What C.E.O.s Really Think About Trump’s Tariffs

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Last week, President Trump hit several countries with yet another round of punishing tariffs.

So far, the economy's been resilient in the face of his trade war.

But it's unclear how long that'll last.

Today, I talked to my colleague, Deal Book Editor Andrew Ross Sorkin, about what CEOs are telling him privately about Trump's tariffs and where they think all of this is headed.

It's Monday, August 11th.

Andrew, welcome to the show.

Thanks for having me.

We are coming to you because you are one of the most deeply sourced and best connected business reporters out there.

You literally talked to the president on CNBC last week.

I did.

It was kind of wild.

Kind of amazing.

And you're regularly talking to business executives who have been navigating these ups and downs of tariffs for months.

I feel like by this point, we've asked this question on the show over and over again.

But help me make sense of this moment.

What is the status of Trump's tariffs as of right now?

So the big shift is that after many, many months of speculation about tariffs, about what the ultimate rates would look like, about how severe they would be and how businesses would have to navigate them, that the tariffs are actually here.

So, we had what the president called Liberation Day back in April.

Right.

He announced these remarkably high tariffs.

I mean, we're talking about numbers in excess of 100%, in some cases, 145%.

And business leaders, politicians around the world had a collective freak out.

Yep.

But over the last several months, those tariff rates continually got delayed and postponed.

Right.

We got that taco meme on Wall Street.

The taco meme.

Trump always chickens out.

Trump always chickens out.

And so here we are in the month of August, and we now have,

in large part, a framework for what the tariff rates are going to be.

President Trump's sweeping global tariffs for more than 90 countries have come into effect, including Japan, the UK, and the European Union.

And the president,

to some degree,

at least isn't totally chickening out.

We're saying this is probably the biggest deal ever reached in any capacity, trade or beyond trade.

And now

if you are a U.S.

company that is importing goods into the United States, you are writing a check to Uncle Sam.

We have hundreds of billions of dollars pouring into our country now.

We should have done this many years ago.

So, what do some of the rates that we're now looking at actually amount to?

So, if goods are coming in from the EU, you're paying 15%.

If goods are coming in from Japan, you're paying 15%.

If goods are coming in from China right this moment, you're paying actually only 30%

with the prospect that you could be paying 125% because that piece of the puzzle has not been fit into the puzzle.

Still unsettled.

Still unsettled.

By the way, India unsettled 50%.

Right.

What was that, Andrew?

That shocking rate on India that was just announced of 50%

really took me by surprise.

I think it took a lot of people by surprise.

Well, it's a huge about face for the U.S.

government and our country's relationship with India.

For the last several years, we have been trying to actually push a lot of companies to actually get out of places like China and move their manufacturing to places like India.

But India has been one of the biggest importers of oil from Russia.

And so they have been effectively propping up the Russian economy.

And Trump is now saying that he's going to use the tariff chess piece, if you will, to change that dynamic.

Okay.

So we have these huge tariffs on India.

We have different rates all over the world.

A sense that these things are really in effect.

How are all the CEOs, all the executives, the investors, the policymakers that you talk to reacting?

Honestly, the surprising thing is at this point, they're actually a lot calmer about it all than you might imagine.

They may not like it, but I think they're recognizing and deciding that this is their new normal.

And the other thing that's so surprising is just how sanguine the markets and the investor class has been around this.

Because back in April, there really was a freak out, not just among the CEOs, but the stock market fell precipitously until the president delayed and postponed these tariffs.

Yep, I remember that.

Now in recent days, you've had the market either flat or actually go up, which suggests that the market is settling in.

And to some degree, they're saying this is okay.

Okay, just explain that to me.

There's a state of permanence now about these tariffs.

One way or the other, for at least the next several years, if not the next decades, and I say decades plural,

I think there's a recognition that we are going to be living with some form of tariff.

And by the way, maybe those tariffs will change and go up and down, but there's now a sense that it's here.

There's a window into what that actually looks like, somewhere between 10% on the lowest end and maybe 30% on the highest end.

And so they're starting to realize we're just going to have to plan to to live with this.

Right.

Now, I don't want to overstate the sense that everybody's cool with this, right?

Inside the boardrooms and the corner offices of corporate America, they're worried.

They're just saying, okay,

we're going to have to figure out how to deal with our worry.

And that's different than the last couple of months of, okay, we're worried, we're freaked out.

And we think that somehow, if we can just get to the president, we're going to somehow get him to back off all of this.

And now that they've realized that that's not the case, they're like, okay,

we have to actually just figure out what to do about it.

Can we get into that actually?

Up until now, how have CEOs navigated these tariffs?

I mean, I can imagine it's been a really rough road.

