Tariff wars between the U.S. and China have been heating up, and they show no sign of cooling off anytime soon. Automakers are prepared to have their businesses disrupted in a major way, as tariffs on both imports of auto parts and exports of finished vehicles will affect many people. With China making up a large segment of global auto demand, the situation could spell trouble for automakers.

All industries will be affected by shifting supply chains, as businesses adjust to the new tariff rules. Motley Fool analysts Jim Mueller and Nick Sciple discuss this and more, on this segment of Industry Focus: Energy.

A full transcript follows the video.

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This video was recorded on Sept. 27, 2018.

Nick Sciple: OK, Jim, now that we've talked about what's going on with these tariffs, what does this mean for the companies that might be affected? There's some non-tariff impacts, there's impacts to specific industries. Let's just jump in and talk about, who are the big industries that are being impacted? Obviously, we can't talk about everything. It's going to impact all of U.S.-China trade. But what are these big, major industries that might be affected?

Jim Mueller: So far, steel manufacturing here in the United States has been positively affected. Nucor, the biggest steelmaker in the country, for instance, has reported that the tariffs have helped push sales up for them in the first half of the year. They're quick to claim that "We're doing all right anyway. We don't necessarily need the extra help. But it's nice to have, and we expect that to go forward."

But on the downside, that raises the costs for everyone who needs to use steel in whatever they're making, a big one being automakers, for example. This latest round of tariffs includes things like brake pads and cables and everything else you need to build an automobile. The automakers are going likely see a large increase in their costs for making those cars.

Sciple: Autos are an interesting industry here. They're going to get bit on both ends of these tariffs. There's a substantial number of auto parts manufactured in China, shipped to the United States, then assembled into vehicles here in the U.S. And, China is a massive market for U.S. automakers. GM, as a matter of fact, sells more vehicles in China than they do in the United States. Ford, their second biggest market is China. Their CEO, Jim Hackett, this week came out and said these tariffs on steel have taken away, they estimate, a billion dollars in profit from Ford. And that's only going to get worse.

This isn't limited only to U.S. automakers. We think about this as a U.S.-China trade spat, this is only going to affect U.S. automakers. But think of a company like BMW. This is a German automaker, but this is really affecting them. They manufacture a lot of their popular SUVs -- for example, the BMW X5 is made in the United States, here in Spartanburg, South Carolina. They, again, are getting hit on both ends of this, from importing the auto parts to assemble into their vehicles and also getting hit on the back end importing their vehicles into China.

Automakers are really going to be significantly impacted by these tariffs.

Mueller: Yeah. This has a secondary effect, too. That's the supply chain. The global economy has spent many, many years making the supply chain as efficient as possible. It's manufactured here, ships the goods there, it goes through customs real fast, it goes to the manufacturer here, and so on. Adding just a little bit of extra time or more friction is like throwing sand into the gear wheels of this very efficient supply chain. Matt Koppenheffer yesterday on Market Foolery mentioned that a British survey of supply chain manufacturers pointed out that adding even 20 or 30 minutes to this really efficient supply chain can have huge impacts down the road, even to the point of putting companies out of business because they run such a tight ship.

Sciple: I mentioned earlier a survey from the American Chamber of Commerce in Shanghai, China. Another part of that survey, 52% of those companies reported that they are facing slower customs clearance, and increased inspections in bureaucratic procedures in China as a result of these tariffs. It ties in exactly with what you said. If you're having to deal with more robust bureaucratic red tape to get your products into the country, that's going to delay your imports, it's going to slow down your supply chain. That's really going to trickle down all the way to the bottom line of the business and their profits. There's a lot of moving parts to these tariffs, and they affect these companies in ways that might not be immediately apparent just from common sense.

Mueller: So the companies have to respond somehow. One way, of course, is to pull in ahead a bunch of your inventory and try to get up a stock supply to try to have a supply of stuff that you need, as well as trying to get ahead of when the latest round on Monday's 10% jumps up to 25% by the end of the year. Companies are trying to get ahead of that, so they don't pay as much.

But also, they're going to have to start looking for other suppliers elsewhere in the world. For exporting, they need to look at other buyers around the world. That's not an easy task. The whole thing has taken years to build. It's going to take a while to figure things out, moving the supply chain around.

Another item that companies can do is to petition the U.S. government and ask for, "Hey, I'm buying something from China. It's made nowhere else in the world," which is one of the requirements of such a petition. "Because of that, if I don't get it, I can't sell what I sell." So the government can look at that, and say, "All right, this one is now exempt from the tariff." But it's a long process, takes several months, and it's not guaranteed, even if everything the company says is accurate.

Sciple: We mentioned earlier that Apple had success with this with the iWatch. There's some other companies that have been trying to do that. Jo-Ann Fabrics is looking at tariffs on fabric and yarn, how that's going to affect them. McCormick is talking about some of their spices that might be affected.

Mueller: I thought that was one of the more amusing ones. [laughs] Garlic. Who thought garlic, right?

Sciple: That's the thing about these tariffs, they touch products that you might never think about coming from across the world, but are being affected by this. Industries that you don't think about when you think about these big metal tariffs. Automakers are top of mind immediately. But you wouldn't think about McCormick, a spice maker, being somebody that's really being affected by this.

One other thing, we're talking about these supply chains, and how these tariff impacts, just slowing down a little bit is going to affect them. I think an important thing to point out is, these supply chains were built over years and decades. To change these supply chains will take years and decades. As long as these barriers remain in place, this is going to be affecting businesses over the long-term. There's going to be a lot of friction to try to move around to fit this new dichotomy.