US President Donald Trump’s decision to implement a 90-day reprieve on certain tariffs caused a surge in the stock market on Wednesday, April 9. However, despite this temporary boost, many senior business leaders remain cautious, with several indicating that they are preparing for an economic downturn.
Corporate executives from a variety of sectors, including Delta Air Lines and Walmart, have voiced concerns about the ongoing uncertainty driven by the trade war. Many business leaders are finding it difficult to predict future demand, leading them to plan for a potential recession. JPMorgan Chase CEO Jamie Dimon expressed his expectation that defaults will rise as the economic situation worsens.
The trade war, initially launched by Trump with the goal of stimulating economic growth, has instead caused turmoil across global markets. Consumers and investors alike have struggled to make sense of the shifting trade policies and their long-term implications.
On April 9, President Trump announced an unexpected 90-day pause on some tariffs imposed on a range of trade partners. Despite this temporary relief, concerns remain, particularly as tariffs on Chinese goods were raised to 125 percent. Stocks rallied following the announcement, with the S&P 500 experiencing its largest one-day gain since 2020, briefly avoiding a bear market.
Though the stock market received a lift, some businesses, such as Paloma Clothing, continue to feel the pressures of the trade war. Mike Roach, co-founder of the Oregon-based apparel company, noted a 11% drop in sales and said he was concerned about the long-term impact of tariffs, even with the temporary reprieve.
While Goldman Sachs revised its US recession forecast after the tariff pause, Walmart is preparing for a potentially worsening economy. The retail giant reported growth expectations of 3 to 4 percent in net sales for the year, but acknowledged volatility in consumer spending due to the tariff-induced uncertainty. Walmart’s CFO, John Rainey, indicated that the company was working to absorb price hikes and maintain affordable products for consumers, despite the impact of trade tariffs.
Several other businesses, particularly retailers, have also begun to feel the effects of the trade war. The amount of US corporate debt categorized as distressed has surged, and some companies, like Michaels Cos and Saks, have seen a sharp decline in the value of their bonds. The merger between JCPenney and other brands like Eddie Bauer and Aeropostale has led to corporate layoffs, with about 9% of staff being cut.
Megan Graham, the founder of Ries, an online company selling refillable toiletry bottles, noted that while she would prefer to manufacture her products in the US, the higher cost of domestic production, combined with the potential for lower quality, means she will likely continue sourcing products from China. She expressed frustration that tariffs have not led to greater domestic manufacturing incentives, but instead appear to be designed to generate government revenue.
Retailers, however, have experienced a temporary uptick in sales as consumers stock up on goods in anticipation of higher prices due to tariffs. Auto dealerships, for example, have seen an influx of customers concerned about upcoming price hikes. Despite this short-term surge, many businesses are bracing for a longer-term slowdown, with concerns over both consumer spending and the broader economic impact.
As the tariff situation continues to evolve, the economic outlook remains uncertain. While some businesses are adjusting their strategies to cope with the ongoing trade tensions, many are focused on navigating an unpredictable landscape and preparing for potential economic challenges.
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