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Businesses are feeling deeply rattled by the most recent round of tariffs and the stock market turmoil that followed. At a PwC webinar, Craig Stronberg, senior director of PwC Intelligence, said that we’re now in a period of “historic disruption.”
The “economic discussion” is “happening everywhere, at all levels, with a lot of angst,” Stronberg said. In 2024, he said, businesses were catching their breath, feeling like they’d left the pandemic era behind them. This year, they’re facing “unlimited uncertainty.”
The uncertainty, PwC US public policy leader Roz Brooks said, is “deliberate” on the part of the Trump administration, as they’re looking to use tariffs as a negotiating tool.
Where to look for direction: Though it’s difficult to know what might be on the horizon, there are some places to look for clues. One is the White House. Businesses and the stock market were “surprised” by the tariffs and the resulting turmoil, Stronberg said, partly due to “recency bias” and the fact that Trump didn’t always do what he said he would during his first term. Now “he is sticking to the script,” Stronberg said, “and if you want to know what’s coming, listen more closely to him.”
Businesses can get an idea of what the administration might do from its general direction. For instance, Stronberg said, it’s taken a distinct protectionist slant. Both Biden and Trump “believed in protectionism as a native good…They believed in controlled trade, and with the US government having far more influence, especially when it comes to certain sectors like technology and FS [financial services] and manufacturing and chemicals and so forth.”
Companies will also likely experience “more pressure” to return manufacturing to the US, though as Stronberg noted, that would be difficult to pull off. Companies have to weigh many factors such as labor availability, funding, and locations before they decide to reshore, he said. “I don’t know that the administration is going to get all the receptivity it wants” on manufacturing, he said. “I don’t think that means they’re going to let up the pressure.”
Another area to pay attention to is US-China relations. “I don’t think that either one of those players is actively talking about decoupling, but you can’t decouple the world’s number one and number two economies, and not cause a recession,” Stronberg said. “So if we go down that road, that’s what’s going to happen.