I think there's two things that have been going on.

One is they've been making pilgrimages to Washington to see lawmakers, to try to see the president, to try to see all of his deputies and lieutenants around him, and desperately try to persuade them away from this, clearly unsuccessfully.

Clearly.

The other thing they've been doing is spending an extraordinary amount of time trying to rethink their supply chain.

Can they move goods from one place to the other?

In certain cases, they were trying to get as much of their

supplies into the United States early to try to get ahead of the tariffs.

So you had Ford, for example, literally sending trucks back and forth between the border of Mexico and the U.S., bringing as many supplies to the U.S.

as they could because they knew they're going to slap us with these tariffs.

Okay, so they're desperately trying to get the Trump team to back off.

That doesn't work.

They've been trying to stockpile to avoid the hit of tariffs.

In the meantime, they haven't been raising prices.

That's been a big mystery.

What's going on there?

Why haven't they passed on the cost of these tariffs to consumers?

So first of all, just Maya Culpa myself, which is I think I, like a lot of people, thought in April that we were going to see higher prices and higher prices super quickly.

I love that you're admitting this.

Well, look, when you saw the president out with, in some cases, tariffs that were supposed to be implemented overnight at 145%,

you would invariably say,

if in fact that's true, prices should go up.

So the first piece that I was just wrong about was actually that these things would get delayed and postponed.

The other thing, though, when you talk to CEOs of some of the big retail companies and just any major manufacturer here in the U.S., is they say that they've been trying to eat as much of the tariff cost so far as they can.

And why is that?

It's interesting because if you go back to the pandemic, companies did something called taking up price very quickly.

They were very worried about inflation and they would almost raise prices even before they got hit with the costs themselves.

And so I thought, and I think a lot of people thought, okay, even before the tariffs are here, companies are just going to raise the prices because they want to get ahead of them.

They're going to repeat their pandemic plan.

Exactly.

Two things have come into play that are different.

One is that the economy is not as strong as it was during the pandemic.

And so there was a real concern that actually the market can't really accept a much higher price.

at the kind of volume that some of these companies are selling their products at, that if you were the first mover to raise prices, you would actually lose market share.

Basically, if you're the first one to raise your prices, if you're a Walmart, your customers might turn to a target.

Exactly.

And the other thing, and this is more anecdotal,

is a sense among business leaders that given the president's propensity to critique them directly, if not more than that,

that just the optics of raising prices could cause the president to come out publicly and single them out.

You saw this happen earlier this year already when there was a news report that Amazon was considering putting literally on the website the cost of the tariffs.

Right.

The day that happened, the president was out there an hour or two later after that report, which was erroneous, by the way.

But he was out there criticizing Amazon and Jeff Bezos was on the phone with the president.

Okay, and this may seem obvious, but just slow down here for me a little bit.

Explain what the CEOs are so afraid of.

I mean, what is it that they actually think will happen once the president gets so angry with them?

Look, I think this president has taken to targeting certain industries, certain companies that he doesn't like for whatever reason.

We saw his approach to universities in America.

We saw him go after some of the big law firms in America.

We saw him go after Paramount and CBS News, for example, and not allow a merger to take place until a settlement was reached.

So I think that there's enough examples that the business community looks at and goes, it's not just that he's going to write something on Truth Social.

If he wants to send his regulatory apparatus after us in one way or another, he can and he will.

And that's, I think, to some degree just a deterrent for the entire business world when it comes to doing anything that they think would cause his wrath.

Aaron Powell, so based on those private conversations that you're having, if you can share some of the learnings that you've had, how does that fear operate within a company?

How does it change your decision making?

Aaron Ross Powell, I'll give you a very tangible example.

I talked to an executive at a company that was thinking of hiring somebody that had worked in the Biden administration.

Not a particularly famous person in the Biden administration, but somebody who had worked in that Biden administration.

As part of thinking about whether to hire that person or not, they decided to make phone calls to back channel with people in and around the president to try to understand whether this person would be, quote unquote, acceptable to the president.

Wow.

Running individual hiring decisions by them.

I think that is the fear that he has imposed on parts of the business community.

And so you can look at that example.

That's a small example.

Think about a company that's going to very publicly raise their prices.

Well, if they can try to avoid raising their prices for as long as they can, they will.

You know, it's interesting because I spent a lot of time talking to these leaders of companies, many of whom happen to be billionaires, and you'd think, okay, they have this extraordinary amount of money.

They shouldn't be worried about the president or anybody else.

I mean, I think that's sort of the conventional wisdom.

Yeah, that's exactly why I asked the question.

But the truth is that I think almost singularly,

this is the one person in the world who has more power than they do.

