A logical buyers' strike

We’re to the point where tariff chaos is inflicting real damage, at least in the short term. The WTO has slashed its 2025 forecast for global trade growth. Nearly one in five firms surveyed recently by Associated Builders and Contractors had projects paused or interrupted last month. Ships in the Pacific are being turned around and capex budgets are being cut. Not at all confident in what might be ahead, C-suites are sitting tight on the investing front and focusing on working with customers and suppliers about how to jointly endure.

— Geert De Lombaerde

 
• Haas reduces production and cuts out overtime in California

• ‘This is nuts’ – A supply chain expert talks tariffs and trucking

• J.B. Hunt takes a $200M whack at capex as most customers wait for the tariff dust to settle
 

A five-year flashback

The pull-forward spending that helped February and March data has concluded. What now? For a lot of leaders, the answer is, “Lean on our learnings from COVID disruption.” That might include spending money: Among nearly 400 executives asked by Endeavor Business Intelligence which strategic decision they’re most likely to make because of tariffs, investing in domestic growth ranked second.

 
• Grant Thornton on ways to cope with the new tariff paradigm

• How to handle equipment costs lifted by tariffs
 

"The dialog [...] was much more about, 'Show
me the math so I can understand what's
happening and then don't shut me down."

Outgoing Fastenal CFO Holden Lewis on April 11 speaking to analysts about the mindset of many customers attending the distributor’s recent expo. The company’s results showed solid Q1 sales growth but Lewis said tariffs have “created some caution” of late.
 

The upbeat take

Some Wall Street and D.C. cognoscenti have in recent days grown mildly sanguine about the idea that the worst tariff volatility might be behind us. From here, that line of thinking goes, it’s about waiting for deal news to trickle in that could lead to mainly the 10% baseline tariffs surviving—and a recession thus being short and shallow. That rosy scenario would create some breathing room to survey the field and make good decisions. And it would give CEOs more opportunities to stop talking for a bit and get out of the way.
 
• The case for muting the boss

5.5%

The one-month price increase for both copper wire/cable and iron/steel products in March's Producer Price Index

Over the past 12 months, though, the commodities’ price paths look very different: Copper is up more than 13%, iron and steel down 2.5%.
 

What we're watching

As we enter the heart of Q1 earnings season, I’ll be paying attention to whether most hard data have caught up to abysmal sentiment numbers—or if they will at all. Case in point: The Empire State Manufacturing Survey’s index for expectations of business conditions six months out has plummeted 40 points since December but April’s reading of current conditions bounced back from March, albeit without returning to positive territory. Early earnings reports say reality isn’t (yet?) matching dour expectations. Down? Yes. And out? No.

It might also be worth considering this scenario, raised on J.B. Hunt’s April 15 earnings call: Did the 90-day tariff pause announced April 9 kick off a second round of pull-forward purchasing? And might that activity put a surprising floor under the economy in Q2?