Market Update 4/30/25: Tariff Turbulence is Reshaping Global Business
Market Commentary
Jack Ablin
By Jack Ablin, Chief Investment Officer. Subscribe for weekly market updates.
Key Observations
U.S. tariff policy changes, including high duties on Chinese goods, are disrupting long-established global trade patterns.
Uncertainty around trade negotiations has created challenges for strategic planning and capital investment.
CEO confidence has dropped sharply, with companies freezing hiring and delaying major expenditures.
Domestic sectors remain more insulated, while trade-sensitive industries, such as footwear, airlines, and consumer goods face growing pressures.
President Trump hit the ground running in his first 100 days, signing close to100 executive orders more than any of his predecessors in that timeframe. Many of these executive actions were targeted at global trade. By imposing across-the-board tariffs, including 145% on Chinese goods, the administration reversed a U.S. trade policy that had been in place for nearly 50 years. The sudden about-face has caught most business leaders flatfooted, particularly those who optimized their businesses for free trade. Athleticwear manufacturer Nike, for example, sources materials from 13 countries across 123 factories, while finished products are manufactured in 36 countries at 500 factories. The company’s global supply chain has been in place for over 15 years, according to their website. If Nike was to pass on the full tariff cost to consumers, a pair of Air Jordan 1 shoes that currently sell for $160 could soon cost around $176, according to the trade publication Sneaker Freaker.
Uncertainty at the Top: Navigating Mixed Signals on Trade
The White House’s start-and-stop tariff directives mean companies have little visibility for investment commitments or supply chain adjustments. While it’s too early to see signs of a pullback in the data, business leaders have expressed frustration at not knowing the policy endgame. Officials at international meetings reported “conflicting messages from the administration about which U.S. officials are actually leading trade talks” and struggled “to determine how much weight their words carry with the president.” It appears that Trade Advisor Peter Navarro, economist and proponent of tariffs, who initially guided trade policy, has given way to Treasury Secretary Scott Bessent, a former hedge fund manager, to lead trade negotiations, suggesting incremental stability. CEO confidence has plunged to levels not seen in over a decade.
Confidence in Decline: What CEOs Are Signaling
Trump’s approach to tariffs has been characterized as a “stop-start trade offensive” that is “paralyzing companies on just about every front” except cost-cutting. This unpredictable approach has left businesses unable to plan effectively. The Conference Board Measure of CEO Confidence Index provides insight into the perspective of company management teams on the current and expected business and industry conditions. The plummet in April reflects the suddenness and lack of clarity around the tariffs.
Earnings season is already in full swing and the mention of the trade war, and its effect on business outlook, is picking up. This week’s earnings calls will offer investors insights into how business leaders plan to navigate the uncertainty. Nearly a third of the country’s largest 100 companies report this week, including Microsoft, Meta, Amazon, and Apple. Already, major companies are slashing forecasts and freezing investments. We expect businesses to announce cost cuts, capital expenditure freezes, and slower hiring. Airlines, including American, Southwest, and Alaska Air have pulled full-year earnings guidance, due to limited visibility into leisure travel demand. Meanwhile, consumer goods companies like P&G and PepsiCo are considering price increases, while manufacturing companies are delaying or canceling expansions and new facilities.
The Investment Pause: Planning on Hold
In periods of uncertainty, investment decisions are put on hold. The S&P Global Flash Composite PMI, which tracks business activity in the U.S., fell to 51.2 in April from 53.5 in March, marking the slowest expansion in nearly 18 months. Companies are delaying capital expenditures, halting hiring, and postponing IPOs. Moreover, the IMF warned that global government debt could reach 117% of output by 2027, the highest level since the aftermath of World War II, as governments grapple with slower growth and economic instability triggered by a potential trade war. These concerns have led the IMF to slash its global growth forecast from 3.3% projected in January to just 2.8%, with the U.S. receiving the largest downgrade among G7 economies. The fund now puts the odds of a U.S. recession at nearly two in five, in line with Cresset’s outlook.
Tariff Exposure: Sector Winners and Losers
It isn’t all doom and gloom. Industry exposure to tariffs is the largest determinant of performance so far this year, with household appliances, footwear, airlines and commodity chemicals most exposed to trade. Despite these challenges, some sectors stand to benefit, including aerospace/defense due to growing military budgets, as well as manufacturing in countries like India that could pick up business diverted from China. Domestic industries, like health care services, real estate and construction, utilities, and education, are largely insulated from a global trade dispute. The situation remains fluid, with Treasury Secretary Scott Bessent recently suggesting the administration might be open to easing some tariffs, including those against China.
Bottom Line:
The unpredictable nature of Trump’s tariff policies has created a paralyzing effect across the American and global economies. Businesses find themselves in a state of suspended animation, unable to plan, invest, or expand amid constantly shifting trade rules. This uncertainty has transformed from a policy issue into a broader economic problem, with measurable impacts on supply chains, consumer confidence, and business operations.
The evidence suggests this uncertainty may be more damaging than the tariffs themselves. Companies can adapt to higher costs when given time and stability, but the current environment makes rational planning impossible. The result is an economy increasingly focused on short-term positioning rather than long-term growth.
Longer-term, investors should anticipate reshoring manufacturing with the potential of higher costs and wages. Diversification will be paramount as we prepare for permanent shifts in global trade patterns.
