Trump Has Flip-Flopped On Tariffs Over 25 Times Since April— Here's How Latest Pause Will Impact You

Forbes Breaking News

Rodney Manzo, head of supply chain intelligence at Sage, joined "Forbes Newsroom" to discuss how President Trump's tariff policies, and pauses on reciprocal tariffs, are impacting global supply chains.

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes.

00:07Joining me now is Rodney Manzo, head of supply chain intelligence at Sage.

00:10Rodney, thanks so much for joining me once again.

00:13Rodney, thank you.

00:15Trump tariff tensions have flared up once again. The 90-day pause on the reciprocal tariffs was

00:21supposed to be lifted this week, but President Trump extended it to August 1st. You and I talked

00:26back in May during the first half of the 90-day pause. And at that time, Anvil found companies

00:32didn't feel confident in handling tariff supply chain chaos. Two months later, another pause later,

00:40how are companies feeling now about the tariff uncertainty?

00:44Much of the same, actually. And it's really hard to predict when no one knows a true strategy.

00:50And you look at some economic rationale around this, whether it's protecting national defense,

00:56generating revenue, or even just reciprocal tariffs. You never know what's going to happen

01:01or who you're going to tariff. So a lot of the supply chain, what we've seen through our

01:06state of supply chain report, unease, tension. And then what we see now is it's the same thing.

01:12When you don't know if it's going to be Malaysia next or Japan, it's really hard to predict. And

01:16it's really hard to put a stable supply chain in place that needs to be stable to perform.

01:21And something that we've seen a lot of is President Trump kicking the can down the road

01:26when it comes to these reciprocal tariffs. When it comes to his tariff policy, there has been a lot

01:31of whiplash. And I can imagine that for a business, for a supplier, that could be really

01:35impossible to try to plan around. So is this extension, is that welcome from businesses? Is

01:41that welcome from suppliers? Or are they just thinking, you know, this is more of a headache?

01:46It's way more of a headache, for sure. And let me give you an example. One of the companies we work

01:52with, they do baby formula. And they produce out of Europe. Obviously, months ago, Europe was on the

01:58radar. So what they did is this lull, they just shipped a lot of their goods. And they have a lot

02:02of inventory on hand in the US. The problem with that, it's a working capital issue. So their costs are

02:08now increasing from holding inventory. So it's a problem because they don't know what to do or how to

02:12react. Because a month from now, you could see another tariff in Europe. And I can imagine that's

02:17hard because there's so many different percentages that President Trump and the Trump administration

02:21is throwing at different countries. So I'm sure companies and suppliers are doing a lot of math

02:27trying to say, OK, this country has X percent of tariffs. This country has Y percent of tariffs.

02:32President Trump said this time, no more extensions. But it's almost like a boy who cried wolf

02:37situation here where he he said, this is it. This is final. And then there's been more extensions.

02:43And according to a Forbes report, Forbes has been tracking this and he has flip flopped since

02:47Liberation Day over two dozen times when it comes to his tariff policy. This time around,

02:53do suppliers think it's going to stick? How really are they preparing for this moment?

02:58The pulse we get is there's unknown and no one's really reassured that any words are actually

03:04going to be reality. And you're looking at it like, you know, a lot of our partners, Canada,

03:0935 percent tariffs. You're looking at like 50 percent for Brazilian goods and for copper and other

03:16things. You're like, well, how do these numbers come about? And even lower, you know, countries that

03:22have a negative import were tariffing them, meaning that they're bringing in more goods than they're

03:28actually pushing out. So it's no one knows what's going to happen. And the strategy is really,

03:33really not a strategy because it's just numbers that blankly get thrown on the wall.

03:38And what does all of that mean to that point of numbers getting blankly thrown at the wall?

03:43Countries have different percentages now of tariffs. So are companies looking at this and saying, hey,

03:48I want to work more closely, perhaps I want to move the supply chain a little bit to a different

03:53country that perhaps has a lower rate. What does that really look like right now?

03:57Yeah. So what we see is how business are reacting. And there's a few things. Number one,

04:04they're reassessing their entire supply chains and they continue to do that throughout the year,

04:08trying to understand if they have a good source or a bad source, a good location or a bad location.

04:12While they're reassessing, they're doing the second thing. They're diversifying their supply chain,

04:18securing costs, securing contracts, making sure that they have stability in this very unstable time.

04:23And lastly, if they continue to explore reshoring, should you bring back things here in the US?

