By Paulo Trevisani and Josee Rose

Global corporations will likely start adjusting to a new, more protective world once the U.S. makes deals with its main trade partners, according to an executive from a major consulting firm.

President Trump's sweeping tariffs surprised business leaders, pushing them to adopt a wait-and-see approach, said Aparna Bharadwaj, global leader of Boston Consulting Group's global advantage practice.

Trump had said before the November election that he was going to enact tariffs on trading partners, however, the speed and magnitude of his policies have taken markets and business leaders by surprise.

UBS estimates the total value of new U.S. tariffs at $780 billion, or 2.5% of gross domestic product. The International Monetary Fund has reduced its estimate for global GDP growth to 2.8% this year and 3% in 2026, from 3.3% for each year in the previous forecast, because of the tariffs.

Uncertainty around the new policy is also taking a toll on business. Just this month, President Trump on April 2 unveiled the bulk of his tariff policies, but on April 9 he called for a 90-day pause on most of them to allow for negotiations.

The quick changes on tariff policy make companies uncertain about the near-term business environment. Many of them have withdrawn earnings guidance, citing uncertainty around Trump policies and how other countries will react to them. Executives have expressed concerns about a potential increase in back-office costs to handle added bureaucracy that typically accompanies tougher trade regulations.

Government officials in some key U.S. trade partners, including Japan, India, Mexico and Canada, have shown willingness to negotiate deals, fanning hopes that preliminary agreements may be reached soon. On the other hand, a Chinese Foreign Ministry spokesman has dismissed any suggestion that trade negotiations with the U.S. were ongoing.

"If the dust settles in about three to six months, good... but if the dust doesn't settle for like a year or two, then that's a lot of business decisions" that may need to be made amid elevated uncertainty, said Bharadwaj, who advises multinational companies and policymakers on global trade, economic statecraft, and emerging markets, with extended experience in Asia.

She added that changing suppliers can take two or three years, while changing a company's manufacturing footprint can take up to eight years.

Markets have reacted in a volatile fashion to Trump's trade policy. U.S. stocks, Treasurys and the dollar sold off rapidly. The most recent hard data still show a resilient economy, with employment holding up and consumer prices keeping with previous trends. But inflation is expected to increase as tariffs kick in, and forecasts of a tariff-related recession this year have increased.

Wall Street has rallied at any hint of de-escalation in trade wars.

Bharadwaj said a world with more trade barriers is here to stay. "It is a new reality," she said. "You can't go back to the past."

Write to Paulo Trevisani at paulo.trevisani@wsj.com and Josee Rose at josee.rose@wsj.com

(END) Dow Jones Newswires

April 24, 2025 12:23 ET (16:23 GMT)

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