Businesses finally got a bit more certainty on the direction of President Donald Trump’s trade war, but it’s not making it much easier to digest.
A half-dozen leaders from financial firms, corporations and trade groups said in interviews that the series of tariff rates Trump unveiled Thursday night were steeper than they had expected, and they worry that the dizzying kaleidoscope of policies he’s applying to different countries will complicate global commerce. The economy is already showing cracks, with the job market slowing and stocks tumbling Friday.
Businesses, which have spent the past four months craving some level of certainty amid Trump’s on-again, off-again trade negotiations, now face difficult decisions on how to price and source goods as the U.S. government prepares to formally impose the seemingly scattershot set of duties, ranging from 10 percent up to 50 percent or more on major economies like Brazil and China. Many of the fast-growing Asian nations key to the supply chain for U.S. consumer goods face a duty hovering around 20 percent, nearly ten times what many had faced before.
“Knowing you’re not going to have another ‘reciprocal’ shoe to drop maybe provides a little bit more predictability, and you can see the administration is willing to make deals,” said Tori Smith, who advises companies in a range of industries as a senior vice president at public affairs consulting firm Forbes Tate, referring to the White House’s term for the “reciprocal” tariffs it is imposing on individual countries.
But “some of the rates are higher than [businesses] expected,” she added. “That doesn’t help them financially.”
Even after Trump issued a new round of executive orders Thursday formalizing duties on more than 100 countries after weeks of talks, threats, and dealmaking, many businesses remain unclear about key elements of the new trade regimen. For one thing, the administration has not explained how it will implement the part of its order setting a higher tariff on goods that pass through a country, but did not originate there, a practice known as “transshipment.”
The new tariffs also include a number of exemptions for critical products — but many of those will become moot when the administration rolls out sector-specific tariffs on key products, including pharmaceuticals and semiconductors, as it has promised to do in the coming weeks
And then there’s the fact that three of the United States’ four largest trading partners — Canada, Mexico and China — are still haggling over broader trade terms with the White House, creating an uncertain status quo.
“If you’re a business and you’ve got global supply chains and you’ve got to make investments, it really matters that some countries are still in negotiations and certain countries are not in negotiations,” said Mohamed El-Erian, chief economic adviser at financial services giant Allianz and chairman of sportswear company Under Armour. “Where are Mexico and Canada gonna end up? We seem to know Vietnam, but do we really know Vietnam? It’s not clear yet.”
That’s a reference to the fact that Trump’s much-hyped trade agreements were verbal — there hasn’t been any documentation backing up what the two sides agreed to. Already, major trading partners like the European Union and Japan have cast doubt on whether they could meet their investment and purchasing pledges, and Vietnam has not even publicly confirmed it agreed to the terms Trump announced in their supposed deal inked in early July.
“I think the lens has become a little clearer” in terms of tariff rates, said Stephen Lamar, the president of American Apparel and Footwear association, which represents brands like J Crew and L.L. Bean that rely heavily on imports from countries like China and Vietnam.
Lamar predicted that many of those duties “are probably going to be it for a while,” but added, “We don’t yet have enough information to make the kinds of long term decisions that need to be made right now, and even the shorter term decisions of, ‘how I’m going to price my spring collection?’”
In a Friday statement, the Business Roundtable, an association of more than 200 CEOs of American companies representing every sector of the U.S. economy, said this, in part: “We are concerned that persistent high tariff rates will harm the U.S. economy, especially the manufacturing sector. Business Roundtable urges our trading partners, particularly our closest partners and allies, and the Administration to continue to work together to mutually lower tariffs and non-tariff barriers.”
The White House has largely dismissed complaints from business warnings that the tariffs will drive up costs for importers and, ultimately, American consumers. Trump has singled out specific companies, like Wal-Mart, demanding that they “eat the tariffs” and has repeatedly suggested to business leaders that they should avoid the duties by shifting production to the U.S.
“President Trump’s trade deals have unlocked unprecedented market access for American exports to economies that in total are worth over $32 trillion with 1.2 billion people,” said Kush Desai, a White House spokesperson. “As these historic trade deals and the Administration’s pro-growth domestic agenda of deregulation and The One Big Beautiful Bill’s tax cuts take effect, American businesses and families alike have the certainty that the best is yet to come.”
The administration also claims economists overestimated how much the tariffs would affect the economy, pointing to the fact that inflation is still largely meeting its targets and that there has yet to be a recession, like some economists predicted.
“I think they are looking at the current numbers as support for the lack of impact of these tariffs,” said Greg Ahearn, the president and CEO of the Toy Association, whose members are largely small and mid-sized businesses that have a harder time absorbing higher duties. “But I think most people believe wholeheartedly that the impact of these tariffs is going to be felt in the months ahead. And the reason why is that production and manufacturing and the goods as they flow through the supply chain takes time.”
Ahearn pointed to Friday’s weak jobs report, including signs that there were actually fewer new jobs created in May and June than previously estimated, as evidence the impact of Trump’s trade policies are just starting to show up in the data.
There are already signs that the tariffs have begun driving up prices on purchases such as furniture, apparel and toys, which helped push up the inflation rate in June.
And Lamar warned that, “Once those prices go up, they have a hard time coming down.”
Many business leaders fear that this week’s worrying economic numbers are only the beginning of a more sustained downturn.
“Inflation and price increases are coming,” Ahearn said. “Layoffs have already been occurring. And supply is going to be lower as we head into the holiday season. These are all happening.”