Uncertainty is often cited as a major concern for businesses, and the U.S. economy is about to put that theory to the test. With rapid policy shifts, unexpected tariff announcements, and fluctuating regulations, business leaders are struggling to keep up with the unpredictability of the second Trump administration.
A Chaotic Start
In just a few weeks, Washington has been a whirlwind of economic policy changes: a spending freeze was announced and then reversed, government agencies were shut down or suspended, and tariffs have been repeatedly threatened, enacted, or rescinded. This policy turbulence has sent measures of economic uncertainty soaring to levels typically seen during recessions or global crises.
While many business leaders initially welcomed the administration’s promises of lower taxes and deregulation, they are now voicing concerns about the instability.
- “Your guess is as good as mine what’s happening in Washington,” said Nicholas Pinchuk, CEO of Snap-on.
- Jim Farley, CEO of Ford Motor, described the situation as “a lot of costs and a lot of chaos.”
- Chad Coulter, founder of Biscuit Belly, said, “It’s like your head is spinning—you just never know.”
Despite the uncertainty, many companies are still pushing forward with investments. Business confidence remains high, though some indicators suggest that optimism is starting to fade.
The Cost of Uncertainty
Economists have long studied the impact of uncertainty on business decisions. Research consistently shows that when policies are unclear, companies hesitate to hire, invest, or expand.
Steven J. Davis, a Stanford economist, explains that businesses can adapt to clear rules—even unfavorable ones—but when the rules themselves are uncertain, companies find themselves in limbo.
Kim Vaccarella, who runs Bogg Bag, a tote bag company that manufactures in China, is facing this challenge firsthand. Newly announced tariffs could increase her wholesale costs, but with trade policies shifting weekly, she’s unsure whether to move production to Sri Lanka or Vietnam. “How do we move on from here?” she asked.
How Businesses Are Adapting
Faced with unpredictability, companies are making adjustments. Some are shifting to lower-cost products that can be paid off quickly rather than making long-term investments.
- Snap-on’s customers, including auto mechanics, are avoiding expensive purchases with long payment plans. Instead, they’re buying tools they can pay off in a matter of weeks.
- Companies across industries are stockpiling inventory ahead of potential tariffs, changing production schedules, and preparing for policy shifts that may never materialize.
These precautionary moves act as a hidden “uncertainty tax,” forcing businesses to make inefficient decisions that add costs and slow economic growth.
Will the Economy Stay Resilient?
The strong U.S. economy may provide a buffer against these disruptions. As long as sales remain steady and consumer demand holds, businesses will likely continue hiring and investing. However, if uncertainty leads to reduced consumer spending, the impact could be more severe.
Consumer confidence surged after the election, but recent surveys show growing concerns about rising prices due to tariffs and potential supply chain disruptions. Coulter, of Biscuit Belly, worries that the fear of the unknown could lead customers to spend less.
“People in times of uncertainty just kind of hunker down,” he said. “They hold on to their money because they don’t know what’s going to happen next.”
For now, business leaders and economists alike are watching closely to see whether optimism outweighs uncertainty—or if the latter begins to take a real toll on economic growth.