Economist to the GTDC Summit: Uncertainty is Certain Under Trump

In his address at the GTDC North America Summit, Douglas Holtz-Eakin warned of rising costs due to tariffs, supply chain disruptions and slowing U.S. economy due to the Trump administration’s policies.

A normally reserved Douglas Holtz-Eakin, who characteristically speaks without slides or notes, took the stage at the Global Technology Distribution Council’s annual North America summit visibly flustered and clutching paper in his hands. The economist and president of the American Action Forum, a Washington-based economic think tank, brought notes because, as he explained, things in Washington, D.C., were changing so rapidly that it was hard to keep up.

“Right now, I’m the personal therapist for most of you. People come into my office asking, ‘Why is he doing this?’ And I don’t know. Don’t ask me why he does anything,” he said, referring to President Donald J. Trump. 

Holtz-Eakin, a former head of the Congressional Budget Office, who also served as the economic advisor to Sen. John McCain’s 2008 presidential campaign and as a senior staff economist on President George H. W. Bush's Council of Economic Advisers, often offers a sobering assessment of the U.S. economy. In his estimation, the U.S. economy is healthy, with inflation back at acceptable levels and GDP growing faster than most developed countries.

However, that was 2024. In 2025, with Trump back in the White House, the threat of tariffs on allies and adversaries alike, indiscriminate cuts to federal spending, sweeping firings of federal employees, and the realignment of political policies are causing global shockwaves. Holtz-Eakin said European countries were prepared for tariffs; what they weren’t prepared for was the U.S. considering their value-added taxes (VAT) as part of trade war considerations or the administration's apparent warming toward Russia.

“They never dreamed they’d see him call Putin or Jamie Dimon to a stand-up meeting and throw away the securities structure they have known for 80 years. They never thought he would come with reciprocal tariffs and identify European VAT as a barrier to trade. And so they are deeply shaped by all of these events. They don’t have any view of what a successful outcome looks like,” Holtz-Eakin told the gathering of channel chiefs and distribution leaders in Oceanside, Calif.

Holtz-Eakin is among many economists who see Trump’s policies as unnecessarily disruptive and likely to slow economic growth. The Conference Board, another economic think tank, projects that U.S. GDP growth will decline from 2.8% in 2024 to 2.3% this year and fall below 2% through 2036 due to Trump’s policies. Holtz-Eakin also predicts that the Federal Reserve will lower interest rates by 25 basis points per month for several months in the year's second half to stimulate economic activity.

The tariffs, the centerpiece of Trump’s trade and economic policy, will undoubtedly raise costs on a wide range of business-to-business and consumer goods, Holtz-Eakin said, possibly reigniting inflation. Higher import costs on technology components, industrial materials, and consumer electronics will likely be passed down the supply chain, impacting manufacturers, resellers, and end customers.

While some industries may benefit from domestic production incentives, others—particularly those reliant on global supply chains — will struggle with increased costs, reduced margins, and potential supply shortages. The uncertainty surrounding tariff negotiations and potential retaliatory measures from trading partners could further disrupt pricing stability, complicating economic forecasting and investment decisions across sectors.

“The structure of these tariffs, the ultimate objective, remains unclear. The economic burden of these costs will be felt by U.S. consumers and businesses, first and foremost. They are inflationary, they increase costs, and they slow growth. That’s a fact,” he said.

While Holtz-Eakin agrees with other economists on the need to rein in federal spending, he said it should be done surgically rather than with a bulldozer, as is currently being attempted by the so-called Department of Government Efficiency under Elon Musk. The problem with tariffs and other Trump policies, he argues, is that they reflect outdated economic thinking. Modern industries—such as automotive manufacturing, pharmaceuticals, and technology—operate with complex, global supply chains in which goods crisscross borders multiple times before reaching their final form. Repatriating production infrastructure is not as simple as erecting economic barriers.

Impact of the Trump Economic Agenda on the IT Industry and Channel
Based on Holtz-Eakin’s insights, Channelnomics has extrapolated the potential impact of Trump’s economic policies on the IT industry and channel:

• Supply Chain Issues: Tariffs on raw materials and technology products will disrupt supply chains and raise prices. Vendors and distributors will likely pass these increased costs onto partners, who will, in turn, pass them on to customers.
• Extended Lead Times: Trade barriers and tariffs could disrupt just-in-time deliveries and increase drop shipping delays. Partners may need to hold more inventory or adjust customer fulfillment expectations.
• Regulatory Policy: Holtz-Eakin believes regulatory enforcement will become less stringent, potentially stimulating growth. However, weaker regulations may reduce the demand for IT investments in cybersecurity, data protection, and compliance technologies.
• Government Spending: The downsizing of federal agencies and reductions in the workforce could disrupt government IT programs like FedRAMP. Additionally, federal IT procurement—one of the largest sources of IT spending—could shrink, limiting lucrative sales opportunities.
• Shift to Services: If hardware costs rise due to tariffs, vendors and partners may shift their emphasis to cloud and managed services, which offer more flexible, consumption-based pricing models. This could create new revenue opportunities for partners that specialize in as-a-service offerings.

Channel Optimism vs. Economic Reality
While many economists—including Holtz-Eakin—express concern about the long-term implications of Trump’s economic policies, the IT channel remains largely optimistic. A Channelnomics 2025 survey found that 54% of U.S. partners believe Trump’s tariffs will help their businesses, and 53% think his overall economic policies will benefit the economy.

This optimism suggests that many partners see tariffs as a catalyst for domestic IT investment and reshoring efforts. However, the reality may be more complex:

• IT companies heavily reliant on international supply chains could face higher costs, shrinking margins, and sourcing challenges.
• The expectation that domestic IT spending will rise may be offset by corporate belt-tightening in response to economic uncertainty and rising interest rates.
• The potential for retaliatory tariffs from major trading partners adds another layer of risk to the global IT ecosystem.

Despite these challenges, the IT channel has a track record of resilience in economic shifts. 2025 will test how adaptable partners are, but those focusing on recurring revenue models, cloud expansion, and supply chain diversification will be best positioned to navigate these uncertainties.

Navigating Uncertainty in 2025
The IT industry has always evolved with changing market forces, and 2025 will be no different. Channel leaders should prepare for a more complex business environment by:

• Diversifying revenue streams to reduce reliance on hardware sales.
• Investing in managed services and cloud solutions that provide stable, recurring income.
• Staying informed about trade policy changes and adjusting supply chain strategies accordingly.

The key for IT vendors and partners will be balancing short-term opportunities with long-term strategic positioning in an increasingly uncertain economic landscape.