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About Cresset
Cresset is an independent, award-winning multi-family office and private investment firm with more than $65 billion in assets under management (as of 1/15/2025). Cresset serves the unique needs of entrepreneurs, CEO founders, wealth creators, executives, and partners, as well as high-net-worth and multi-generational families. Our goal is to deliver a new paradigm for wealth management, giving you time to pursue what matters to you most.
Market Update 4/30/25: Tariff Turbulence is Reshaping Global Business
By Jack Ablin, Chief Investment Officer. Subscribe for weekly market updates.
Key Observations
President Trump hit the ground running in his first 100 days, signing close to100 executive orders more than any of his predecessors in that timeframe. Many of these executive actions were targeted at global trade. By imposing across-the-board tariffs, including 145% on Chinese goods, the administration reversed a U.S. trade policy that had been in place for nearly 50 years. The sudden about-face has caught most business leaders flatfooted, particularly those who optimized their businesses for free trade. Athleticwear manufacturer Nike, for example, sources materials from 13 countries across 123 factories, while finished products are manufactured in 36 countries at 500 factories. The company’s global supply chain has been in place for over 15 years, according to their website. If Nike was to pass on the full tariff cost to consumers, a pair of Air Jordan 1 shoes that currently sell for $160 could soon cost around $176, according to the trade publication Sneaker Freaker.
Uncertainty at the Top: Navigating Mixed Signals on Trade
The White House’s start-and-stop tariff directives mean companies have little visibility for investment commitments or supply chain adjustments. While it’s too early to see signs of a pullback in the data, business leaders have expressed frustration at not knowing the policy endgame. Officials at international meetings reported “conflicting messages from the administration about which U.S. officials are actually leading trade talks” and struggled “to determine how much weight their words carry with the president.” It appears that Trade Advisor Peter Navarro, economist and proponent of tariffs, who initially guided trade policy, has given way to Treasury Secretary Scott Bessent, a former hedge fund manager, to lead trade negotiations, suggesting incremental stability. CEO confidence has plunged to levels not seen in over a decade.
Confidence in Decline: What CEOs Are Signaling
Trump’s approach to tariffs has been characterized as a “stop-start trade offensive” that is “paralyzing companies on just about every front” except cost-cutting. This unpredictable approach has left businesses unable to plan effectively. The Conference Board Measure of CEO Confidence Index provides insight into the perspective of company management teams on the current and expected business and industry conditions. The plummet in April reflects the suddenness and lack of clarity around the tariffs.
Earnings season is already in full swing and the mention of the trade war, and its effect on business outlook, is picking up. This week’s earnings calls will offer investors insights into how business leaders plan to navigate the uncertainty. Nearly a third of the country’s largest 100 companies report this week, including Microsoft, Meta, Amazon, and Apple. Already, major companies are slashing forecasts and freezing investments. We expect businesses to announce cost cuts, capital expenditure freezes, and slower hiring. Airlines, including American, Southwest, and Alaska Air have pulled full-year earnings guidance, due to limited visibility into leisure travel demand. Meanwhile, consumer goods companies like P&G and PepsiCo are considering price increases, while manufacturing companies are delaying or canceling expansions and new facilities.
The Investment Pause: Planning on Hold
In periods of uncertainty, investment decisions are put on hold. The S&P Global Flash Composite PMI, which tracks business activity in the U.S., fell to 51.2 in April from 53.5 in March, marking the slowest expansion in nearly 18 months. Companies are delaying capital expenditures, halting hiring, and postponing IPOs. Moreover, the IMF warned that global government debt could reach 117% of output by 2027, the highest level since the aftermath of World War II, as governments grapple with slower growth and economic instability triggered by a potential trade war. These concerns have led the IMF to slash its global growth forecast from 3.3% projected in January to just 2.8%, with the U.S. receiving the largest downgrade among G7 economies. The fund now puts the odds of a U.S. recession at nearly two in five, in line with Cresset’s outlook.
Tariff Exposure: Sector Winners and Losers
It isn’t all doom and gloom. Industry exposure to tariffs is the largest determinant of performance so far this year, with household appliances, footwear, airlines and commodity chemicals most exposed to trade. Despite these challenges, some sectors stand to benefit, including aerospace/defense due to growing military budgets, as well as manufacturing in countries like India that could pick up business diverted from China. Domestic industries, like health care services, real estate and construction, utilities, and education, are largely insulated from a global trade dispute. The situation remains fluid, with Treasury Secretary Scott Bessent recently suggesting the administration might be open to easing some tariffs, including those against China.
Bottom Line:
The unpredictable nature of Trump’s tariff policies has created a paralyzing effect across the American and global economies. Businesses find themselves in a state of suspended animation, unable to plan, invest, or expand amid constantly shifting trade rules. This uncertainty has transformed from a policy issue into a broader economic problem, with measurable impacts on supply chains, consumer confidence, and business operations.
The evidence suggests this uncertainty may be more damaging than the tariffs themselves. Companies can adapt to higher costs when given time and stability, but the current environment makes rational planning impossible. The result is an economy increasingly focused on short-term positioning rather than long-term growth.
Longer-term, investors should anticipate reshoring manufacturing with the potential of higher costs and wages. Diversification will be paramount as we prepare for permanent shifts in global trade patterns.
About Cresset
Cresset is an independent, award-winning multi-family office and private investment firm with more than $65 billion in assets under management (as of 1/15/2025). Cresset serves the unique needs of entrepreneurs, CEO founders, wealth creators, executives, and partners, as well as high-net-worth and multi-generational families. Our goal is to deliver a new paradigm for wealth management, giving you time to pursue what matters to you most.