Tariff Uncertainty Still 'Incredibly High,' says ICG's Nicholas Brooks

President Donald Trump’s tariff exclusions for smartphones and other tech products have added to a growing set of confusing signals for companies and trading partners digesting how to engage a White House still promising to negotiate dozens of new deals in America’s favor.

The dizzying weekend saw Trump exclude popular consumer electronics from 125% tariffs on China and a 10% baseline global tariff. The move exempted more than $101 billion in US imports from China alone and was seen as a short-term win for US tech champions like Apple Inc. and Nvidia Corp.

Trump and top aides on Sunday, though, declared that the reprieve was only a procedural maneuver to ultimately hit those tech products with a different, sector-specific tariff.

For financial markets handicapping the economic spillovers, that again made finding clarity hard in a strategy the White House insists is carefully constructed but critics see as subject to the whims of a transactional president.

For countries sending delegations to Washington to negotiate — like the European Union’s trade chief is aiming to do Monday — fresh questions arose about whether talking is even the best approach.

And for international companies operating in an environment where rules can change overnight, inactivity during the turmoil is emerging as the safest bet.

‘Act First’

“The Trump team continues to follow an approach of act first, then make adjustments as needed,” said Wendy Cutler, a former senior US trade negotiator who is now at the Asia Society Policy Institute. “This approach contributes to more unpredictability for investors and our trading partners, who may no longer conclude that rushing to negotiate with the US is the best approach.

Trump is hailing a flurry of negotiations aimed at locking in reduced country-by-country tariffs, which he has long said he won’t apply to sectors that have their own levies.

Such duties have already been rolled out for autos, steel, and aluminum. More national security investigations that would lead to tariffs are expected in the weeks ahead on pharmaceuticals, semiconductors and other vital sectors.

“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” Trump said in a social media post Sunday. “What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China.”

China’s government said the US decision to exempt certain consumer electronics was a small step and called for abolishing tariffs altogether. President Xi Jinping is heading to Vietnam, Malaysia and Cambodia this week to shore up relationships in the region.

Fueling Inactivity

The White House’s messaging is creating more uncertainty for companies dependent on imports to the US.

“The whole system seems designed to create paralysis,” Ryan Petersen, the founder and CEO of digital freight platform Flexport Inc., wrote in a social media post Sunday.

Tobias Meyer, chief executive officer of cargo and logistics giant DHL Group, said companies trying to conform with constantly shifting US directives “don’t know even if something’s announced, whether two days later it’s not changed again.”

“You really see some fatigue of decision makers in manufacturing and also in the distribution sector,” Meyer said Monday in a Bloomberg Television interview. “I hear a lot that customers simply say, ‘we’ll wait for now.’”

The economic fallout of such a freezing up of trade could be wide. On Monday, Singapore’s trade ministry downgraded its forecast for economic growth this year, saying businesses and consumers may “adopt a ‘wait-and-see’ approach before making spending decisions.”

Diplomats and other officials who’ve sought to engage in talks with the US are similarly unsure about how best to proceed.

Nicholas Brooks, Head of Economic and Investment Research at ICG joins Stephen Carroll and Caroline Hepker on Bloomberg Radio to discuss what it all means for the global economic outlook.

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