The damage is real: Tariffs spur turmoil at home and abroad

For CEOs, what’s next is the stuff of existential debate. Who knows what will happen in the coming days? But here are some takeaways from the trade war so far:

The damage is real – If current tariffs remain in place for three months, RBC estimates that the U.S. economy will see zero growth this year. Goodbye Trump bump. Hello, planning for a potential recession. For months, CEOs have talked about tariffs as a tactic and negotiating ploy to squeeze concessions from trading partners on other issues. Now, the threat is urgent and real, with an impact that could ripple across different industries. Cash-strapped consumers tend to cancel vacations, delay renovations, and skimp on expenses like healthcare. Consumer spending accounts for almost 70% of U.S. GDP—and Americans are nervous about the future right now.

“Buy America” isn’t easy – I was speaking with C-suite leaders in Westlake, Texas, earlier this week at Deloitte University’s Next Generation CEO Program. When the topic of reshoring came up, one attendee suggested I remind readers how long it takes to build a plant “and then add two years.” Taiwan Semiconductor Manufacturing Company just promised to invest another $100 billion in chip manufacturing in Arizona. It first announced plans for chip production in 2020, only to be delayed by various labor issues. One is a dearth of skilled workers. More than a quarter of America’s manufacturing workers are over 55 and may lack the skills or willingness to move to new locations. Immigration could help, but the new administration in Washington is more focused on deporting workers than wooing new ones. 

Manage that supply chain – The shipping industry is in crisis mode. Chipotle CEO Scott Boatwright has vowed to eat the costs of Mexican avocados. SharkNinja CEO Mark Barrocas is trying to source materials from Vietnam and Thailand. Luxury retailer Sebastian Picardo of Canada’s Holt Renfrew is trying to find “the best fashion edits from Canada and around the world while adjusting to customers’ needs.” (Angry Canadians are now boycotting our stuff.) The lesson in all this is to stay as fluid and as diversified as you can.

I’m curious to hear how your business is coping with the cost and uncertainty of this sudden trade war. Feel free to reach out at the email below and take small comfort in knowing the pain will be widely shared.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Trump pauses tariffs on autos. The car industry has one more month before the president says he will impose his 25% import tax on the industry. 

The Trump bump disappeared. Economic uncertainty has weighed on investors over the last few weeks and by yesterday morning all the gains that had appeared in the S&P 500 since Trump was elected were wiped out.

Consumer confidence crumbling. Trump’s see-sawing over tariffs—one day they’re on, the next they’re off—is making consumers delay their decisions. One symptom: The percentage of Americans who say they’re planning to go on vacation has suddenly dropped to an historic low.

Tariffs hurt exports, too. Exporters often need to import goods in order to make the products that they then export, thus import tariffs raise the cost of exports, according to a study: “Averaged out over all exporters, the 25% import tariffs on Chinese goods acted like a hypothetical 2% export tariff on US exporters,” according to a summary of the data by Panmure Liberum’s Joachim Klement.

China’s POV: The CCP’s leaders are unofficially worried that the trade war, coupled with the U.S.’s new alliance with Russia, will leave it without friends or trading partners. 

Trump threatens to kill all members of Hamas. In an extraordinary statement on Truth Social, the president said to Hamas, “This is your last warning! For the leadership, now is the time to leave Gaza, while you still have a chance. Also, to the People of Gaza: A beautiful Future awaits, but not if you hold Hostages. If you do, you are DEAD! Make a SMART decision. RELEASE THE HOSTAGES NOW, OR THERE WILL BE HELL TO PAY LATER!”

Must-read: “The Secret Campaign in China to Save a Woman Chained by the Neck” from the New York Times.

From Fortune

China threatens war(s)
The Chinese Embassy stated that the country is ready to fight “a tariff war, a trade war or any other type of war… till the end” in an X post on Wednesday. President Trump levied a second 10% tariff on Chinese imports on Tuesday, after which China responded with tariffs on American agricultural exports.

Deloitte to factor RTO into bonuses
Big four accounting firm Deloitte has let U.S. tax staff know that office attendance will be considered when bonuses are given out, per a memo.

The state of venture capital
Fortune’s Allie Garfinkle recently sat down with Sequoia Capital Managing Partner Roelof Botha to discuss the rapid economic changes that have dominoed over the past six months. For more on that and other insights into the state of venture capital, check out the interview here.

The markets

• Keep an eye on the bond market, where rising yields and a global selloff signal higher borrowing costs in the future. The current wave of selling was triggered by Germany’s surprise determination to float nearly $1 trillion in bonds for increased defense and infrastructure costs. The German government was jolted to act by ...
• JD Vance, according to Bloomberg’s John Authers: “US Vice President JD Vance appears to be by a wide margin Frankfurt’s most despised living human. His name keeps coming up. Germans see his attempt to interfere in their election, tell them how to deal with their Nazi legacy, and then humiliate Ukraine’s President Volodymyr Zelenskiy, as despicable and unforgivable. It’s the extent of the shock caused by Vance (and Trump) that has shaken the German establishment into action.”
• The S&P 500 gained a point yesterday and closed at 5,842.63 … Palantir was up nearly 7% on the day … All of the major US indexes showed gains, breaking a days-long losing streak … but S&P futures contracts were down 0.84% this morning … The VIX “fear” index (volatility) pulled back from its March 4 peak.

From the analysts

• Wells Fargo on DOGE cutting contractors: “Savings data provided by the Department of Government Efficiency (DOGE) shows a fairly immaterial impact to our companies so far, and recent commentary also suggests a relatively limited impact. … Big disconnect in Fed IT: We continue to remain skeptical that DOGE could result in meaningful spending cuts,” per Matthew Akers et al.
• WARC Media on TikTok: “Global TikTok ad revenue is forecast to reach $32.4bn, an 11% share of total social spend in 2025 – assuming a US ban does not materialize,” the company said.
• Convera on recession risk: “Investors on Polymarket have adjusted their outlook, accordingly, pushing the probability of the US economy contracting for two consecutive quarters this year from 23% last week to 37% today,” per Boris Kovacevic.
• Goldman Sachs on “downside risks to US growth”: “Over the last two weeks, on the back of disappointing data and concerns about the risks from policy and policy uncertainty … Markets have sharply downgraded their growth view,” per Dominic Wilson and Vickie Chang.
• Bank of America on “fear”: “Perhaps the biggest risk about tariffs is a self-fulfilling slowdown due to corporate paralysis. … BofA’s trade-related uncertainty tracker continues to hit new records, eclipsing 2018. But earnings transcripts reveal far fewer negative vs. ‘we’ve got this’- style tariff commentary – especially among importers with the benefit of experience,” per Savita Subramanian et al.
• Wedbush on PC gaming: “Red Flag … [CEO of Maingear Santos Wallace] noted he likely can't source the same quality of certain components (the chassis he uses for instance) at a competitive price point outside of China, meaning he simply will have to raise his prices  … we see tariffs (both the direct impact on certain component costs, as well as the potential indirect impact on the US consumer's wallet) as the single largest risk to what otherwise appears to be a potentially significant upcycle for the US gaming market,” per Matt Bryson et al.

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