How painful will Trump's tariffs be for American businesses?

Their options range from hoarding goods and raising prices to rewiring supply chains

In the weeks after Donald Trump's sweeping election victory, American companies sought to reassure investors that they were amply prepared for a new round of tariffs. Some, like Stanley Black & Decker, a toolmaker, highlighted efforts to shift their supply chains away from China. Others, like Lowe's, a home-improvement retailer, pointed to processes they have put in place to deal with tariffs after Mr. Trump's first term, during which levies were imposed on about $380bn-worth of imports ranging from steel and aluminum to washing machines, mostly from China.

Yet the coming disruption may be more widespread and less predictable than many American businesses expect. On November 25th, the president-elect announced on Truth Social, his social-media megaphone, that he would impose a 25% tariff on all products flowing from Mexico and Canada and raise the rate on goods from China by 10%. Mr. Trump's intention to follow through with his threat against Mexico and Canada was then put into doubt by subsequent posts describing "wonderful" and "productive" meetings, respectively, with the leaders of the two countries.

That has not been comforting. If Mr. Trump were to slap tariffs on America's northern and southern neighbors, the impact on American companies would be devastating. Businesses from Mattel, the maker of Barbie dolls, to Whirlpool, a home-appliance manufacturer, have factories in Mexico. Around three-fifths of America's imported aluminum and a quarter of its imported steel come from Canada, with large volumes of steel also flowing from Mexico. According to Citigroup, a bank, Mr. Trump's tariffs would raise the price of steel for American manufacturers by 15-20%.