S&P/ASX 200 Index (ASX: XJO) shares are expected to open lower today as the market ponders the impact of new US tariffs.
According to the latest SPI futures, the ASX 200 is expected to open 1.2% lower on Friday.
Yesterday, we saw the first way in which the 'Liberation Day' reciprocal US tariffs will impact ASX shares — short-term price falls.
The ASX 200 declined 0.94% yesterday, and many stocks plunged as companies released statements regarding the impact.
Every country is subject to a different reciprocal US tariff, depending on its own tariffs and other charges levied on US goods.
The market has been eagerly yet warily anticipating this information for months, and now we finally have it.
The next step is getting an understanding of how the US tariffs will affect your ASX shares investments.
Aside from a likely short-term hit to share prices, there will also be an impact on companies' financial metrics.
Brace for impact on your ASX shares
More ASX shares will likely experience volatility as more companies issue statements about how the tariffs will affect them.
Some companies got on the front foot and released statements yesterday.
One of them was whitegoods manufacturer, Breville Group Ltd (ASX: BRG), which sells approximately 45% of its products into the US.
This is the second way in which the US tariffs may impact your ASX shares.
If you're invested in companies that sell a lot of goods into the US, you're likely to see a short-term share price hit.
Breville also told the market that it currently manufactures approximately 90% of its products, by value, in China.
The US will slug China with a 34% reciprocal tariff on top of the previously announced 20% tariff.
The rest of Breville's products are made in the EU, Mexico, and Taiwan, which all face new tariffs (except USMCA-compliant goods).
This is the third way in which the US tariffs may impact your ASX shares.
If you're invested in ASX companies that manufacture goods in countries with high tariffs, there will be a greater rise in their costs.
Breville flagged that US tariffs will raise its cost base in FY26.
Management said:
Subject to the current uncertainty and fluidity in the economic environment, US tariff implementation and iteration, coupled with any country-specific responses, it is likely that the Group's input costs will increase for FY26.
The Group will continue to make tactical adjustments, where appropriate, to lessen the potential short-term impacts from any new tariffs.
Breville shares fell by almost 12% to a three-year low yesterday.
However, the ASX 200 consumer discretionary stock regained ground over the course of the day to close at $30.05, down 5%.
Another impact on ASX shares…
The fourth way in which the US tariffs may impact your ASX shares is whether your companies raise their prices to offset the tariffs.
US consumers may not react well to higher prices, leading to a potential loss of sales.
ASX online luxury goods retailer, Cettire Ltd (ASX: CTT), discussed the likelihood of raised prices in the US in a statement yesterday.
The high-end fashion retailer said many European brands were already talking about raising prices to counter the US tariffs.
This will affect Cettire, given that about 41% of its total gross sales in 1H FY25 were EU-manufactured goods sold to US customers.
Cettire said:
Cettire is currently assessing the full implications of these tariff changes on the Company and its global operations, noting that several major luxury brands have indicated they would seek to increase pricing of luxury goods in the US market to mitigate possible tariff changes.
Cettire shares fell 20% to a three-year low before rallying to end the day at 68 cents, down 14.5%.
What does history tell us?
The tariff saga that Australia experienced with China in recent years taught investors that most companies can adapt to these challenges.
For example, we saw many ASX wine shares fall in value after China announced a tariff of up to 212% on that particular Aussie import.
Take a look at what's happened to Treasury Wine Estates Ltd (ASX: TWE) shares since those tariffs were imposed in November 2020.
As you can see, the short-term hit to the Treasury Wine share price was followed by a pretty quick rebound.
After news of the China tariffs broke, ASX wine companies like Treasury Wine went about adapting their businesses.
They found other markets in which to sell their goods. Some moved their manufacturing into China to avoid the import duties.
Indeed, US President Donald Trump has already issued an open invitation for companies to relocate their manufacturing to the US.
After all, this would raise investment, create jobs, and help grow the US economy.
In Breville's case, the company says it is already "well progressed" with plans to diversify its manufacturing.
It's not looking to move to the US, but it's considering other nations. Breville said it will make decisions "as facts on the ground evolve".
The complete US tariffs list by country will no doubt help with these decisions.
As for Treasury Wine, the share price fell 1.65% to $8.95 yesterday after the company said it expected minimal impact from the tariffs.
Foolish takeaway
The thing that markets hate most is uncertainty.
Now that we know what the new reciprocal US tariffs will be, we may see some stabilisation in ASX shares trading.
Having said that, the imposition of US tariffs is a significant shift in the world trade order.
So, watch your ASX share announcements to learn how the companies you are invested in intend to adapt to these changed conditions.
