Humans crave certainty. We want to know we’ll be paid at the end of the month, that our home is intact when we get there after work, and that our car is still where we parked it. We mostly get the certainty we need.
Business craves certainty. It needs to know that building a new manufacturing plant, designing a new widget, or even hiring an extra staff member will be positive for revenues and profits.
Markets crave certainty. Only, there we get a lot less of it. Inflation is transitory, until it isn’t, which then spooks the markets. Results come in better or worse than expected, and the share price responds.
From our politicians, we expect very little, but we do expect some level of certainty — but now US President Donald Trump has set the rule book on fire and thrown it out of the window.
His 90-day pause on reciprocal tariffs, leaving a 10% tariff in place and imposing a 125% tariff on Chinese imports, has thrown business and markets into a tailspin.
The immediate response to the pause was positive for markets, but imagine for a moment being an American businessperson. If you import from China, with 125% tariffs across the board, your business is done for. But even if you’re Nike, you have a challenge: what will happen in 90 days’ time?
So the response from US importers will be to use this 90-day window to import as much as they can afford to buy and store, to build a stockpile to tide them over whatever may be coming.
So the response from US importers will be to use this 90-day window to import as much as they can afford to buy and store
If you were looking to expand your business, that is now on hold. How can you roll out a long-term project when you can’t even see 90 days ahead, let alone the years needed to convince the board or funders to invest?
Trump has thrown the global economy into total uncertainty, and this will have serious short- and long-term consequences, many of which won’t be apparent for some time, maybe even years.
Suppliers around the world will be looking for new markets outside the US to avoid the tariffs that, in many cases, will simply make their product less economically viable, or worse, simply too expensive for consumers.
Politicians will be scrambling to try to get a trade deal out of Trump that can protect their economy.
At the core, the lack of certainty is about trust. Nobody trusts Trump and, by extension, the US. Sure, in a little under four years, there’ll be a new president, but who, and what policies will they have?
This has huge real-world repercussions for the US: its days as the global leader of free markets are numbered. We need to get ready for a new age.
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