From the Desk

Tariffs have dominated headlines since inauguration day. Households, markets, and global partners have been surprised by their scope and intensity. A trade uncertainty index from Federal Reserve economists hit its highest mark since it was first tracked 60 years ago. In the most recent round up of S&P 500 quarterly earnings, over half the companies mentioned tariff concerns on their calls. Even Fed Chair Jerome Powell lamented in his last rate update that “I don’t know anyone who has a lot of confidence in their forecast.” 

As consumers and companies wait for the new trade rules to emerge, the reflex option is to hold off on major spending and investment. For now, this deteriorating sentiment has not shown up in the hard data, which by its nature is backward looking. Sentiment shifts can be fleeting, and current gloom may never materialize in a growth hit. But some forecasters have already cut their GDP forecast for the year by about a third.  

All this leads to April 2nd being a critical milestone as the U.S. more formally rolls out tariff plans. If the guidance is rules-based it may help reset to a more dependable outlook. Anything less is likely to continue to stall decision making and cool growth.

Sources: Bloomberg, Financial Times, 2025.