An End to Trade Uncertainty… Maybe

With all-out trade wars looming for months, businesses understandably put most major decisions on hold—everything from hiring to building new operations to mergers. “It was a ‘hope for the best, prepare for the worst,’” says Justin Ripley, a Korn Ferry senior client partner and member of the Global Industrial practice.

But will that change? Over the last week, agreements made by the US with Japan, South Korea, and the European Union have seemingly taken the largest trade taxes off the table for most products. Assuming they’re finalized, the agreements likely mean that importing goods to the US will be more expensive. So far, those in the C-suite seem to appreciate having some clarity. “I think we’ll see a lot of movement the back half of this year on everything,” Ripley says.

The agreements center on 15% tariffs (with some significant exceptions) on goods imported from the EU, South Korea, and Japan to the US. That’s much higher than in 2024, when tariffs on imports in many cases were less than 2% on European goods and 3% on Japanese goods. But over the spring, the US threatened tariffs of 30% or higher unless the parties could reach a broad agreement that included lowering tariffs on US exports. Annual US imports from the EU, Japan, and South Korea are valued at about $600 billion, $150 billion, and $130 billion, respectively.

The uncertainty had many companies around the world in a sort of stasis. Firms did not know how much their imported materials or finished products were ultimately going to cost. Decisions on whether to shift production from one country to another became more challenging. Outside of financing AI-related work, many organizations delayed major investing decisions, focusing on preserving liquidity and containing other expenses.

Mergers and acquisitions in the US, which usually account for almost half of all M&A activity worldwide, fell by 13% year-over-year in the first quarter. According to a spring survey of about 400 directors, tariffs ranked as the top priority of boards—outranking compliance issues, AI, and shifting policies on M&A activity. The recent agreements could signal the end of a major source of distraction for many leaders. “Many are glad the craze of the negotiations is over,” says Christoph Mât, a Korn Ferry senior client partner who leads the firm’s Assessment and Succession business in Germany.

Experts point out that leaders will now see whether their months of scenario planning have borne any fruit. Many boards pushed executive teams to develop contingency playbooks for different scenarios around capital allocation, cost containment, communication protocols, workforce engagement, and more. In turn, executives directed managers across functions to run scenarios to analyze the impact of various tariff levels.

There’s still some wariness among some corporate leaders, particularly outside the US. The US administration reversed decades of low tariff policies and repeatedly changed its demands over the spring and summer. “Most C-level executives here on the ground expect spontaneous changes,” says Mathias Kesting, a Germany-based Korn Ferry senior partner and executive coach.

Indeed, there’s still plenty of uncertainty. For one thing, the US hasn’t reached an agreement with China, which supplied it with almost $440 billion in goods in 2024. On August 1, tariffs are set to take effect for dozens of additional countries, including the US’s two largest trading partners, Canada and Mexico. Nothing is finalized, not even the most recent agreements. The US and EU need to work out whether pharmaceuticals, a major EU export to the US, will get a 15% tariff or some other figure. The US and Japan haven’t agreed on an exact list of goods covered by a deal. “Many of the key details, especially around implementation, are still to be determined, which makes it difficult for organizations to take concrete action at this stage,” says Luka Cras, a Netherlands-based principal for Korn Ferry.

It could take some time for final deals to emerge. For example, when the UK officially left the European Union on January 31, 2020, a deal became necessary between the now-separated trading partners. They started bargaining in March 2020, and negotiations took more than nine months. A final deal didn’t go into full effect until May 1, 2021, when the European Parliament ratified the agreement.

Still, the recent deal frameworks could be enough for “people with courage” to move ahead rather than waiting for total clarity, says Alan Guarino, Korn Ferry vice chairman in the Board and CEO Services practice. “That’s what CEOs get paid to do.”

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