Executives at major corporations, including Target, Goldman Sachs and Pepsi, have invoked the same one-word boogeyman on recent earnings calls: “Uncertainty.”
Concern among companies big and small about the unsteady business environment has centered on President Donald Trump’s tariff policies, which the White House has altered numerous times since Trump took office.
A pair of court rulings last week thrust Trump’s steepest tariffs into limbo, adding another layer of uncertainty as federal appeals court judges determine whether a major swath of the policies pass legal muster.
In response to the tariff shifts, many U.S. companies have opted to put hiring and investment plans on hold out of fear that a fresh levy could otherwise spark regret, experts told ABC News.
That paralysis risks sapping momentum from the economy and tipping the U.S. into a downturn, they added, while acknowledging the ultimate outcome remains unclear.
“These pretty significant policy changes – whether they’re coming out of the administration or the courts – can have a big financial impact on companies,” Gregory Brown, a finance professor at the University of North Carolina, told ABC News. “Profits can turn to losses, and vice versa.”
“It has to be nerve-racking for people on the front lines of this in terms of having their businesses or jobs highly affected,” Brown added.
The Trump administration has rebuked criticism of its on-again, off-again tariff approach, saying the flexibility affords White House officials leverage in trade negotiations with countries targeted by the levies.
Speaking to ABC News’ “This Week” in April, Treasury Secretary Scott Bessent described the posture as “strategic uncertainty.”
“You’re not going to tell the person on the other side of the negotiation where you’re going to end up. And nobody’s better at creating this leverage than President Trump,” Bessent said.
In the meantime, a host of major companies have warned that they may suffer losses due to the lack of clarity.
Target CEO Brian Cornell last month warned of “massive potential costs” due to tariffs, lamenting difficulties posed by “the rates we’re facing and the uncertainty about how these rates in different categories might evolve.”
In April, Goldman Sachs CEO David Solomon voiced alarm about possible damage that could result from the murky outlook.
“This uncertainty around the path forward and fears over the potentially escalating effects of the trade war have created material risks to the U.S. and global economy,” Solomon told analysts.
A survey of CEO confidence fell to its lowest level since 2022, the Conference Board found last month. More than half of CEOs expect conditions to worsen over the next six months, the survey said.
Secretary of Treasury Scott Bessent and President Donald Trump look on during The White House Digital Assets Summit in the State Dining Room of the White House, on March 7, 2025, in Washington, DC.
Anna Moneymaker/Getty Images, FILE
The policy uncertainty puts businesses in a bind because they cannot evaluate the costs and benefits of important long-term decisions, such as investment and hiring, Brett House, a professor of professional practice at Columbia University and former deputy chief economist at Scotiabank, told ABC News.
“Companies always have risks ahead of them. They can price those risks in terms of the cost of lending or borrowing and the prices of goods or services,” House said. “In a period of uncertainty, it’s hugely chilling of business activity because there’s almost now way to anticipate what the price of an activity should be.”
The uncertainty facing businesses has coincided with an anxious moment for consumers. Consumer attitudes have soured for four consecutive months as tariffs have taken hold, according to a survey conducted by the University of Michigan.
Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper appetites diminish. In theory, a slowdown of spending could hammer some companies at the same time they attempt to navigate the ever-shifting business environment, some experts said.
“If consumption starts coming down and companies are not investing, that’s when you start to see little parts of gross domestic product come down,” Jadrian Wooten, a professor of economics at Virginia Tech University, told ABC News. “We’re in that danger zone.”
The Federal Reserve Bank of St. Louis released a study in April that found a sudden surge of economic uncertainty could set the conditions for an economic recession.
So far, key measures of the economy have largely defied fears of a downturn.
The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. In recent months, inflation has cooled, reaching its lowest level since 2021.
The Organization for Economic Co-operation and Development, or OECD, forecast on Tuesday continued growth for the U.S. economy in 2025 and 2026, albeit at a slower pace than last year. Recession forecasts on Wall Street faded in recent weeks after Trump rolled back some tariffs.
Brown, of the University of North Carolina, said the uncertainty facing businesses is unmistakable, but its precise economic effect remains to be seen.
“The uncertainty is real,” Brown said. “How much of it really comes to fruition and really shows up in the data — that’s a different question.”