How Businesses Can Stay Informed with Ongoing Tariff Policy Changes
As the U.S. imposes new waves of tariffs on major trading partners like Canada, China, and Mexico, businesses must stay vigilant and adaptable to shifting economic policies.
“This (a tariff) is basically a sales tax on anything made outside of the United States,” said economist Dr. Phil Powell of the Indiana Business Research Center. “If you’re a business, and some of your parts and materials come in from Canada, all of a sudden you’ve woken up from yesterday and you’re paying 25% more money.”
Powell explained that tariffs not only increase costs for businesses that rely on imported materials but also trigger retaliatory measures from affected countries.
“From a geopolitical perspective, Canada and Mexico have to retaliate. So, if you export your products to Mexico or Canada, now you have to pay a 25% tax to their government,” he said.
For companies in Indiana, particularly those in Johnson County, these tariffs could have a compounded effect.
“Hoosier companies can have a double whammy. They have to pay more for materials, more for their inputs, then they have to pay a sales tax to sell in other countries,” Powell said. “It’s not going to be true for all businesses, but a lot of supply chains move in between Mexico, Canada, and the United States.”
Businesses built these supply chains over decades under NAFTA, and later under the U.S.-Mexico-Canada Agreement (USMCA), negotiated during President Donald Trump’s first term. Now, companies must contend with new trade barriers.
“In plain business talk, that’s what we’re facing,” Powell said.
As economic conditions shift, Powell stressed the importance of staying informed.
“These are not normal times. You have got to do your best to watch the business media,” he said. “I would advise businesses to watch the most up-to-date information from the press. A trusted, unbiased business media source. Usually, there are industry websites and government websites that have this kind of information, but right now things are fluid, so you’ll need to be watching the news.”
Powell personally follows business outlets such as The Wall Street Journal and Bloomberg, as well as local sources like the Indianapolis Business Journal. He encouraged business owners to find reliable sources that provide factual and unbiased coverage of tariff policies.
“Usually, there are industry websites and government websites that have this kind of information, but right now things are fluid, so you’ll need to be watching the news,” said Powell.
Alongside the recent tariffs, general economic uncertainty is affecting overall growth expectations.
“Before the tariffs, the economy was expected to grow about 2-3% this year. We were expected to have a good year,” Powell said. “What’s happening is, because of all the uncertainty, households are pulling back on their spending at a much faster rate than economists expected.”
Higher interest rates have already led businesses to be more cautious, and now Powell says households are also reducing their spending.
“Businesses have clawed back. Businesses across the board in the economy have become more conservative because of higher interest rates,” Powell said. “That was not impacting households, now it is impacting households, and they are pulling back spending.”
To monitor economic growth in real time, Powell recommended the GDPNow model from the Federal Reserve Bank of Atlanta. The model provides a “nowcast” of GDP growth using a methodology similar to that of the U.S. Bureau of Economic Analysis.
“In just ten days, we’ve seen the expected GDP growth rate on an annualized basis in the first quarter go from +2.3% to -2.8%,” Powell said. “Businesses need to understand that these tariffs are like the straw that breaks the camel’s back on top of all the other business uncertainty that’s going on.”
Inflation could also rise if tariffs remain in place.
“If the tariffs stay, we’re looking at an increase in the inflation rate of about another point,” said Powell. “Another point of inflation is huge. We want it to be two percent or lower; right now, it’s at three. Once you get about four percent, that’s a real dangerous zone.”
As 2025 unfolds, Powell emphasized the need for businesses to remain flexible.
“It’s not fun to watch the news these days, but if you are a business, you will need to monitor what’s going on,” he said. “You need to have your management team in a situation where you can pivot pretty quickly based on information. 2025 is going to test the management skills of Johnson County business owners.”
However, Powell cautioned against panic, noting that the situation could change rapidly.
“2025 could be a good year, this (recent tariffs) could just be a hiccup right now, so I am not preaching doom,” he said. “These tariff issues could disappear pretty quickly. If they do, that’s good news, but Johnson County business owners need to be prepared to respond very quickly to what is a fluid economic environment right now.”