How companies are handling Trump's "reliably unreliable" tariff policy
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President Trump is, as one analyst put it, "still reliably unreliable" on policy pursuits — and the herky jerkiness is giving companies whiplash in the early days of his second term.
Why it matters: Businesses prize certainty — so unpredictability can make it hard for them to plan.
The big picture: Trump hit the pause button Monday at the eleventh hour on 25% Mexico and Canada tariffs that he'd reaffirmed just days before — inducing a dizzying turnabout for companies that briefly feared a supply-chain ruckus.
- The auto industry was so panicked that some experts were predicting manufacturers would need to shut down within weeks.
- Then after Trump paused the tariffs, it was back to business as usual — at least until the one-month pause for negotiations is concluded.
What they're saying: Trump's Mexico and Canada tariff head fake "is a good reminder of his unpredictable nature," writes Paul Ashworth, chief North America economist for Capital Economics.
- But that doesn't mean Trump's bluffing. Ashworth said his firm's anticipating a 10% universal tariff in Q2, steepening tariffs on China and sees rising risk of additional tariffs tagged to European Union imports.
Yes, but: Unpredictability can be a viable political strategy.
- Trump's defenders say he maintains a bargaining edge by keeping his adversaries guessing.
The intrigue: So far this earnings season, corporate executives aren't necessarily freaking out about the tariffs drama — at least not publicly.
- "Not having a clear view of what is to come, when and for how long, we've not yet incorporated any new tariffs in our outlook," Harley-Davidson CEO Jochen Zeitz said Wednesday on an earnings call.
- "We have successfully dealt in the past with tariff(s), either by passing it on to the customer, sometimes with margins, sometimes just one for one," Johnson Controls CFO Marc Vandiepenbeeck said Wednesday on an earnings call.
- "And we've also been able to pass on some of the pressure we see through the supply chain, either directly on price concessions from our suppliers, or naturally, you'll have the effect of currencies on some of the tariffs that will offset some of that pressure," Vandiepenbeeck said.
The bottom line: Contingency planning is the name of the game.
