Corporate chiefs from Delta Air Lines Inc to Walmart Inc are warning of a wave of pessimism that’s swamping demand. — Reuters
DALLAS: Donald Trump’s 90-day reprieve on some tariffs sent the stock market soaring Wednesday.
But the chaos sown by the president’s trade war means corporate America is planning for a recession.
Corporate chiefs from Delta Air Lines Inc to Walmart Inc are warning of a wave of pessimism that’s swamping demand and making it difficult to predict what’s to come.
Jamie Dimon, the JPMorgan Chase & Co chief executive officer, said Wednesday that defaults will rise as the economy worsens.
Automakers are offering fresh discounts or pledging to hold prices steady in a bid to lure consumers scared off by talk of tariffs.
Comments from Delta chief executive officer Ed Bastian exemplified the dread. Reminded that last month he had said he didn’t think the United States was headed into a recession, Bastian conceded to an interviewer on CNBC that things had changed. “We’re acting as if we’re going into a recession,” he said.
“Whether you’re a corporate manager trying to figure out whether you want to step forward on an investment, whether you’re a bond trader or in the markets trying to allocate capital, or even as a consumer, I think everything has stalled” because of uncertainty tied to Trump’s policies, he told CNBC.
Trump, who came to office on a pledge to bolster economic growth and fortify the United States economy, is instead unleashing a wave of panic across markets and businesses as consumers and investors try to make sense of his policies and their impacts.
On Wednesday afternoon, Trump said he would pause higher reciprocal tariffs for 90 days on dozens of trade partners, while raising duties on China to 125%, an about-face that came roughly 13 hours after higher reciprocal duties on 56 nations and the European Union went into effect.
It wasn’t immediately clear which nations would receive tariff relief, but stocks soared after the president’s announcement, lifting the S&P 500 Index to its biggest one-day gain since 2020.
The benchmark US gauge had been headed to a bear market, approaching a 20% decline from its peak.
When asked whether Americans should believe the reprieve will hold and tamp down fears over heightened uncertainty, Treasury Secretary Scott Bessent said “the only certainty we can provide is that the United States is going to negotiate in good faith and we assume that our allies will too.”
Goldman Sachs Group Inc. economists rescinded their forecast for a US recession after the announcement, but for Mike Roach’s business, “the recession has already started.”
The cofounder of Portland, Oregon-based apparel company Paloma Clothing said sales have dropped 11% from a year ago, he’s running three discounts at once and is thinking about pulling back on summer hiring.
“By pausing the tariffs today – that’s great for today, the market will go up,” he said.
“The reality is, it still leaves us in a very uncertain environment.” — Bloomberg
