US tariff uncertainties to hit manufacturing, logistics, and retail sectors hardest: Jefferies

ANI April 16, 2025 160 views

A new Jefferies report highlights the potential devastating economic consequences of ongoing US tariff uncertainties across multiple critical sectors. Manufacturing, logistics, and retail industries are predicted to experience the most significant disruptions due to complex global supply chain dependencies. The report suggests that Information Technology companies will likely face substantial challenges, including reduced profit margins and decreased client spending. Moreover, the potential weakening of the US dollar and rising competitive pressures could further complicate the economic landscape for multinational corporations.

"Tariff uncertainties are likely to impact manufacturing, logistics and retail verticals the most" - Jefferies Report
New Delhi, April 16: US tariff uncertainties will impact manufacturing, logistics and retail verticals the most, given their reliance on global supply chains, according to a report by Jefferies.

Key Points

1

US tariffs may significantly reduce IT firms' profit margins

2

Global supply chains face substantial disruption

3

Potential recession risks emerging in technology sector

4

Multinational corporations expected to see reduced spending

"Tariff uncertainties are likely to impact manufacturing, logistics and retail verticals the most given their reliance on global supply chains." the report said

The report added that the rising prospects of a US recession may lead to rate cuts, which in turn will hurt the BFS vertical.

Jefferies further added that the sectors such as communications, insurance and healthcare are likely to be the least impacted verticals from the reciprocal tariffs.

The report says that the US-based Information and Technology companies will also be impacted adversely, affecting the US GDP growth outlook.

"US Govt.'s tariff announcements may not only impact US GDP growth outlook but are likely to impact US-based multinational corporations (clients of Indian IT firms) more. Rising uncertainty and a potential worsening of business outlook will hurt new deal signings and discretionary IT spends," the report added.

The report pointed out that IT companies are likely to face difficulties in expanding their profit margins due to weak demand. The report cited four key reasons for this.

First, cost-saving contracts, which are becoming more common, usually offer lower margins in the initial years.

Second, with reduced demand, competition among firms is expected to rise, leading to pricing pressure.

Third, to manage costs, IT companies may increasingly rely on subcontractors instead of hiring full-time employees, helping reduce fixed expenses but affecting overall profitability.

Lastly, the report said that a potential weakening of the US dollar against the Indian rupee could negatively impact margins.

As a result, margin estimates for the financial year 2026-2027 (FY26-27) have been cut by up to 100 basis points, and overall margins--excluding TCS and Tech Mahindra--are expected to remain flat at FY25 levels, the report added.

Reader Comments

M
Michael T.
This is exactly what we've been seeing in our manufacturing business. The constant tariff changes make it impossible to plan long-term. We're having to build in extra buffer costs just to account for the uncertainty. 😕
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Sarah L.
Interesting how healthcare and communications are least affected. Shows how essential those services are regardless of economic conditions. Maybe time to rethink career paths!
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Rajesh K.
As someone working in Indian IT, this is concerning but not surprising. The subcontractor trend has been growing for years. Companies need to focus more on high-value services rather than competing on price.
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Jennifer P.
The article makes good points but I wish it had more specific examples of how these tariffs are affecting actual businesses. More case studies would make the impact clearer to readers.
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David M.
Dollar weakening against rupee is a double-edged sword. Great for Indian workers sending money home, tough for IT companies trying to maintain margins. Global economics is always full of trade-offs!
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Alicia B.
Retail is getting hit from all sides - tariffs, supply chain issues, and now potential rate cuts. Small businesses especially are going to struggle. We need more stability in trade policies. 🙏

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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Tags:
US Tariffs Jefferies Report IT Sector Supply Chain Global Economics Technology Impact
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