Little more than 12 hours after President Trump’s tariffs took effect, he paused them for 90 days. This may have triggered a surge among the battered global stock markets but the latest rebound looks more like brief respite than a long-term turning point.
Many analysts caution against reading too much into the bounce. Kate Leaman, chief market analyst at Avatrade, warns that this is likely a temporary surge, rather than a lasting recovery.
Historical precedent, from the dot-com bubble burst to the 2008 financial crisis, shows that sharp gains often occur within broader downturns. “This raises the possibility that Wednesday’s surge may be a classic ‘dead cat bounce’ – a brief recovery in the price of a declining asset – rather than the start of a sustained recovery,” Leaman says.
The constant stream of U-turns and reversals has left finance leaders scrabbling for new metaphors to describe the market volatility induced by tariffs. The 90-day window does little to resolve underlying tensions, especially with China still facing tariffs as high as 145%, fuelling fears of a spiralling trade war. China has just retaliated with a 125% tariff. Meanwhile, British businesses must still contend with the 10% base duty on imports into the US from the UK.
Broader trade uncertainty coupled with inflation fears and rising costs means volatility is likely to persist. CFOs and their finance teams are analysing the risks, shaping strategy and spotting new growth opportunities, all while attempting to find as much clarity as they can in the murky outlook.
‘Few CFOs left unaffected’
“It’s not necessarily the tariffs that are the problem,” says Martin Edstrom, CFO at Paragon, a business-service provider. “It’s the level of uncertainty they bring. This, and rising inflation caused by reciprocal tariffs in the UK and EU, is a major concern.” If this uncertainty continues, it could stifle companies’ ability to raise funds and invest, further slowing economic growth, he adds.
Already, fewer M&A transactions are proceeding this year than predicted. Dealmaking has come to a screeching halt as investors desperately seek to exit their investments. Any hope of an IPO revival looks unlikely, with ticketing marketplace StubHub and Swedish fintech Klarna both having paused their IPO plans following days of stock market turbulence.
At Paragon, Edstrom is building additional headroom into budget estimates to account for this uncertainty.
Regardless of how much Trump may be willing to negotiate, the incoming tariffs will likely leave “few CFOs unaffected,” says Jim Lejeal, CFO at Forter, a global retail fraud firm. “I don’t think any business is completely immune to the challenges at play.”
The current climate is leading some to draw parallels with the 2008 global financial crash and early pandemic crisis, Lejeal claims. “Those same lessons apply now: forecast, communicate and mitigate,” he says.
The tariff playbook
With new US tariffs driving up costs, some finance teams are already adjusting their strategies, diversifying supply chains or sourcing from new suppliers. Others are preparing to pass rising costs on to customers.
“Pushing up prices will likely be necessary in most cases,” says Konstantin Dzhengozov, CFO at Payhawk, a spending management platform. Indeed, 30% of CFOs worldwide anticipate passing 91% to 100% of tariff costs along to their customers, according to new data released by Gartner.
That said, industries with heavy regulation and long-term contracts are unlikely to be able to pass forward these costs. Such a strategy also poses a significant risk to demand and long-term competitiveness, warns Dzhengozov: “It’s a very complex path to navigate. Finance chiefs must scrutinise contracts, subscriptions and expense policies to mitigate the risks. Focusing on cross-functional collaboration can also help to get messaging right and preserve customer trust.”
In Edstrom’s view, it is too soon to say exactly how tariff costs will be distributed or what the appropriate path for businesses should be. Tariffs shift with political winds, he says: some may stick and others will change. This makes forecasting around tariffs infuriating. “Be proactive and plan for all potential outcomes,” he advises. “Look at what would happen at both the high and low end and prepare for each of these economic scenarios.”
Myles Corson, who leads the CFO advisory practice at EY, says frustration over a lack of clarity is the underlying theme among the finance chiefs he has talked with. “The key recommendation for CFOs right now is to stay connected with their business partners. Speak to your suppliers and logistics providers on a regular basis to get a comprehensive view of the evolving tariff landscape.”
Any approach to tariffs must be collaborative, he adds: “Work closely with the leadership team to figure out what your joint approaches should be to these rapidly evolving circumstances.”
Crisis leadership
It’s not all doom and gloom. “People like to talk about the world falling apart but we’ve been through economic crises before,” says Rachita Sundar, CFO at Qualtrics, an online survey platform. “In fact, we’ve been operating in a pretty tough economic geopolitical environment over the last three years. Our job is to not jerk the wheel on any decision, but to maintain agility. Take the time to assess everything. This is a marathon, not a sprint.”
If you look at past cycles of economic disruptions or crises, the CFOs who succeed exhibit the ability to have a strong vision, says Lejeal. “They have a clear perspective, they know what matters to the businesses and can articulate that knowledge.”
Corson agrees. He sees this as an opportunity for CFOs to “step up” and demonstrate their value to boards, colleagues and investors, positioning themselves and the finance function as a real business partner.
As with any crisis, there will be winners and losers, he adds: “Those with a good personal brand and strong business relationships are going to be able to navigate the coming months much more effectively.”
Though some tariffs may be short-lived, being proactive and anticipating outcomes can be beneficial in the long run. Businesses can use the turbulence as an opportunity to reassess cost structures and drive efficiencies, while finance chiefs have a chance to earn trust and build credibility.
Little more than 12 hours after President Trump’s tariffs took effect, he paused them for 90 days. This may have triggered a surge among the battered global stock markets but the latest rebound looks more like brief respite than a long-term turning point.
Many analysts caution against reading too much into the bounce. Kate Leaman, chief market analyst at Avatrade, warns that this is likely a temporary surge, rather than a lasting recovery.
Historical precedent, from the dot-com bubble burst to the 2008 financial crisis, shows that sharp gains often occur within broader downturns. “This raises the possibility that Wednesday’s surge may be a classic ‘dead cat bounce’ – a brief recovery in the price of a declining asset – rather than the start of a sustained recovery,” Leaman says.
