Business leaders have been grappling with uncertainty surrounding President Donald Trump’s fluctuating tariff policies since he assumed office in January. While Tuesday’s announcement of a 25% tariff on imports from Canada and Mexico offers some clarity, it does not completely resolve the ongoing concerns for U.S. companies.
Trump’s decision to impose tariffs on the two largest trade partners of the U.S. is expected to increase costs for U.S. businesses, who will ultimately bear the brunt of these levies. The debate over the potential impact of these tariffs has dominated discussions among corporate executives in 2025. Over 750 of the largest U.S. companies have addressed the issue in investor meetings and earnings calls, according to data from LSEG.
In the face of such uncertainty, many businesses have taken a “wait-and-see” approach to investment and spending. Although some companies pre-ordered goods in anticipation of tariffs, the lack of a clear, consistent policy has left many executives hesitant to make long-term decisions.
Despite Tuesday’s announcement providing some degree of predictability, it is far from the end of the matter. Trump has hinted at additional tariffs on the European Union and investigations into other imports such as copper and lumber, which could trigger more trade barriers. Several countries have already vowed to retaliate, escalating the risk to global trade.
David Young, an executive at the Conference Board, a global business group, stated that “uncertainty continues,” as companies continue to delay critical decisions. “There very much is a degree of paralysis,” he added.
Corporate leaders have assured investors they will find ways to absorb or pass on the increased costs from tariffs. However, many have voiced frustration with the ongoing shifts in policy. Hilton Schlosberg, co-CEO of Monster Beverage, expressed uncertainty on a February 27 earnings call: “As regards tariffs, I think your guess is as good as mine. Things keep on changing day by day.”
The unpredictability surrounding tariffs has eroded both business and consumer confidence, following an initial boost after Trump’s re-election. The ISM Manufacturing Index for February revealed a sharp increase in inflation expectations, with suppliers frequently citing tariffs as a primary concern. U.S. consumer confidence dropped to an eight-month low in February, driven by rising inflation concerns. Major retailers like Walmart and Lowe’s also issued warnings about weaker demand.
Autodesk CEO Andrew Anagnost emphasized the importance of resolving the uncertainty, noting that “customers don’t want to work through uncertainty.” He added that moving toward policy certainty would be essential for business stability.
During his first term, Trump focused on addressing what his administration described as China’s predatory trade practices. A 10% tariff on Chinese goods was followed by a further 10% increase, with the possibility of port entry fees on Chinese-built ships. Trump has also targeted Canada and Mexico, citing concerns about cross-border issues like fentanyl smuggling and immigration.
The United States imports around $900 billion worth of goods annually from Canada and Mexico. These countries share highly integrated supply chains with the U.S., particularly in the automotive industry, where parts often cross borders multiple times. The U.S. also engages in substantial trade with both countries in sectors like aerospace, agriculture, and energy.
Advisors and supporters of Trump’s administration argue that the ultimate goal of these tariffs is to bring more manufacturing jobs back to the U.S. and reduce the trade deficit. Justus Parmar, CEO of Fortuna Investments, stated, “While inflationary and potentially harmful in the short term, tariffs will be beneficial for American jobs in the long run.”
Some companies, including Honda and Pfizer, have said they could shift manufacturing to the U.S. in response to the tariffs, though this would increase costs. Others, who pre-ordered goods earlier in the year to avoid higher tariffs, are looking for ways to manage excess inventory and demand uncertainty. “It’s a tremendous waste of resources,” said Pat D’Eramo, CEO of Canadian auto supplier Martinrea. “I’d much rather be working on ways to reduce my costs so we can be more competitive.”
While the long-term impact remains unclear, it’s evident that the shifting tariff landscape is creating significant challenges for U.S. businesses.
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