Short-term relief brings new uncertainties as companies weigh supply chain strategies – strategic planning remains critical.

Tariff talk continues to dominate the headlines and influence economic and market activity and sentiment in the United States and abroad.

On May 12, 2025 the White House announced an agreement between the U.S and China to partially de-escalate tariffs, effectively reducing the U.S. tariff rate on Chinese imports to 30% for 90 days. This agreement also suspended the U.S.’s reciprocal tariff for the same period, leaving the 10% baseline tariff in place.

“Generally speaking, the reaction from business owners has been one of relief,” says Chris Claybrook, Regions Commercial Banking executive in Nashville of the temporary agreement. “I do think there is a sense of frustration in trying to operate under these 90-day cycles and the overall uncertainty that still exists.”

Businesses in flux over tariff uncertainty

“The general uncertainty created by tariffs and the potential for a global trade war has been weighing on both spending and hiring, and some investment decisions have been put on hold,” says Brian Willman, head of Regions Corporate Banking Group.

He also notes that amid tariff news clients have been stocking up on select key inventory components and diversifying supply chains by looking into new vendors in what they hope will be more tariff friendly environments.

Regions Trade Finance group and International Subsidiaries Banking group heads Carson Strickland and Laerte Barros shared perspective on the impact the tariff noise has had in a recent article on understanding tariffs and international trade.

“We’ve seen inventories rise as U.S. companies began ramping up purchases from impacted countries in late 2024 and early 2025 to get ahead of the proposed tariffs,” said Strickland. “There are concerns around sales that were already made and even more so around the timing of shipments. Sales could be booked, or shipments could be on the water at current tariff rate and once those goods arrive, the new tariff rates could already be in effect.”

Claybrook has seen this firsthand as businesses try to rush orders over the 90-day period to get in under the temporary tariff relief, but notes that the expectation is that shipping lanes and rates could be strained as a result.

The impact: Tariffs aren’t all bad news

Businesses that have lower leverage and may not be negatively impacted by tariffs are more inclined to move forward with expansion plans. Additionally, strong domestic demand continues to drive growth in energy and transportation infrastructure related industries.

“Companies with access to established manufacturing within the U.S. seem to have an advantage,” notes Willman “And those that are completely domestic will have far less impact, but the uncertainty there is still creating concern.”

The biggest advantage for businesses is having a strong balance sheet and solid cash flow management. “Conservatively managed businesses are thriving by staying prepared and holding onto cash.”

One commercial banking leader shared perspective from a client business that may benefit in the near term from Chinese tariffs, in particular. A manufacturing company, their clients also buy components from China. The business is in talks with those clients to determine what it would take to manufacture those products domestically. The result would lead to business growth and additional hiring opportunities in their community.

The impact: Trade finance

“Trade Finance activity ramped up as companies that have cross-border exposure want advisory input on how to increase efficiencies/access to liquidity and reduce risk,” says Strickland. “Regardless of recent tariff news, which includes potential delays and/or relief with China but higher tariffs on European Union trade, companies that have cross-border exposure should always focus on business resiliency.”

Strickland notes that this includes ensuring risk is effectively managed and access to liquidity and working capital are sufficient to absorb disruptions in supply chains and impacts to revenue and/or profit margins. “Importers and exporters of goods and services should be careful to manage both payment and currency risk as well as maximize working capital efficiency by working with trading partners and their bank to extend payables, shorten receivables, and have access to well-structured bank credit facilities.”

The impact: International subsidiaries

Barros shares that his team continues to consult subsidiaries of foreign corporations on potential financial support as they weigh the option to establish operations in the U.S. “Many are waiting for a definition on the final levels of the tariffs.”

Barros shares that while import tariffs have become a new reality, significant uncertainty remains regarding the final tariff levels that will apply to each country. The U.S. is still engaged in negotiations with its major trading partners, and until definitive trade agreements are reached, many companies are delaying their investment decisions.

“However, this does not mean that foreign corporations are remaining passive,” Barros notes. “On the contrary, many are proactively developing localization strategies for their U.S. operations, which include evaluating manufacturing sites, exploring tax incentives, engaging with local suppliers, and discussing potential financing structures with their banking relationship teams – all in preparation to act quickly once the economic landscape becomes clearer.”

The impact: Navigating toward what lies ahead

Chad Cargile, Regions Commercial Banking leader in Houston and East Texas shares that the overarching sentiment among businesses is that it really depends on the industry and the specific client situation – and many are not yet sure how tariffs of any rate are going to impact them. However, from a broader economic landscape, there seems to be consensus from businesses spanning all industries that the current interest rate environment is still somewhat restrictive.

“Tariffs, economic volatility, and the interest rate environment continue to impact business decisions,” says Willman. “While many companies used the election as a reason to hold off on capital investments, that has widely been extended due to the ongoing uncertainty surrounding tariffs. The temporary agreement in place only extends that uncertainty.”

Thad Walton, Regions market executive and Commercial Banking leader for the Carolinas agrees. “Uncertainty is prevailing. The demand to expand and/or invest is there for some clients, but the overall landscape is still largely unpredictable. Business owners and leaders are looking for signs of stabilization to provide comfort to act, but the planning is there.”

Many expect tariff levels on China to ultimately be far less punitive than originally proposed – and the temporary agreement with China seems to support that expectation. For now, uncertainty remains the name of the tariff and economic landscape game.