HSBC Global Trade Pulse Survey

Global businesses are facing surging costs and supply chain disruptions, prompting a strategic rethink of operations and planned investments as tariffs and shifting trade policies continue to take effect.

This is according to the findings of our recent Global Trade Pulse Survey, which offers insight into the business plans and sentiment of over 5,700 international firms across 13 markets regarding tariffs and trade. The survey reveals that two thirds of corporates have already experienced cost increases due to tariff and trade uncertainty – and the worst may be yet to come.

But despite ongoing cost pressures and widespread changes to supply chain strategies, businesses remain overwhelmingly confident in their long-term growth aspects – nearly 90% globally believe they will be able to grow internationally over the next two years. Download the report to learn more.

Companies expect costs to escalate further in both the short-term (73%) and the long-term (72%). Businesses also expect an average decline in revenues of 18% due to supply chain delays. Over half of respondents (51%) rank rising costs as the number one concern for supply chain strategies and 85% of corporates have revised or plan to revise their pricing strategy upwards to reflect higher costs or market changes.

Over three quarters of corporates (78%) are having to rethink their long-term business model. If tariff instability continues over the next two years, 43% of companies will rethink their international expansion strategy and 39% will shift their focus to domestic or regional markets.

Despite these headwinds, optimism about expanding global trade is strong. Nearly 9 in 10 businesses (89%) are confident in their ability to grow international trade over the next two years within the confines of a more stable market. Businesses are also reconfiguring their supply chains and rethinking how and where they operate. Most are taking action or planning to carry out nearshoring (moving production closer to key customer markets, 83%) and reshoring (bringing production back to their home country, 77%).

Businesses most likely to initiate nearshoring, a practice gaining most traction by globally exposed and production-centric sectors, are those in Technology, Media and Telecoms (87% have done so or plan to). Businesses most likely to have expected to see an increase in cost in the next 2 years are those in TMT (76%), followed by Healthcare (73%), and Consumer (73%).

Encouragingly, many respondents see trade pressure as a catalyst for innovation, with 77% saying it has encouraged them to evolve and seek new opportunities. 58% have already adopted new technologies or platforms, 56% have improved internal efficiency or cost structures, and 51% have since launched new products or services.

The survey points to the emergence of new trade corridors in some of the markets surveyed and we are seeing global businesses strengthening their relationships with key markets outside their borders. Malaysia (61%) and Vietnam (52%) are expanding their relationships with China; India (54%) and the United States (51%) with Europe, and the United Kingdom (46%) and India (62%) with the United States. In some markets, optimism about international trade growth endures, led by India (96%) and the United Arab Emirates (94%).

The Asian trade map would look drastically different should trade uncertainty persist, with 38% of Asian firms looking to trade more with South Asia, 36% to trade more with Europe, 33% to trade more with the Middle East – but 28% to trade less with North America.

Over the next two years, 52% of Asian firms are considering or in the process of moving production to (or increasing production in) China. The equivalent figure for South Asia is 39%; for Europe it is 35%; for the US it is 29%, and for the Middle East it is 28%.

Currently, the biggest concern to Asian firms (51%) is rising costs due to tariffs and other trade-related factors. 34% of Asian firms have adjusted prices to reflect higher costs, with 51% of Asian firms planning to do so. In addition, 37% of Asian firms have increased their inventory levels to manage supply disruptions, while 49% are planning to do so.

During the current period of trade disruption, Asian firms find cash and liquidity management as the most helpful form of support in managing working capital (61%), followed by improved payment terms with buyers and suppliers (55%), and supply chain finance (51%).

Vietnamese businesses have experienced exponentially higher cost increases than the global average and are expecting additional short-term costs due to trade uncertainty. In particular, 80% of Vietnamese respondents have already experienced cost increases due to tariff and trade uncertainty. They are expecting a notably higher short-term (82%) and slightly higher long-term cost increase (75%). The mean average expected impact on revenue to a Vietnamese business due to supply chain delays/interruption is 2 percentage points higher than the global average.

Vietnamese companies have brought production back to their home country (42%), shifted focus to domestic market (41%), and enhanced data analytics (41%) in response to trade uncertainty.

Looking ahead, Vietnamese companies are still confident about their international growth (81%) and many respondents (76%) think trade uncertainty has encouraged their business to evolve and explore new opportunities. That said, over half (54%) would like external support with crisis planning or building business resilience.