Counter/Consensus: Tariffs and Inflation, India-China Relations After Kashmir, European Boycotts, and warming E.U.-U.K. Relations

1. Tariffs & Inflation (Counter)

Blame game. Midway through the Trump administration’s 90-day reciprocal tariff pause (pending the outcome of this week’s court ruling), U.S. consumers appear to be increasingly willing to blame companies for a perceived acceleration in price increases, posing reputational headwinds for brands at a time when many are already grappling with pronounced economic uncertainty and volatile U.S. consumer confidence. Among the roughly seven in 10 U.S. adults who think tariffs are inflationary, 57% of them say American companies are “very” or “somewhat” responsible for the resulting inflation consumers perceive, up notably compared with a similar assessment we performed in late January 2025. Shares for each item are similar when broken out by respondents’ political affiliation.

In our view, part of the explanation for why consumers are poised to hold U.S. companies responsible for tariff-related inflation stems from the fact that while many Americans feel it’s reasonable for companies to pass on some tariff-related costs, in practice, they expect companies will do so by a wider margin than they’re comfortable with. As we explore further in a newly published analysis, at the moment, a combined 30% of U.S. consumers say it’s reasonable for companies to pass up to half of the tariff-related cost increases they incur onto consumers, but only 26% of consumers (among those who anticipate price transmission, making for an even smaller share of consumers overall) think companies will actually confine price increases to this range. Conversely, only 17% of U.S. adults think it’s reasonable for companies to pass along 50-99% of the tariff-related costs they face, compared with the 30% who say companies will do so (again assessed among those who anticipate price transmission). 

On the one hand, these metrics suggest that challenges lie in store for U.S. companies that lack sufficient inventory or sway with suppliers to keep price increases in line with consumers’ expectations of what’s reasonable. On the other hand, big-box companies that are advantaged on this front — and who are ultimately able to keep consumer-facing price increases below the midpoint of any tariff-related cost increases they now face — will outperform expectations among the nearly two-thirds of U.S. consumers (63%) who anticipated higher increases, while meeting the expectations of roughly another quarter of them (26%) who say that increases in the range of 1-49% are reasonable.

To some degree, these findings cast doubt on the prevailing narrative that consumers are resistant to price hikes at all costs. To be sure, only 13% of U.S. consumers say companies should “definitely” pass along tariff costs in the first place. But with full cost absorption still a non-starter for many U.S. companies, our data suggests there’s a range of more modest price hikes — potentially on the order of 5% — that consumers will be less likely to balk at.

See our just-published analysis on the topic for the full rundown, including our assessment of why we think a 5% price hike is a reasonable benchmark.

2. India-China Relations (Counter)

Liaisons dangereuses. Several weeks after a military skirmish between India and Pakistan over India-administered Kashmir (see our prior analysis of that conflict here), the role of Chinese military hardware in supporting Islamabad’s military response has come to light. Upon first blush, this threatens to throw a wrench into a slow but steady rapprochement between New Delhi and Beijing after a yearslong standoff over a border dispute of their own. 

As we argued back in August 2024, the current geopolitical moment — which has seen both India and China swept up in the Trump administration’s tariff war — is propitious to warming relations between two of Asia’s great powers. Public sentiment was similarly conducive at that time: Heading into Q4 2024, Indian favorability toward China and Chinese favorability toward India were both on the upswing.

As one would expect, Indian views of China began to worsen almost immediately following the killing of several dozen tourists in India-administered Kashmir on April 22 (peak of green line in chart above), which India alleged had Pakistani involvement. Indian favorability toward China continued to fall through May 7, when India launched missile strikes on Pakistan and bilateral sparring began in earnest.

But two counterpoints are worth noting. First, while Indian favorability toward China has fallen substantially since the conflict with Pakistan flared in late April, it remains well above levels observed in previous years when the India-China border dispute surrounding the Line of Actual Control pinned bilateral sentiment in quite negative territory. Second, while Indian views of China continued to worsen through May 7 — around the time when Pakistan’s use of military hardware hit the news cycle — they did so at a similar rate as opposed to plunging more quickly, suggesting the information may have already been “priced in” due to tight China-Pakistan relations for several years. Sentiment in China is noisier, but trends in our data meanwhile suggest the Chinese public was bothered by India’s reprisals to a somewhat lesser degree, reflected in the smaller downswing in net favorability toward India following the May 7 attacks.

