“I’m hoping that we can still make our budgeted sales. But of course, you know, our profits will be less,” Wedge said. “Right now it’s all so volatile. ... We can’t plan anything, which is the frustrating part.”
Trump believes the tariffs, especially the aluminum and steel levies, will bring business back to U.S. companies. He also has said it is for national security reasons.
So far, economic data has not shown definitively whether the policies have worked. The trade deficit fell 16.3% from March to April, the biggest month-to-month decrease on record, the government said Thursday. But much of that plunge was from companies stocking up in the early months of the year before tariffs increased, economists said. They also pointed to the fact that any change of that magnitude means a reduction in economic activity.
The Fed’s latest Beige Book report Wednesday also indicated economic activity has declined in recent weeks.
Another report this week, from the Federal Reserve Bank of Atlanta, said its research shows that half of tariff expenses will be passed to customers. That’s less than when Trump raised tariffs in his first term.
But it also means many customers won’t be able to continue absorbing higher costs after years of sticky inflation. So either profits will go down, or companies will need to cut costs.