Tariffs and tensions are reshaping city economies

Tariff policies, rising geopolitical tensions and unprecedented uncertainty are putting pressure on cities and regions across the world. The back-and-forth of tariff rates applied to countries around the world has left businesses uncertain and put investments and exports on hold. Export-driven cities, such as Hamilton in Canada, Guangdong in China and the Aichi prefecture in Japan, are feeling the most pressure given their dependence on trading partners, especially considering the recent hikes in tariffs on automotives to 25%, as well as on steel and aluminium to 50%.

And yet, it is not all bleak, and some cities are staying surprisingly resilient.

What you will learn in this report:

• Economic momentum is slowing across US metros. While all of top 50 metros in the US are forecast to see positive GDP growth rates for this year, this growth will be slower than before. Major exporting regions, such as Detroit, New Orleans and Honolulu, are expected to see large declines in GDP growth rates (relative to 2024).
• Canadian metros are facing a recession. We believe Canada would have faced a downturn even without tariffs—due to high interest rates, weak housing, and slowing consumer spending—and we now suspect that the country is currently in a recession.
• Emerging APAC cities to lead, trade-dependent cities to trail. In China, export-dependent cities like Guangdong and Jiangsu remain the most vulnerable, whereas Beijing and Chengdu are more resilient due to their strong tech and business service sectors. This remains true across the APAC region.
• European cities are holding firm through global turbulence. Over the short term, GDP growth across European cities will stay moderate but positive, and cities with the highest concentrations of dynamic sectors will see the strongest gains.