Trump’s tariff pause leaves fashion CEOs puzzled about what happens in 90 days + more.
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In a stunning reversal, the president said on Wednesday he would temporarily lower the hefty tariffs he had just imposed on dozens of countries, though he also hiked duties for China and kept 25% tariffs levied on aluminium, steel and autos in place. The news sent global stocks soaring on Wednesday after an intense bout of volatility that wiped trillions of dollars off equity markets. Investors hope there will now be time for negotiations to avert a full-blown global trade war.
The European Union said on Thursday it would pause its first countermeasures on about 21 billion euros ($23 billion) of U.S. imports.
Stocks, however, reversed course on Thursday, posting sharp declines. The latest reversal in Trump’s tariff agenda has only added to company executives’ confusion about its objective. Companies with complex and diverse supply chains spanning multiple countries from China to Germany were already scrambling to work out how they would be affected by duties and grappling with possible price hikes to mitigate tariff risks. “The developments related to tariffs, whether from the USA or countermeasures by the EU and other countries, are currently extremely dynamic and volatile. We are analyzing the situation internally with great precision and high priority – particularly regarding potential impacts on our procurement and pricing,” German retailer Hugo Boss said in a statement.
Hugo Boss and other companies are questioning what happens after the 90-day pause, especially as the average effective U.S. tariff rate would now be roughly 23% before U.S. firms adjust their imports, Yale economist Ernie Tedeschi said in a post on X.
Those tricky calculations are being made at a time when consumer confidence is waning and worries are growing about a global recession. “Global trade flows are complex and the (…) conditions for cross-border trade are currently changing rapidly,” German chemicals company BASF said on Thursday. BASF said the direct impact of U.S. tariffs would be limited due to its high proportion of local production, but added it was difficult to estimate the effects of a trade war on demand for its products and its customers. Tech giant Apple (AAPL.O), opens new tab has chartered cargo flights to ferry 600 tons of iPhones, or as many as 1.5 million, to the U.S. from India.
Analysts have warned that U.S. prices of iPhones could surge, given Apple’s high reliance on imports from China, the main manufacturing hub of the devices, which is now subject to Trump’s highest tariff rate – an eye-watering 125%.
“A 90-day pause on tariffs, while framed as a temporary relief, creates considerable uncertainty for businesses,” said Anita Wright, a chartered financial planner at Bolton James. Trump says he wants to bring back manufacturing to the U.S., but the constantly changing policy makes it risky to invest for the long term, particularly in sectors like green energy. “The Trump tariffs are putting the brakes on green investment just like they are anything else, but the effects may be particularly acute in this category,” said Matthew Nordan, general partner at Azolla Ventures, an independent venture capital company. “The reason is that we’re talking about physical stuff – industrial infrastructure, things made out of steel, projects with long lead times – where the tariffs present more friction than for services or software companies.”
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