2025 Business & Economic Outlook - Part 2 of 5
(Based on insights from Alex Chausovsky, Bundy Group, shared at Allied Executives’ 2025 Business & Economic Outlook)
At our recent Allied Executives Business & Economic Outlook event, Alex Chausovsky delivered a reality check about the current tariff environment. The short version: it’s not as catastrophic as feared, but it’s far from simple.
The rules of the game have changed. Tariffs are no longer just trade tools; they’re geopolitical levers. Understanding that shift is essential for planning in 2026.
The New Tariff Landscape
Alex reminded us that today’s tariffs aren’t being negotiated in back rooms or balanced for long-term trade equity. They’re being issued unilaterally. Executive orders now dictate tariff policy, sometimes overnight.
The administration isn’t just targeting China anymore. It’s leveraging tariffs against Mexico, Canada, India, Brazil—even traditional allies—to influence everything from immigration control to defense spending.
That volatility is the new normal. The key takeaway: tariffs are now a permanent fixture of U.S. strategy, not a temporary disruption.
What the Numbers Really Say
Before the new tariffs hit, the effective rate on U.S. imports hovered around 2%. Today, it’s closer to 18%. But thanks to creative mitigation, supplier concessions, cost absorption, and rerouted supply chains. The actual rate businesses pay is about 9%.
That’s why inflation hasn’t spiked as badly as some predicted. Still, Alex expects the lagging effects to build pressure through mid-2026. Tariffs take 9–18 months to filter through the system, so we’re only seeing the front edge now.
This means higher input costs are likely coming, even if the headlines go quiet.
The Bigger Risk
Alex was clear that tariffs are just one piece of a larger strategic puzzle. The bigger risk lies in how they reshape global alliances.
China still dominates critical mineral production—97% of gallium and germanium, essential for semiconductors and defense tech. Pushing too hard could backfire if those supply lines tighten further. Meanwhile, traditional allies like India and Brazil are drifting toward closer ties with China, creating a more fragmented trade world.
The takeaway for business leaders? Complexity is here to stay. The rules will keep shifting long after this news cycle ends.
What Leaders Should Do Now
- Map Your Exposure – Know which products, suppliers, and markets are most vulnerable to new tariffs.
- Build Your Expert Bench – You don’t have to master trade law, but you need trusted advisors who do.
- Plan Scenarios – Develop concrete playbooks for multiple outcomes: tariffs increase, decrease, or move to new product categories.
- Communicate Constantly – Increase contact with top suppliers and customers. Visibility builds loyalty when conditions tighten.
The Silver Lining
Not everything is negative. The recently passed “One Big Beautiful Bill” offers real tax and depreciation benefits—especially for R&D investments. But, as Alex warned, those gains are complex and need professional guidance to capture fully.
Key Takeaway
Tariffs are no longer temporary headwinds, they’re structural. The leaders who navigate them best will track exposure, plan multiple outcomes, and act before policy shifts make those decisions for them.