04:30Not all companies, not all industries or verticals can, but they're doing those things.

04:36And lastly, what they're doing, I think more than ever, they're looking at visibility across that

04:40first mile because that's really where you're getting hit from sourcing to inventory management

04:46or production to incoming goods. They're trying to invest in technology. They're trying to automate

04:51communication, collaboration, making sure they're more seamless and they have real-time feeds going

04:55on so they can quickly react and adapt to this uncertain time with tariffs.

05:01And when it comes to tariffs, economists have said a tariff is a tax on the consumer.

05:06I'm thinking about the consumers right now, especially when businesses, as you're saying,

05:11they're facing unease, they feel unease, they feel this uncertainty. There's a lot of unknowns right now.

05:16When will the consumer really feel the brunt of that?

05:19Yeah. So I look at this in two questions that I continue to ask myself.

05:24Do tariffs ultimately help? And what about this for me? So if I'm looking at, do they ultimately help?

05:31Are they going to protect domestic industries short-term? Maybe, maybe they do. Do they help

05:38with inflation? Maybe. Do they help with bottlenecks? Definitely not. And what's the retaliatory measures

05:44here that are going to be taking place? So when I look at those things, I don't see them actually

05:49helping. I see them counter to each of those points that we want. Increasing inflation, creating supply

05:54chain bottlenecks, hurting domestic industries, and really short-term, long-term, it's not helpful.

06:00So for me, for you, when we're going in the store, I think we'll face higher prices. We're already

06:06seeing that. We're just looking at Amazon Prime. We're talking about that right before this. Prime

06:10Day is not what it has been in years past. Well, why? Consumers have less money. Things cost more,

06:17so they're not buying as much. But you see across in different verticals and industries, you see this

06:22more. Electronics. If you need a new MacBook, it's going to be more expensive. Vehicles, way more money

06:27than you would in the past. And even copper could be hit. So for the consumer at the end of the day,

06:32these tariffs are not helpful. They're not helping you or me. They're increasing what we're spending

06:37on products. And to that point, it's Amazon Prime Day right now. I'm thinking about November. I'm

06:44thinking about Black Friday. I'm thinking about the holiday season come November and December. We're

06:49even closer to the holiday season right now than we were back in May when we were talking. And two months

06:54ago, you said businesses really face two choices right now. One was, do I order too much right now

07:00and have an overstock? Or do I not order enough right now? And perhaps I don't meet my margins

07:05come the end of the year. Where are they right now when it comes to holiday season shopping and buying?

07:12So there's different camps of brands and companies and different strategies. The companies that delayed

07:18and they're producing in Japan or Malaysia and these countries, they're being hit now because their hand

07:23is forced. You need to ship goods to get them into your warehouse or distribution center for the

07:27holidays. It takes 30 to 45 days via ocean to get them to wherever they need to go. If you don't

07:32have them on hand, you're not going to be able to sell them. The other companies that put the strategy

07:38in place, let's move ahead. Let's avoid these. They have a benefit. And I don't know the cost difference

07:43between a 20 or 50% tariff with the holding cost per se, but chances are the ones that reacted quick

07:49and avoided those tariffs are actually making more money and they prevented themselves from

07:53getting that tariff tax. And so if I'm a company right now, and I know that President Trump said

08:00August 1st, that's the drop dead date. That's when these reciprocal tariffs will go into effect.

08:05If I'm a top executive here, do I believe that? And how do I strategize right now in almost mid-July

08:13about that August 1st date? You have to believe it. And the reason for that is you can't plan not to

08:19believe it. The repercussions of that is just counter to what you would need to be as an

08:23executive in a company or operator at a brand. And if you don't have one, two, three, four different

08:30contingency plans in place, you're going to fail and your business is going to under. I think we're

08:35seeing that for the SMBs, the smaller companies, they can't react quick enough. They don't have the

08:39money, the capital, the resources to actually do something. It's hurting them. Bigger companies,

08:44they'll just take a hit. They'll lose margin, maybe increase costs for us and the consumers,

08:50but there's all different strategies and you have to deploy multiple now. And if you look at 10 years

08:56ago when I was at Harry's or even close to 15, 20 years ago when I was at Apple, we never had to

09:03worry about any of this. It was stable. We never made any changes. We never had to adapt. The

09:08contingency models, the risk models were not in place. Now today, every business is doing that.

