The Bullwhip Effect
Tariff Disruptions Are Here to Stay. Layoffs will spike and Inflation will continue to rise.
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Tariffs have disrupted the global supply chains by adding cost and uncertainty, triggering price increases for consumers and businesses. The fluctuating nature of tariffs, especially with frequent on/off changes, has exacerbated these issues and created a perennial climate of uncertainty and have frozen the supply chains as companies hesitate to commit to long-term plans. This uncertainty has reverberated through worldwide disruptions in production, delays, and increased operational expenses.
I Thought Tariffs were Resolved or Paused?
NO. The US and China have a 90-day trade truce in place, starting on May 14, 2025. This means that tariffs on some goods will be lowered for that period. The truce will end on August 12, 2025. During this period, the US is suspending 24 percentage points of the additional tariffs on Chinese goods, while retaining a 10% rate. China is also suspending 24 percentage points of its tariffs on US goods, retaining a 10% rate.
The global supply chain is complex. The “on and off again” tariffs are detrimental than a consistent, sustained tariff war. This is because the uncertainty and instability created by on-again, off-again tariffs disrupt businesses, leading to market volatility, reduced investment, and increased costs, potentially outweighing the negative impacts of a more predictable, sustained tariff war.