Everything by Ross George

• Made in America by Sam Walton

Do you have recommendations? Drop us a message, and we will add it to next week’s list.

This newsletter was curated by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!