The Legal Lens podcast featured Mariaelena Gayo-Guitian in an interview discussing the impacts of the new administration’s tariffs on restructuring and bankruptcy filings for the coming year.
Gayo-Guitian explained that the proposed tariffs will impact the financial health of companies, resulting in the increased likelihood of store closures, layoffs, and restructuring efforts.
“Tariffs increase import costs, disrupt supply chains, and create financial uncertainty, which I believe is the biggest problem. We’re now facing a 25% tariff on imports from Canada and Mexico, 10% on Canadian eight energy, and 10% on Chinese imports—which is obviously very significant because of the dependency that we have on buying these foreign goods. So, what are we going to expect from this? You’re going to have companies, obviously, that rely on imported goods, and materials and are going to face higher costs and narrowing profit margins, and this will increase the likelihood of defaults. Midsize companies—and those companies that are highly leveraged—will be the most vulnerable to absorb these hikes in costs. Businesses may try to diversify and source away from tariff-impacted regions, but shifting suppliers is costly and time consuming. It’s not something you can do overnight, so companies that can’t or don’t have the ability to adjust may face inventory shortages, operational delays, and loss of revenue. Declining sales will also push weaker retailers into financial distress, leading to more store closures, layoffs, and restructuring.”
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