23 July 2025 • Global Trade & Tariffs, Business Risk Management, Economic Uncertainty
The principles of tariffs have always been pretty well understood especially at a macro level. However, given the sophistication of the world economy, the use of tariffs as an element of economic policy holds no great respect. Tariffs are as useful to economic policy, as a chainsaw is to a brain surgeon. Over the last six months much has been written about tariffs and their likely impact on global trade and to a lesser extent their impact on the relationship between global trading partners. Unfortunately, there is no clear advice about the impact of tariffs. There can’t be because the tariff goal posts keep moving and that’s no surprise, after all the tariff policy was generated by a “stable genius”, a genius who hasn’t formulated a paper on the matter for peer review nor is there a policy map about how these tariffs work through the global economy. From the headlines, we are told that these tariffs will redistribute the world’s wealth to the benefit of the American economy in the order of trillions of dollars.
It may help to draw a comparison between the impact of tariffs and the impact of Covid. Initially, Covid was passed off as being of no concern but later it became clear that Covid was a worldwide threat. The world then moved to a chaotic phase of Governments trying to mitigate its effects. It is difficult to measure the impact of these mitigation efforts, although undoubtedly these efforts did save many lives and safeguarded the health of countless others. Ultimately, Covid was successfully tackled when real and practical measures were implemented and more conclusively the medical world produced solutions to the address the disease. This Covid summary does not do justice to the many hurdles and complexities that were faced in trying to deal with Covid but then this is only proposed as a guide/comparison to the journey that we are on as we navigate through the new world of tariffs.
Right now, we are in the phase of mitigating the effects of tariffs. Companies across the world are assessing the almost daily news on changes to tariffs. As soon as a new policy on tariffs is announced, someone comes up with a work around or some other such mitigating action.
There is ongoing uncertainty about what countries, industries and products will ultimately be the subject of tariffs and further at what rate will the tariffs be levied. For how long will the tariffs be levied and what compensating actions will be taken to address the negative effects of tariffs.
Given the potential for tariffs to have a wide reach as second and third wave effects take hold, not least the inevitable unintended consequences and indeed the compounding effects of geopolitical actions that will inevitably be pursued, it would be prudent for all businesses to have a plan to deal with negative consequences. But such plans need only extend to what every business should always have prepared. Who are your suppliers and how much is your business dependant on their survival or pricing. Do you have access to alternative suppliers. Apply the same test to your customer base. How can you increase liquidity if you get a cash squeeze. Care needs to be exercised so that a short-term cash squeeze doesn’t turn into a long-term operating crisis. Every business will be affected differently and requires their own bespoke plan.
However, this picture doesn’t have to be completely coloured with pessimism. In any changing environment there will be initial effects which may create losers in the first instance and yet there will likely be opportunities for growth and development albeit in the engagement with some change and pain.
The world economy can be viewed as having a short-term, zero-sum gain situation in regard to its supply chain where your business may be able to supply a vacant situation. Such an opportunity is not to be missed. To quote Brutus in Julius Caesar “There is a tide in the affairs of men Which, taken at the flood leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries, and we must take the current when it serves, Or lose our ventures”
But let’s put tariffs aside as they are likely a short to medium term disruption notwithstanding that they may herald significant consequences for business owners. If we look to the business horizon there are a few changes that are becoming manifest. Legislative and technological advances have brought crypto currency and artificial intelligence on the business stage and albeit that they may seem like part of a Hollywood movie, they are very real issues and will have a significant impact on most if not all businesses. These issues are rapidly developing, and their impact is yet unquantifiable. But they are not to be ignored lest the tide turns and leaves you in the “shallows and in miseries”.