But, you know, in fairness, CEOs have always been trying to stay in the good graces of, frankly, every president.

And I was just with a tech CEO who actually made this point.

He's a Trump supporter, who said, look, during the Biden administration, you know, we were implementing all sorts of DEI and ESG-related programs in our companies to hopefully buy some goodwill with the president.

We were investing in EVs.

Sometimes the Biden administration during COVID was requesting certain social media companies to take down certain posts, to amplify other things.

And that some of the big tech companies were doing that in part to stay in the good graces of the administration that was ultimately regulating them in all sorts of other ways.

Now, I'm not saying that those are all equivalent things,

but I think it's just worth putting on the table.

I get that what companies have been doing to adapt to tariffs is a way of kind of avoiding a conflict with the president.

But in this case, these companies, I mean, they have shareholders, they have to put out earnings reports, you know, and eating the cost of these tariffs just doesn't seem like a sustainable long-term solution.

It isn't.

And I think the more that I talk to some of these executives, especially in the last couple of weeks, there's a greater sense that things are about to change.

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Okay, Andrew, you said this strategy is going to have to change.

What are you hearing about what CEOs are going to do?

You know, I just got back from Aspen, Colorado.

The Aspen Institute has something called the Aspen Economic Strategy Group meeting every year with

many of the former Treasury Secretaries in the United States, Hank Pauls and Larry Summers and Janet Yellen, and so many CEOs, Larry Fink, who runs BlackRock and Brian Moynihan, who runs Bank of America.

And one of the things just coming out of that meeting that you realize is that this is unsustainable, that at some point the dam does have to break when it comes to prices.

And so I think you're going to start to see prices rise.

And there have been very public indicators of that already.

Amazon's said that they're going to have to raise prices, and they're going to have to raise prices for two reasons.

One is that their own suppliers are charging them more.

And also, all of the sellers in their marketplace are going to be raising their prices because they, too, can't afford it.

This is an interesting example because Amazon was this company that was shamed by Trump, you know, didn't do this, backed away.

And now they're saying, look, we're going to have to raise these prices.

The rubber meets the road.

And while we're talking about the rubber meeting the road, another good example of this is Ford.

And I've spent time talking to Jim Farley, who's the CEO of Ford.

This is a company that he now says is going to lose $2 billion this year.

Whoa.

And so what I keep hearing over and over again from CEOs is that come this fall, they are going to be forced to raise their prices, despite how much they like to keep them where they are if they could.

And what are they telling you about their hiring plans?

Because we just got this pretty weak jobs report.

Are your conversations with these executives reflecting any softening in the labor market?

You know, one of the things that a number of CEOs have told me just in the past couple of weeks is this idea that when they've had job openings, that in many cases they're not filling them.

And one of the reasons they're not filling them, and maybe that's reflective of what those job numbers suggest,

is this uncertainty.

The uncertainty of the tariffs have created an environment where they don't know what the future portends.

They don't know once these tariffs are in effect and what prices they're going to ultimately have to sell their products at, what the business looks like in the same way that it did over the last six months.

But, you know, a lot of the data that we're getting still is inconclusive.

If you look at, for example, Bank of America and their spending reports, they actually track every customer and how they use credit cards.

They would say spending is up.

You talk to the CEO of Uber, who I spoke to last week.

He would tell you there are more people that are ordering cars than before, that they're seeing no slowdown.

And so there is this sort of mixed picture, and I don't think we have real clarity just yet.

Okay, so we've talked about various ways that the companies might adapt to tariffs, these new potential strategies, one raising prices.

Another potential effect would be their hiring.

What if they just did what the Trump administration wants them to do and moved manufacturing or sourcing to the United States?

I mean, that is a way of adapting to the tariffs.

Aaron Powell, Jr.: And many are looking at that.

There is no question that they're trying in some cases to do that.

But it takes a very long time to be able to move supply chains around, to be able to build a new manufacturing facility.

And so during that period of time, you still are going to have to import goods.

You know, an example of that is the way Apple is approaching all of this.

We just saw them announce that they are going to be investing an additional $100 billion

in manufacturing here in America.

Huge announcement.

But Tim Cook was asked in the White House, When would the actual iPhone, the full phone, be produced in the United States?

And he said not for a very long time.

And that's because

even if he wanted to, just the physical nature of getting everything coordinated would take years.

So basically, even if the tariffs have the desired outcome,

you could still see an economic impact in the meantime while that is playing out.

The laws of economic gravity would suggest that at some point you have to pass the costs on to customers.

The question is, how big an impact that's going to have on the overall economy.

Given this picture that you've laid out for us with these cracks emerging in the U.S.

economy, why has the stock market been doing so well?

We're in all-time high territory right now.

