Over the weekend, Donald Trump reversed his reassurances of adopting a more generous approach to tariffs by reinstating a stringent 20% tariff across the board. Trump is expected to imminently announce a “Liberation Day” in the Rose Garden, during which universal tariffs on all imports to the U.S. will be declared. This move comes alongside a Trump-driven recent 10% decline in the stock market and is indicative of how his unpredictable tariff decisions are impacting the U.S. economy. Economic experts and business leaders have been vocal about the potential negative consequences of these policies. Trump himself stated on NBC, “I couldn’t care less if car prices go up!”
The issue, according to a Yale CEO Caucus survey, lies with Trump rather than tariffs themselves, as 90% of CEOs actually support tariffs when they are applied strategically. They see them as necessary tools to address trade imbalances and to limit foreign dumping practices that threaten U.S. industries such as steel. However, Trump’s personal motivations, such as targeting long-standing adversaries like Canadian Prime Minister Justin Trudeau, seem to overshadow these objectives. His erratic and unpredictable tariff implementation is seen as hindering corporate investment and growth.
Currently, there are approximately 12,500 tariff categories involving 200 trading partners. A recent count revealed 107 instances of inconsistent tariff policy changes initiated by Trump over the past two months, often with same-day reversals. This unpredictability, compounded by contradictory messages from Trump’s deputies, creates a challenging environment for businesses aiming for stability.
Businesses require consistent policies to justify significant capital investments and expansion. During the Yale CEO Caucus this month, CEO participants expressed their frustrations as CNBC reported multiple tariff policy reversals within a three-hour event. Some of Trump’s supporters argue that his approach is a strategic negotiation ploy meant to unsettle his counterparts and compel them to make deals. However, critics argue that Trump is being outmaneuvered, as companies often repackage existing or planned investments as new announcements for public relations purposes. Many announced projects, such as Foxconn’s proposed $10 billion factory in Wisconsin, have not materialized as expected.
Polls indicate that 90% of CEOs believe Trump’s tariffs are detrimental to the U.S. economy. The impact is evident in numerous economic indicators, with significant losses in the stock market and adverse effects on manufacturing, employment, and overall economic growth. Inflation expectations have surged, consumer confidence has taken a hit, and the labor market is witnessing increased layoffs. Economic growth forecasts have been downgraded as the initial optimism from Trump’s tax cuts and deregulation fades, transforming into an ongoing scenario of increased tariffs.
Many business leaders ponder the motivations behind Trump’s tariff policies. Some speculate that Trump is attempting to induce a recession early in his term to mitigate future political risk. Others suggest his actions lack strategic foresight and are driven by impulsive decision-making. Some psychological analysts propose that Trump’s behavior may resemble an entrepreneurial self-destructive impulse, stemming from unresolved childhood issues and megalomania.
For U.S. businesses, the current situation is less of a “Liberation Day” and more of a challenge. The economy would benefit from a more stable, strategic approach to tariffs, free from the unpredictable nature of current leadership. Jeffrey Sonnenfeld, Steven Tian, and Stephen Henriques from the Yale Chief Executive Leadership Institute provide these insights, reflecting on the broader implications of the present tariff policies.
This article first appeared on Fortune.com.
