"SAN FRANCISCO, Jan 3 (Reuters) - Auto and tech giants unveiling their latest innovations at the CES trade show in Las Vegas next week can anticipate a deluge of inquiries on a subject that isn't typically central to the consumer-focused event: tariffs.
The gathering is among the largest of manufacturers, analysts, and suppliers in the United States and occurs just prior to the swearing-in of President-elect Donald Trump, who has vowed substantial tariffs on imports from Canada, Mexico, China, and other U.S. trading partners. This has raised worries about escalating expenses for businesses and consumers.
"This will be a hot topic," remarked strategy consultant Deborah Weinswig, CEO of Coresight Research, who stated that the proposed tariffs have been a recurrent theme in nearly every discussion she's had with clients leading up to CES. "This is something that senior leadership will certainly need to deal with."
CES 2025, previously known as the Consumer Electronics Show, takes place from Jan. 7-10 and serves as a platform for debutings ranging from new automotive technologies to quirky gadgets, as well as showcasing novel applications of artificial intelligence. A key attraction this year is a keynote address from the CEO of AI chip giant Nvidia (NVDA.O), Jensen Huang.
While AI will remain a dominant topic on the exhibition floor, tariff concerns will feature prominently in policy sessions, press meetings, and informal discussions.
Companies might face questions regarding altering suppliers and relocating production to the United States to alleviate disruptions in the supply chain - measures that are time-consuming and costly, as per analysts.
For example, Honda (7267.T) dispatches 80% of its production from Mexico to the U.S. market. The company has cautioned that it might need to contemplate shifting production if the United States were to impose enduring tariffs on vehicles imported from Mexico.
Approximately half of new cars sold in the U.S., along with a considerable portion of the parts in others, are manufactured elsewhere, according to estimates from Edmunds. European and American automakers could witness a potential reduction of up to 17% of their total annual core profits if the U.S. enforces import tariffs on Europe, Mexico, and Canada, as outlined in an S&P Global report.
In addition to tariffs, Trump has articulated intentions to begin rescinding measures designed to encourage the adoption of electric vehicles.
Numerous suppliers, already grappling with lower than anticipated EV demand, are operating on thin profit margins and will need to significantly adjust their cost structure this year in anticipation of probable tariffs, noted Felix Stellmaszek, global leader of the automotive and mobility sector at Boston Consulting Group.
"Factor in the uncertainties in the supply chain and labor scarcity, and it's evident that many suppliers are facing a challenging situation," he remarked. "Scenario planning is at an intense level."
In the midst of confronting potential tariffs, automakers and their suppliers - which include Honda (7267.T), Toyota (7203.T), Bosch, and Continental (CONG.DE) - are expected to provide updates on their endeavors to develop vehicles incorporating software-driven improvements, autonomous technology, and AI aimed at rendering vehicles more user-friendly and safer to operate.
The lineup of speakers will feature individuals such as Delta Air Lines (DAL.N) CEO Ed Bastian, Volvo Group (VOLVb.ST) CEO Martin Lundstedt, Panasonic (6752.T) CEO Yuki Kusumi, and X Corp CEO Linda Yaccarino. Representatives from every industry are likely to encounter inquiries about tariffs.
"'How will companies collaborate from a supply-chain standpoint?" posed consultant Weinswig. "'How can we address escalating expenses? Can technology offer a solution? There's still much that remains unclear; we see everyone striving to anticipate every conceivable scenario.'"