- In today’s CEO Daily: Diane Brady on the chaos of tariffs.
- The big story: We’re starting to see the downside risks of a trade war emerge.
- The markets: Global bond market selloff. Buckle up!
- Analyst notes from Wells Fargo on DOGE, WARC Media on TikTok, Convera on recession risk, Bank of America on “fear,” Goldman Sachs on risks to U.S. growth, and Wedbush on PC gaming.
- Plus: All the news and watercooler chat from Fortune.
Good morning. Automakers got a one-month exemption yesterday from the 25% tariffs on imports from Canada and Mexico—a glimmer of hope that sparked a Wall Street rally. But Target CEO Brian Cornell and other U.S. retailers say they could raise prices on fresh-food imports within days. Canada and China have already announced retaliatory tariffs on U.S. goods, with Mexico promising to announce its plan by Sunday. Stock markets may reverse course and rally if investors cling to the hope that the global trade war will be no more than a “little disturbance,” as President Trump promised in his speech to Congress. Or not.
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.
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Contact CEO Daily via Diane Brady at diane.brady@fortune.com