Where does this leave the two regional powers? All in all, Indian views of China (and the inverse) are worse than they were, but not as bad as they’ve ever been. In our view, this suggests the latest spat with Pakistan — and Islamabad’s use of Chinese military hardware against India — is unlikely to fully undo the prospects for a deeper India-China rapprochement (at least on the Indian side of the ledger), but it is likely to set it back.  

3. European Boycotts (Counter)

Et tu, l’Europe? Consumers in overseas markets have begun to shun U.S. brands in response to President Trump’s trade policy and rhetoric. While Canada was an early and intense boycotter in response to tariffs and threats of annexation, European consumers are getting in on the action. In a quarterly Morning Consult survey of the five largest Western European economies — France, Germany, Italy, Spain and the United Kingdom — we find that French consumers are the most likely to say they have boycotted a foreign brand in the preceding 12 months, with 1 in 5 claiming to have done so, followed by German and U.K. consumers (check out the full analysis here). 

The majority of these boycotts have specifically targeted U.S. brands. Food & beverage brands are the primary targets, with the same two American brands topping consumers’ lists of boycott targets. Other frequently boycotted American companies include Elon Musk's enterprises. 

It is therefore tempting to completely attribute current European boycotts to political sentiment linked to recent events such as Trump’s tariffs. But when we asked European consumers what types of brand behavior were most likely to motivate them to boycott a foreign company, tariffs and the policies of brands’ home countries were middle of the pack. General nationalism and unethical company behavior were higher up. And while nationalism is certainly playing into current trade dynamics, the prevalence of other factors like labor relations and ethical business practices shows that in normal times, other factors will rank higher than geopolitics in consumers’ minds. 

There were major differences by country. While the current U.S. administration and its rhetoric or policies were top of mind for French and German respondents who provided additional details, in Italy and Spain it was primarily companies’ perceived support for Israel amid the ongoing conflict in Gaza that was most often singled out. Our previous research on the topic noted that Western Europe was a region with significant risk of boycotts stemming from the Israel-Gaza conflict, followed by the Middle East and Muslim-majority countries in Asia. In the United Kingdom, those who cited specific reasons were more evenly split between anti-Trump boycotts, opposition to military conflicts, and company or brand behavior. 

America’s globe-striding brands have enjoyed decades of relatively permissive conditions to operate globally. Sure, contentious trade talks and non-tariff barriers have limited brands’ global reach in some cases, but the international rules-based order has been very good to U.S. multinationals overall. We are now in a period where that order is being called into question by the U.S. administration first and foremost, and while Washington’s recent tariff walk-back included conciliatory statements from U.S. Treasury Secretary Scott Bessent, the assumptions that global companies have relied on for 80 years have been called into question by the recent policy uncertainty, which we think is going nowhere fast. 

4. U.K.-E.U. Relations (Consensus)

Cross-Channel kumbaya. On May 19, the U.K. government made great hay of a newly announced agreement with the European Union, with incumbent Prime Minister Keir Starmer hailing the agreement as “good for jobs, good for bills, and good for our borders.”

While E.U. Commission President Ursula von der Leyen simultaneously hailed the deal as a “historic moment,” some analysts were less impressed with the agreement’s anticipated economic impact, noting that perhaps the biggest change was to align U.K. and E.U. food standards. 

The Economist was lukewarm on the agreement beyond its defense implications, yet nonetheless noted that it “has hugely improved the mood music between the two sides.” While we don’t see a marked vibes shift around the closing of the deal, our data similarly suggests it’s not worth missing the forest for the trees.

Following the United Kingdom’s withdrawal from the European Union in January 2020, U.K. favorability toward it has been on a gradual rebound, with the most notable improvements occurring from 2022 onwards; a more recent boost materialized when U.S. President Trump returned to office. (As they say, the enemy of your enemy…) While U.K. sentiment has remained flat through the May 19 announcements, the longer-term trends in our data suggests that gradual steps to improve relations along the lines of last week’s agreement are far more likely to have staying power than would have been the case a few years prior, even if the two sides remain at arms length in some areas. 

Contact us for a confidential briefing on brand- and market-specific dynamics, and to discuss opportunities to leverage our daily Intelligence data to safeguard your brand.