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First U.S. President Donald Trump announced reciprocal tariffs on April 2, “Liberation Day,” and stock markets tanked. A week later, on April 9, he announced a 90-day “pause” on punishing tariffs, and stock markets soared. Traders who were despondent one minute were elated the next. Almost everyone except the Chinese breathed a sigh of relief. But then even China’s crippling 145% tariff rate was scaled back to 30% for a 90-day period.
These head-spinning developments underline the worst aspects of Donald Trump’s trade war: uncertainty. No one knows what comes next or what to do. As things now stand, Mr. Trump’s reciprocal tariff has been trimmed to 10% for most countries during the 90-day negotiation period. What happens after that is anyone’s guess.
If the whole process was clearly defined – rates, timing, affected countries – at least businesses would have a framework to work with. But as things stand, no one knows what to expect tomorrow.
That’s the dilemma facing the business community right now. The President’s avowed goal is the reindustrialization of what he sees as a hollowed-out America. Even if reindustrialization is a desirable goal, it will take many years and trillions of investment dollars to accomplish it. Who wants to make those kinds of commitments in the chaotic environment we’re now experiencing? Four years from now there may be a new President with completely different priorities and a brand-new playbook.
Right now, many businesses are almost paralyzed. Each company faces its own set of challenges as it tries to cope with this turbulent new reality.
The immediate concern is China. At current levels, trade between the world’s two largest economies will quickly grind to a halt. That creates massive problems for many American companies. Here are three examples.
Apple Inc.’s (NSD: AAPL) big problem is most of its iPhones (an estimated 80%-90%), as well as other electronics like iPad, are manufactured in China, which now faces tariffs of 30%, but only for the next 90 days.
Prior to this news, there had been suggestions that Apple should shift production elsewhere or even, as Mr. Trump desires, bring it to the U.S. Neither is as easy as it sounds. Moving some or all production to another country (or countries) is like throwing darts at a moving target. Once all the negotiations are completed, who can predict which nations will fare best when it comes to exporting to the U.S.? Apple has already moved some iPhone production to India, but until the tariff pause, that country was facing a 26% hit – better than China, but not great.
Vietnam, which had become a favourite for companies seeking to diversify from Chinese factories, was looking at a 46% rate. Without certainty going forward, neither Apple nor anyone else is likely to commit to a move that could cost hundreds of millions.
As for shifting all production to America, economists say that’s a non-starter because of a shortage of skilled labour and the costs involved. Assembling iPhones is a complex task that, at least for now, can’t be done by robots, or uneducated workers making $2 an hour.
Bottom line: Unless the exemption is made permanent, high tariffs on China would disrupt Apple’s finely tuned global supply chain, which relies on a network of suppliers, assemblers, and manufacturers in different countries.
The Home Depot Inc. (NYSE: HD) imports many of its products, from tools and hardware to building materials. Much of this comes from China. When tariffs are imposed on these imports, supply chains may be disrupted, and the cost of goods sold will increase. The result is higher retail prices.
The increased costs and potential for passing on higher prices could put pressure on Home Depot’s margins, especially if it faces resistance from customers or competitors. The company may be able to offset some of this pressure through operational efficiency, but tariffs typically reduce profitability in the short term.
If tariff levels are changed frequently, it will make it harder for the company to plan its pricing and inventory strategy effectively.
Bottom line: The effect of tariffs on Home Depot largely depends on the types of goods impacted by the tariffs, the rate applied to the exporting country, HD’s ability to adjust its supply chain, and how it manages to pass on the increased costs to consumers without hurting demand. Tariffs will drive up costs and reduce margins, so Home Depot will need to adapt to retain market share. That may mean finding new suppliers in lower tariff countries, raising prices strategically, and focusing on cost-cutting measures.
Ford Motor Co.’s (NYSE: F) problem (and that of other U.S. automakers) is different. Tariffs on China aren’t the major concern. What keeps management up at night is Washington’s 25% tariffs on steel and aluminum and the 25% cross-border tariff on vehicles that don’t comply with the strict manufacturing requirements of the USMCA trade agreement.
Tariffs on steel and aluminum imports increase the cost of producing vehicles. These materials are essential for car manufacturing, including the body frame and various other components. Many auto parts such as engines, electronics, and specialized components are sourced from abroad. Increased costs for these components due to tariffs can raise the overall production costs.
There has been widespread speculation that the result will be an increase in the price of new motor vehicles of between $3,000 and $10,000. Should that happen, the price of used cars would almost certainly rise as well, which is likely to depress demand. That would lead to the disappearance of some models and a scramble for market share.
Tariffs are not only a concern for the U.S. and Canadian markets, but they can also affect Ford’s exports. If Ford (or other North America automakers) exports vehicles or components to countries that impose retaliatory tariffs in response to the U.S., this could make Ford’s products less competitive in those markets. This is particularly relevant as Ford has a significant global presence, and many of its vehicles are produced in one country but sold in others.
Bottom line: Tariffs can have a significant impact on Ford, especially in terms of increased production costs, higher vehicle prices, and potential disruptions to global supply chains. While Ford may be able to adjust by shifting production, changing sourcing strategies, or passing costs onto consumers, the overall effect of tariffs will depend on the specific materials and markets involved. The impact could be especially pronounced for Ford as it navigates the transition to electric vehicles and responds to competitive pressures in the global automotive market.
As these examples show, this story is far from over. Hopefully, the 90-day pause will end up bringing clarity – but don’t bet on it.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
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