U.S. President Donald Trump attends a cabinet meeting at the White House in Washington, D.C., U.S., April 10, 2025. / REUTERS/Nathan Howard

U.S. President Donald Trump's about-face on sweeping import tariffs did little to soothe companies' worries about the fallout from his trade war and its chaotic implementation: soaring costs, falling orders and snarled supply chains.

In a stunning reversal, the president said on Apr. 9 he would temporarily lower the hefty tariffs he had just imposed on dozens of countries, though he also hiked duties for China and kept 25 percent tariffs levied on aluminium, steel and autos in place.

The news sent global stocks soaring on Apr. 9 after an intense bout of volatility that wiped trillions of dollars off equity markets. Investors hope there will now be time for negotiations to avert a full-blown global trade war, but warn that the economic outlook is still cloudy. 

The European Union said on Thursday it would pause its first countermeasures on about $23 billion of U.S. imports.

Stocks, however, reversed course on Thursday, posting sharp declines.

Companies with complex and diverse supply chains spanning multiple countries from China to Germany were already scrambling to work out how they would be affected by duties and grappling with possible price hikes to mitigate tariff risks. The reprieve has only added to the confusion.

"The developments related to tariffs, whether from the USA or countermeasures by the EU and other countries, are currently extremely dynamic and volatile. We are analyzing the situation internally with great precision and high priority, particularly regarding potential impacts on our procurement and pricing," German retailer Hugo Boss said in a statement.

Hugo Boss and other companies are questioning what happens after the 90-day pause, especially as the average effective U.S. tariff rate would now be roughly 23 percent before U.S. firms adjust their imports, Yale economist Ernie Tedeschi said in a post on X.

Those tricky calculations are being made at a time when consumer confidence is waning and worries are growing about a global recession.

Also Read: Trump pauses tariffs for 90 days but hits China harder

Conditions for cross-border trade were changing rapidly, German chemicals company BASF said on Thursday. BASF said the direct impact of U.S. tariffs would be limited due to its high proportion of local production, but added it was difficult to estimate the effects of a trade war on demand.

"Many consumers and businesses cannot plan with any sort of confidence just now and may see a recession hit regardless," said Marcus Brookes, chief investment officer at Quilter Investors. "Spending and investment could be pared back and would be completely counter to everything Trump said he wanted to achieve."

Tech giant Apple has chartered cargo flights to ferry 600 tons of iPhones, or as many as 1.5 million, to the U.S. from India. Analysts have warned that U.S. prices of iPhones could surge, given Apple's high reliance on imports from China, which is now subject to 125 percent levies.

Alphabet and Microsoft, which have invested billions of dollars to build out data center infrastructure to offer AI services, are sticking to their capex plans even as worries emerge that their customers may have to tighten budgets due to the uncertainty.

"Decision cycles for big tech were already slowing and ongoing uncertainty isn't going to help that," said Rebecca Wettemann, CEO of tech advisory firm Valoir.

CONSIDERABLE UNCERTAINTY

Modelo Especial owner Constellation Brands' said on Thursday that beer sales were taking a hit as demand from Hispanic populations in key U.S. states amid Trump's crackdown on immigration. CEO Bill Newlands said the company's Latino customers, who represent roughly half of Modelo's customer base, have pulled back on social gatherings. 

Some companies, including General Motors, Porsche and Mercedes-Benz, have built up inventory in the U.S. to get ahead of tariffs.

But the uncertainty is dimming the outlook for later this year, while weaker U.S. consumer confidence is already hurting spending on discretionary items like sneakers. 

According to a weekly sales survey by industry association Footwear Distributors and Retailers of America, in the eleven weeks since Trump's inauguration, shoe sales in stores are down 9.5 percent from the same period last year. The association's members include Nike, Adidas, Skechers, and Walmart.

A spokesperson for Inter IKEA, which makes IKEA products and supplies them to franchisees around the world, said tariffs make it more difficult to keep prices of home furnishings affordable.

"It's too early to say what level the tariffs will affect the prices of our products, but we are closely monitoring the situation and will continue to evaluate how it evolves," they said.

The outlook for earnings season, which kicks off in earnest next week with reports from LVMH, ASML and L'Oreal, is increasingly gloomy.

Volkswagen warned late on Apr. 9 that first-quarter profits were much weaker than expected and included a charge for the cars it's sending to the U.S. Stellantis said last week it was temporarily laying off 900 workers at five U.S. facilities and pausing production at one assembly plant each in Mexico and Canada

Serbia's Testeral, which makes aluminium and PVC products for the construction industry, may have to lay off staff if tariffs remain in place, CEO Sanja Stanimirovic told Reuters. The company cannot easily raise prices to cover the additional cost because it is locked into long-term contracts, she said.