In two weeks, I’m speaking to a group of companies in the packaging industry about issues affecting their businesses this year. I’m going to discuss the economy, navigating higher costs, leveraging new tax legislation, AI and what companies are doing to find and retain workers in a volatile job market.
You know what I won’t be talking about? Tariffs.
That wasn’t the case a year ago. Back then, it was the hot topic everyone wanted to know about. How will tariffs affect my business? Should I increase prices? Is my company going to suffer? Are the tariffs legal? When will they end? In just the past year, a lot of those questions have been answered.
Donald Trump’s tariff increases affected some businesses – particular those heavily reliant on buying materials from China and India – but most seemed to weather the storm. In fact, many of my clients – and those in my audience – took the “tariff” news as an opportunity (ssshh!) to increase prices even beyond the cost of the tariffs in order to tuck away a few extra dollars of profit. Others waited out the legal process and, thanks to the supreme court overturning the president’s illegal use of the International Emergency Economic Powers Act, are waiting in line for refunds, which they’ll ultimately receive.
Now, tariffs are back in the news. Facing the July expiration of Trump’s temporary 10% global tariff, the administration this past week announced that it was planning to assess new tariffs ranging from 10% to 12.5% on 60 countries, including trading partners from the UK and the EU to China, India and Australia, for allegedly trading in goods that used forced labor, a strategy allowed under section 301 of the Trade Act of 1974.
Seems like something I should mention in my presentation to the packaging association, right? Not really. Not unless I want to put everyone to sleep. That’s because at this point, and for most businesses, tariffs are a bore. They’ve become a non-issue.
The owners in my audience are mostly profitable this year, thanks to our resilient consumer economy and continued economic growth. Many continue to hire. Their customers have been conditioned to expect price increases, if need be, but that may not even be necessary for some businesses as they take advantage of new tax deductions and productivity gains that can be achieved with technology and AI.
They’ve also seen that the supposed “king” in the White House has a limit to his royal decrees. He has been struck down multiple times in the courts – foreign aid funding, birthright citizenship, national guard deployment, renaming the Kennedy Center – and has been forced to comply with both a judiciary and legislative branch that have curtailed many of his imperial plans. Ask any business owner about these new tariffs and they’ll likely tell you that they expect them to be opposed, litigated and overturned.
The king’s last tariff adventure had him illegally assessing tariffs, and because of the supreme court’s rebuke the palace is being forced to comply with the actual law – which it’s doing, by the way – and tariff refunds are flowing back to businesses (although not without some hiccups).
Businesses now regard tariffs as a short-term problem. That’s because – to the relief of many – the Trump era is almost half over. Any new tariffs, even after they’ve made their way through the inevitable challenges, can be easily overturned by the next administration. Do JD Vance or Marco Rubio feel as strongly about tariffs as their boss does? That’s tough to say. One thing’s for sure: there’s not a single Democratic challenger, announced or otherwise, who supports them. So the long-term outlook for Trump’s tariffs doesn’t look great.
Even still, the president will say that his tariffs were successful. He will say that “trillions” of new investments were made in the US by foreign companies seeking to avoid these levies, bringing new jobs and opportunities for Americans. He will point to data supporting an increase in manufacturing activity and say it was because of his tariffs. He will pretend that the datacenter boom and the AI economy don’t really exist and that all of the GDP and stock market gains are due to tariffs and other parts of his economic policy.
His political opponents will say otherwise. They will say that they challenged the king and they won. They will tell their constituents that no man is above the law and that a president’s policies can’t go unchecked. They will promise that, once they re-assume power, they’ll reverse the tariff (and other) damage he’s done and make everything right again.
But business people don’t really care. They cared when Trump imposed 50% tariffs on the goods they buy. They cared when American policy so upset their trading partners as to cause conflicts in their relationships. They cared when the president’s actions were going – for a time – unchecked and unchallenged.
All of that has changed. It’s apparent that, despite the protests and the rhetoric, the country still has no king. We just have a president and his every move is scrutinized and held in abeyance by the courts and Congress. His new tariffs are just a small fraction of what he really wanted, and not enough to significantly affect the profitability, hiring and investment plans of most businesses. They’re just not as big of a concern as they were before. Which is why I’m barely going to mention them when I speak to that packaging association.