How do you explain that?

Well, there's this other phenomenon in our economy that we haven't talked about, which is artificial intelligence and just all of the data centers which are being built around the country, which are helping support our entire economy in ways that didn't exist only a couple of years ago.

And so you have companies like Microsoft, which will spend $120 billion this year.

That's into the economy to be building data centers.

And when they're building data centers, it has an impact on buying semiconductors.

So all of a sudden they're buying these GPUs from NVIDIA.

They are building on land, so they're helping support real estate prices.

All of these data centers need electricians and construction work and electricity.

So the energy complex is getting impacted.

So there is this enormous force that is lifting a lot of parts of our economy.

So even if prices go up in certain areas, it is possible that perhaps our economy can absorb more of it than we might.

if we didn't have this thing called AI happening around us.

You're saying these companies are just injecting a huge amount of cash into the economy right now, and that's part of what's making it look so resilient.

It's extraordinary.

I mean, some people would call it a gold rush, other people would call it a sugar rush.

And I don't think we know yet which it ultimately will be.

It's hard to believe that these kinds of investments at this scale are going to be here forever.

Call me in five years from now.

It's possible that if it took several hundred people to build the the data center, the data center only needs five, 10, 15 employees.

So invariably, you know, this can't go on at that level forever.

But there are some people who believe that AI will fundamentally change our economy in all sorts of other ways.

So big picture, I want to zoom out and just think broadly about the moment that we're in.

When we say that tariffs are here to stay, when the CEOs, when the investors tell you that,

how significant is that, Andrew, in the course of economic history?

Aaron Ross Powell, we have not seen anything like this in nearly 100 years.

The last time that we had this kind of reordering was in the 30s and 40s, and part of that was Smoot Hawley, which was an effort by the United States to tariff other countries.

And then we had a war.

which reshapes a lot of our universe.

I think these tariffs are going to reshape the relationship that the United States has with so many countries

and for a very long time.

Because one of the things that many of the policy leaders that I talk to say is these tariffs are going to be here likely long after President Trump is in the White House.

And the reason for that is if, in fact, they're bringing in something like $300, $400 billion a year in revenue from a budget perspective, it's going to be very hard for Congress to say, well, we're not going to have that money anymore.

Right.

Congress is going to want to spend that money.

Congress is going to want to spend that money.

You're going to have companies that have completely reoriented the way they have organized their own supply chains.

They're not going to turn around on a dime and change that after making all of these new investments.

And then you're going to have all of these trading partners, which have reorganized the incentives even inside their own countries as a function of this.

And so it's going to be very, very hard hard to undo.

So people in Trump's orbit, maybe even the president himself at times, have cast what we're looking at is an effort to really reorder the global economy.

I guess my question is after hearing you, has that already happened?

It's a great question.

It may have already happened, and we didn't even realize it.

You know, this story feels like it keeps changing every day, and it's hard to know what really is going to come next, what the stock market's going to do, what the bond market's going to do, what the political class will do over the next several years.

But in so many ways, it does feel already that the world has changed, and in some way, perhaps permanently.

Andrew, thanks so much for your time.

Thanks for having me.

We'll be right back.

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Vladimir Putin said that he would never sit down with Zelensky, the head of Ukraine, and the president has now got that to change words.

On Sunday, Vice President J.D.

Vance said that the U.S.

is working to arrange a meeting between Russian President Vladimir Putin and Ukrainian President Vladimir Zelensky to discuss an end to the war.

The president said this to me today privately said, look, maybe this works out, maybe it doesn't, but it's worth the effort, it's worth trying, and we're going to keep.

Vance made the comments during an interview on Fox News.

He said he didn't think it would be a good idea for the Russian and Ukrainian leaders to meet before President Trump meets with Putin later this week.

That meeting is supposed to take place on Friday in Alaska.

It would be the first in-person summit between Putin and an American president since Russia invaded Ukraine in 2022, and it's seen as a victory for Putin, who's been isolated from Western leaders for months.

And in a highly unusual arrangement, two American AI chipmakers have agreed to give the U.S.

government a cut of the money they make in China.

People familiar with the deal told the Times that the companies, NVIDIA and Advanced Micro Devices, are expected to pay the U.S.

15% of the money they take in from selling AI chips to China.

The Times is reporting that NVIDIA's CEO met with Trump at the White House to discuss the deal last Wednesday and agreed to the arrangement.

The Commerce Department began granting licenses for AI chip sales two days later.

That essentially made the federal government a partner in the company's business in China.

Today's episode was produced by Ricky Nowetsky, Alex Stern, and Caitlin O'Keefe.

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That's it for the daily.

I'm Natalie Ketrowev.

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