Tariff Impact on Business Strategy: Why “The Economy Is People” Matters

I’ve said it for years: the economy is people.

Not GDP figures. Not trade balances. Not abstract percentages that scroll across financial news tickers. People.

Behind every economic statistic are human beings trying to build decent lives. Every policy decision ripples through communities, families, and individual futures in ways that outlast the news cycle.

So when our current administration embraces sweeping tariffs with political bravado but little strategic nuance, I see more than just misguided economic policy. The tariff impact on business strategy goes far deeper than most analyses suggest. It represents a failure to recognize the fundamental human stakes at the core of economic policy.

Tariffs: When the Numbers Become People

Strip away the political posturing, and tariffs reveal themselves as something far more consequential than lines on a customs form:

• A hidden tax that hits hardest at the bottom. When prices climb on electronics, clothes, and household goods, families with thin financial margins feel it immediately. The Yale Budget Lab projects that 2025 tariffs could slash U.S. GDP by 0.6% ($160 billion annually) with reduced export competitiveness causing an 18.1% decline in exports. That’s not just a statistic—it’s millions of kitchen table conversations about what to sacrifice this month.
• Job disruptions without safety nets. Industries entangled in global supply chains face rising costs and shrinking prospects. When a factory closes, it’s not an economic adjustment; it’s 300 people wondering how they’ll pay their mortgages.
• Community erosion that spans generations. When local economies built around specific industries falter, the effects cascade: shrinking school budgets, declining home values, younger generations leaving, and tragically, increases in what economists clinically call “deaths of despair.”

This isn’t abstract. This is real life playing out in real places.

The Long Horizon: What We’re Not Talking About

Most tariff coverage fixates on immediate effects: supply chain snarls, interest rate impacts, inflation spikes. But the meaningful consequences unfold over decades, according to multiple economic analyses:

The Inequality Accelerator

Tariffs function as regressive taxation without the honesty of calling themselves taxes. They raise costs on necessities that consume a larger portion of income for working families while barely registering for the wealthy.

A Minneapolis Fed analysis highlights how tariffs could force monetary policy choices that further disadvantage wage earners. Investopedia reports that the Fed faces a difficult dilemma: tariffs simultaneously stoke inflation while weakening growth. This isn’t just about paying more at checkout—it’s about a systematic tilting of the economic playing field that compounds over time.

The Two-Speed Recovery

Some communities and workers will adapt to these economic shifts. Those with capital, education, and mobility will pivot.

But that adaptation isn’t universally accessible. The worker whose factory closes at 53 doesn’t just need a coding bootcamp and a cheery attitude. The single parent can’t simply relocate for opportunity. The small town built around one industry doesn’t have venture capital connections. Research from Tobin Yale underscores how economic dislocation affects different demographics unequally.

This creates what I call a meaningful significance gap—where opportunity segregates based not on ability or effort, but on starting position and resources. The result resembles a two-speed economy where some accelerate while others stall permanently.

What Matters Next: Strategic Responses

The tariff impact on business strategy requires thoughtful adaptation. For the businesses and organizations I work with, I recommend viewing this moment through the lens of meaningful transformation—where short-term challenges catalyze more resilient, human-centered models:

1. Diversify supply chains with purpose. Don’t just react—redesign. McKinsey notes that rewiring supply chains requires significant operational overhauls, but this necessity creates opportunity for more sustainable and resilient models. FTI Consulting advises that companies should position these changes for long-term competitive advantage.
2. Protect what matters. CSE research shows tariffs threaten clean tech inputs and climate commitments. WINS Solutions emphasizes that tariffs on solar panels, EVs, and batteries could delay crucial decarbonization efforts. Smart businesses are doubling down on these priorities despite short-term cost pressures, recognizing that backsliding on sustainability means losing future competitive ground.
3. Support the humans in your ecosystem. Smaller and diverse suppliers often bear the brunt of economic shocks. ADEC ESG recommends supporting these partners through capacity-building, longer-term contracts, or shared risk arrangements to maintain these critical relationships.
4. Build scenario resilience. The Chertoff Group recommends developing contingency strategies for various tariff scenarios. This isn’t just risk management—it’s creating the operational agility essential for future success.

The Better Alternative

If we truly embrace “the economy is people,” we’d approach trade policy with sophistication rather than sledgehammers:

• Target interventions with surgical precision rather than imposing broad taxes on our own citizens
• Pair any protectionist measures with robust transition support
• Consider who bears the costs and who reaps the benefits when designing policies
• Take the long view that today’s trade decisions shape our children’s opportunities
• Recognize global interconnectedness as reality, not ideology

A Matter of Meaning

When we reduce trade policy to abstract debates about GDP or political theater, we miss the profound human reality. Trade isn’t just about products crossing borders—it’s about possibilities crossing thresholds.

The administration’s tariff policies might generate appealing headlines about getting tough, but headlines don’t pay mortgages or build community resilience or create opportunity where it’s vanished.

The question isn’t whether tariffs impact GDP. The question is whether they enable humans to flourish, and this fundamental insight should drive your business strategy in response to tariff impacts.

Because the economy isn’t just numbers on a spreadsheet. The economy is people—their hopes, work, struggles, and aspirations. Any policy that forgets this truth will inevitably fail those it claims to help.

And that’s the greatest cost of all.

Looking for more insights on how to navigate complex economic shifts while keeping people at the center? Check out my approach to Strategic Optimism for uncertain times and discover What Matters Next for your organization.