09:13And so as the supply chain expert here, as someone who's been there when you didn't have to make

09:19these contingency plans, when it was smooth sailing, now it's exactly the opposite. I mean,

09:24what is the best way for businesses to go forward? Yeah. So the same thing in the past,

09:31and you'd be, I think anyone listening to this would be just amazed that most of the global supply

09:36chain is run on an Excel spreadsheet, pen and paper, email, phone call, or someone just going around

09:43the world and shaking hands. That process and that way to manage the supply chain is just not what

09:50happens nowadays. Agentive AI, intelligent software, software that connects and orchestrates an

09:57ecosystem, that's what they're putting in place and that's what they're looking at now. They have to

10:01produce that, the feeling, the gut of a human and replace it with actually technology that can see

10:06around the corner. So we're seeing a lot of that. The second thing that we're seeing is true

10:11diversification. You know, if you always just worked for 20, 30, 40 years, that one supplier in

10:17the one location, you are not doing that anymore. You're diversifying that supplier, whether it's

10:22forcing that supplier to have multiple locations, so you still work with the same supplier, or you're

10:28diversifying outside of that supplier and having multiple suppliers in your ecosystem. So those two

10:32things are working in parallel nowadays. Aside from looking at President Trump's social media accounts

10:38and seeing what his latest tariff announcement is, what specifically are you looking out for between

10:44now and August 1st? Because the White House said, we're still working on deals. Deals could be made

10:49right now. They're sending letters, they said, to other countries saying, this is the deal. This is what

10:54the tariff rate is going to be. What are some signposts you're specifically looking out for?

10:59I'm looking at the legal landscape. Number one is what's happening here. Are these going to hold

11:03true? Are the courts that are scrutinizing these policies and the practices, are they going to allow

11:08them to continue? Because for me, that's a major way to get around this. The second thing that I'm

11:13looking at, what are our allies? What are these countries that are actually getting these tariffs

11:18doing? Are they, is it reciprocal? What actions are happening? And then lastly, I'm picking up the

11:23phone, I'm calling my suppliers, and I'm trying to get closer to them and trying to understand what

11:27strategies and policies they have in place. Are they going to eat some of those costs for me? Are they

11:32looking at moving their supply chains to different locations? So those are the three, I think, things

11:37I'm looking at in doing to try to help combat tariffs now, and also the unknown with tariffs.

11:43And to that point, would suppliers eat some of this cost? What is the benefit for them there? And

11:49how much of a loss is that? And how much are they going to eat before they pass it on to you or me?

11:54It depends, right? It very much depends. So where I look at this, high margin industries have a lot of

12:02room to go, and they can cut into their margins to keep their customers and keep them happy.

12:06Because the alternative for these suppliers is to lose your customer, which then you'll have zero.

12:12So they're looking at that. So if you look at electronics or even auto and other industries,

12:16they will, they'll come down. But others where they just can't, like health, beauty, and wellness,

12:21food and bed, where maybe the margins are a little bit lower, they can't actually do anything for you,

12:26which is very unfortunate. Because you could be the world's best supplier, again, for someone that's

12:30been with them for 20 plus years. And you may not be able to do anything to retain the business,

12:35which is pretty unfortunate on both sides. And to end the conversation, I want to circle back to

12:41the beginning, because the sentiment here is, while two months have passed since you and I have talked,

12:46it's been three months since Liberation Day. A lot has changed, but a lot has stayed the same.

12:53Are businesses right now, from when you and I talked, are they feeling better, worse,

12:57or exactly the same? You know, that's a great question. And I would look at it on a couple

13:05lenses. The first lens are the companies that were able to adapt. And for whatever reason,

13:13they were able to not hit the lottery of tariffs. And they prevented their supply chain from moving to

13:18whether Canada or Japan or Malaysia or any country that was hit, they're feeling great.

13:23They feel like they made the right moves, even though it was pure luck. It was a lottery move.

13:28They made the right moves. The others that are now being hit that did do these moves,

13:33try to move away from China, try to move from other countries, do the right thing that are now

13:37getting hit, they're questioning things and they feel way worse. And every individual or every company

13:42has a different strategy, different approach for good reasons. But it's really hard to put strategies

13:48in place when you don't know what's next. I think that's a big question, the what's next. And as

13:54you and I sit here right now, what's next seems to be that August 1st date. But I hope you and I talk

14:01around August 1st, either perhaps August 1st or right after and see where we are then. Rodney Manzo,

14:07thank you so much for the conversation. Brittany, thank you so much.

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