Expect media cuts, localization and a shift to digital, experts tell The Drum.
Trump's 2025 tariffs have created a new wave of supply chain instability. How can marketers orient themselves?
Donald Trump is now a little over 50 days into his second term as president – a period that has seen him reprise the key themes of his first term. Near the top of that list is using tariffs (and the threat of tariffs) to achieve wide-ranging political and economic goals.
The tariff list is already long: two separate, stackable 10% charges on all goods imported to the US from China; 25% on goods (with some exceptions) from neighbors Mexico and Canada; a global 25% on aluminum and steel (with planned similar measures for cars and agricultural products). Much of the world has responded with retaliatory tariffs of their own, including the EU and Canada.
Trump has his own unpredictable style with policy development and announcements, making it hard even for experts to keep track. As one such expert, David Marcotte, senior vice-president of cross-industry and cross-border technology at Kantar Consulting, put it to The Drum: “Somebody asked me, ‘Can you tell me what countries and what percentage of tariffs are going on at the moment?’ I said no. Because, frankly, [tariffs] show up, they disappear, they come, they go. There’s no consistency of what’s actually sticking or what dates they’re going to occur. What is constant is uncertainty.”
Marcotte goes on: “We’re only 50 days into this madness. What’s going to happen in the next 50 days?”
What indeed. And how can brand and marketing departments keep their head above the water and plan for the rest of the year? We assembled a hit squad of top trade and marketing analysts for a primer.
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In many ways, unpredictability is itself the most salient feature of the moment, over and above any particular tariff.
“The macro picture is one of volatility,” says Andrew Frank, distinguished vice-president analyst for marketing leaders at Gartner. “There’s a seismic shift going on in geopolitics in general and what we now call Vuca [‘volatility, uncertainty, complexity, and ambiguity’] in particular. Tariffs are a contributor to that general climate.”
Kantar’s Marcotte says that this volatility is itself the major concern for anyone trying to plan their way out of the moment. “Uncertainty has a cost to it.” Take shipping. “Maybe we have to wait a day before we ship something because we don’t know if it’ll be under a tariff or not. Maybe I have to put it in a warehouse, or I have to find another ship. Every time I make another incremental decision in the process of getting something from procurement to the shopper is a cost and that cost is not based on a real number… The other side is that I try to find product from sources that are not under tariff conditions, but the reality is that virtually everything goes through China in some manner.”
The upshot, Marcotte says, is an “uncertainty tax.” With every player in a supply chain not quite sure how to price in the volatility ahead of them, they can only guess at how much cost to pass on down the chain – an imaginary cost that becomes real the moment it’s passed on. “I think a lot of the film Empire of the Sun, where the criminal element says, ‘It’s great when things are getting better or worse – we can predict it. It’s the in-between that gets you killed.’”
Widespread unclarity about what tariffs will land and when is just as much a factor as the tariffs themselves in contributing to price rises, says Marcotte. “Yes, prices will rise, but it’s not predictable and it’s not immediate.
“Most manufacturers will start building in a price increase before the price before the cost increase hits them,” Marcotte explains. “And frankly, that’s good business. I know it’s going to cost me more in the future, so I need to start getting the price adjusted now. But from a consumer perspective, if they catch on that’s not good, they start thinking they’re being cheated.” The latter is – at best – a headache for marketing departments to figure out.
Jay Pattisall, a vice-president and principal analyst at Forrester, says that it won’t take long for the combined effect of price hikes and dropped consumer confidence to reach marketing departments. “The advertising and agency marketplace are indirectly susceptible to the ripple effects of tariffs, in the same ways that auto-marker supply chain partners are indirectly affected. Should tariffs and resulting price increases persist, they will impact consumer spending and sentiment during Q2 2025.”
So, marketers and agencies looking for a signal of where things are heading should stay laser-focused on signals of consumer confidence, says Marcotte. Bellwethers like the price of eggs, credit card tension, mortgage status and airline forecasts are significant predictors of confidence, so keep an eye on them. “The price of eggs determines what confidence is, so understanding that and being able to react is very important.”
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Pattisall, Frank and Marcotte all agree that we can expect marketing budgets to be hit by the second half of 2025.
Media spend, says Pattisall, is likely to be hit hardest: recall what happened during another recent major spike in instability, Covid-19. Media agencies, he says, suffered fastest and hardest. “Plan for media budget cuts in the second half of the year. Media is the most sizeable and flexible budget item available for companies to redirect to meet profitability goals”.
Thankfully, Pattisall says, media shops will have already learned a thing or two from the pandemic. Media houses working on the ‘media commission’ model, taking fees from a percentage of media spend, would be hit hardest, but many have since pivoted away from that structure.
Other agencies that see fees from media budgets should tread carefully too, says Pattisall – including some influencer marketing shops.
But these ‘at-risk’ agencies needn’t be sitting ducks. Gartner’s Frank says that there’s an opportunity to further marketing’s much-vaunted strategic shift. “Marketing can take a stronger role in these ‘cross-functional councils’ that are looking at strategy across all aspects of the organization, including supply chain, which are affected by the Vuca effect. Marketing needs to step up and think more strategically about how the organization ought to be responding.
“Marketing needs to demonstrate leadership in its agility and its ability to adapt. We’ve seen time and again when organizations automatically do things like cut media budgets in a recession that don’t always have the best long-term outcome once economic conditions change.”
Still, Frank says, marketing partners that can move fast and adapt quickly will be increasingly in demand as volatility continues to bed in. “The moment really emphasizes the need for agility, flexibility and avoiding too many long-term commitments that make assumptions about the economic future.” Again, the recent experience of Covid-19 may be relevant: “A lot of the clients that we spoke to were actually thankful their agencies were able to negotiate them out of some of the commitments they had made. So, on both sides of the agency relationships, we should be focusing on assurances that we have the agility and the bargaining power to shift in strategies quite quickly”.
One way to prove that agility is to pivot towards digital channels, where results can be gathered quickly. The moment, Frank says, “favors digital approaches, which tend to be more flexible, and performance-driven strategies, because they’re easier to measure… You know you’re getting at least some short-term value. And programmatic channels allow for more agile and cost-effective placements.”
Clients’ alternative, Frank says, will be to bring things in-house. “We’re already seeing some movement toward in-housing some marketing operations so that they can gain greater control over budgets and make rapid adjustments, which is more difficult for to do through an agency relationship.”
And expect some measure of increased regionalization, which is, after all, one of the clear aims of protectionist tariffs. “There’ll be more focus on regional effects. In a tariff war, different regions are affected in different ways depending on their economic role, what they produce and what they consume. All of that becomes more significant when you’re planning a media strategy that’s targeted at the organizations and individuals that are impacted by these events”.
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