The Impact of Tariff Threats on Business Investment

The uncertainty generated by the threat of tariffs significantly affects business decision-making and investment strategies. Research indicates that spikes in policy uncertainty can lead to substantial declines in investment, with historical data showing a 6% drop in investment during periods of heightened uncertainty around the financial crisis. This is critical for long-term projects, such as building manufacturing plants, which require stable conditions for capital-heavy decisions. The fear of future policy changes can dissuade companies from proceeding with large investments, even when no actual changes have occurred.