• The CES trade show will be dominated by discussions on tariffs, a concern for tech and auto industries.
• Companies may consider moving production to the U.S. to mitigate supply-chain disruptions.
• Honda warns of shifting production if the U.S. imposes permanent tariffs on imported vehicles.
• The uncertainty surrounding tariffs has led to intense scenario planning among companies.

The upcoming CES trade show in Las Vegas, one of the largest gatherings of manufacturers, analysts, and suppliers in the United States, is expected to be dominated by discussions on tariffs. This topic, usually not central to the consumer-focused event, has gained prominence in the wake of President-elect Donald Trump's pledge to impose significant tariffs on imports from Canada, Mexico, China, and other U.S. trading partners. This has sparked concerns about spiraling costs for businesses and consumers alike.

Deborah Weinswig, CEO of Coresight Research, anticipates that the proposed tariffs will be a hot topic at the event. She notes that the issue has come up in almost every conversation she has had with clients ahead of CES. The tariffs are expected to be a major concern for senior leadership in the tech and auto industries.

The CES 2025, formerly known as the Consumer Electronics Show, runs from January 7-10 and is used to debut products ranging from new automotive technology to quirky gadgets, as well as showcasing new ways to use artificial intelligence. Among the highlights this year is a keynote speech from AI chip giant Nvidia's celebrity CEO, Jensen Huang.

Tariffs and AI: The Dual Focus of CES 2025

While AI will still be the buzzword on the show floor, the issue of tariffs will be top-of-mind in policy sessions, press conferences, and on the sidelines. Companies may be asked about changing suppliers and moving production to the United States to mitigate supply-chain disruptions - moves that take time and are expensive, analysts have said.

Honda, for instance, sends 80% of its Mexican output to the U.S. market. It has warned it would have to think about shifting production if the United States were to impose permanent tariffs on vehicles imported from the country. Nearly half of new cars sold in the U.S. as well as a significant share of parts on the rest are made elsewhere, according to estimates from Edmunds. European and American carmakers could lose up to 17% of their combined annual core profits if the U.S. imposes import tariffs on Europe, Mexico, and Canada, according to an S&P Global report.

In addition to tariffs, Trump has said he plans to begin rescinding policies meant to promote the adoption of EVs. Many suppliers, already struggling because of weaker than expected EV demand, are operating on razor-thin margins and will have to radically adapt their cost structure this year in the face of potential tariffs, said Felix Stellmaszek, global leader of the automotive and mobility sector at Boston Consulting Group.

The Impact of Tariffs on the Auto and Tech Industries

Between responding to potential tariffs, automakers and their suppliers - including Honda, Toyota, Bosch, and Continental - are expected to provide updates on their race to develop cars with software-driven enhancements, self-driving technology, and AI that makes vehicles easier and safer to drive. Among the speakers will be Delta Air Lines CEO Ed Bastian, Volvo Group CEO Martin Lundstedt, Panasonic CEO Yuki Kusumi, and X Corp CEO Linda Yaccarino. Every industry is likely to face questions about tariffs.

The uncertainty surrounding the tariffs has led to a state of hyper mode scenario planning. Companies are trying to figure out every possible scenario to mitigate rising costs and supply-chain disruptions. The question of how companies are going to work together from a supply-chain perspective and how technology can solve these issues remains unanswered.

The upcoming CES trade show is set to be dominated by discussions on tariffs, with companies expected to provide updates on their strategies to mitigate potential supply-chain disruptions and rising costs. The uncertainty surrounding the tariffs has led to a state of hyper mode scenario planning, with companies trying to figure out every possible scenario.