Tariffs and Business Uncertainty: The Current State of Play

Businesses hate uncertainty — and the Trump administration’s rapidly evolving tariffs barrage has kicked unpredictability into high gear. With Washington blanket-targeting its largest trading partners, major allies and any country with levies on U.S. imports, no one knows what’s next. The dynamic leaves executives in an uncomfortable vacuum of forward vision, making it increasingly difficult to plan and make key operational decisions.

This is especially true for mid-sized firms. Companies at this scale typically have global reach, often with complex multinational supply chains that increase their exposure to trade disruptions. Even domestically focused and services firms are not safe, with uncertainty heightening around possible knock-on effects and overall economic impact.

PYMNTS Intelligence surveyed CFOs at U.S. middle-market firms generating annual revenues between $100 million and $1 billion in mid-February. ¹ At the time, talk of major U.S. tariffs was everywhere, but the government had not formally announced or enacted any levies. Our survey reveals how such companies plan to tackle the lack of certainty that tariffs would create in the next 12 months.

One in five respondents at those firms, which represent both goods and services verticals in various industries, said that levies likely to be imposed by the U.S. on imported products would lead them to raise prices on their goods and services. But crucially, only a sliver said they would do so immediately as their first response to the tariffs. In any case, most companies hadn’t even started to plan for a global trade war. Will they be left scrambling?

These are just some of the key findings from “Tariffs And Business Uncertainty: The Current State of Play, March 2025,” a PYMNTS Intelligence study conducted from Feb. 10 to Feb. 18. Data was collected from a survey of 60 CFOs, each representing U.S. companies generating annual revenues between $100 million and $1 billion.

• The Uncertainty Divide
• Plan B Needed
• How to Respond
• Read More
• Methodology

The Uncertainty Divide

CFOs have differing views on how and whether tariffs will affect the U.S. economy.

CFOs at middle-market companies are divided over whether the ramp-up in tariffs will hurt the U.S. economy. More than one-third, or 37%, expect a negative impact, slightly more than think the levies will be positive, at 32%. Similarly, more CFOs expect tariffs to hit their operations directly, at 33%, rather than produce benefits, at 27%. These trends vary relatively little between the goods and services sectors, a reminder that tariffs on goods can indirectly affect services, as higher prices on goods leave consumers less money to spend on services. This points to a “winners and losers” dynamic: pain for some and pleasure for others, depending on their operating environment.

What’s more interesting is how much uncertainty plays into these outlooks. Just more than half, or 54%, of CFOs at high-uncertainty firms — defined as companies whose CFOs have a high degree of uncertainty about the business climate they’re operating in — believe tariffs will cause macroeconomic damage. This can affect everything from consumer demand to inflation to unemployment.

What’s clear is that tariffs spell middle-market trouble. That 54% share with high uncertainty expectations thinks tariffs will negatively affect their businesses and the U.S. economy. In contrast, barely half of low-uncertainty firms — defined as those with relatively greater confidence in the business climate — anticipate that outcome.

Six in 10 middle-market CFOs expect tariffs to heighten uncertainty and planning challenges.

Middle-market CFOs broadly agree that tariffs will exacerbate key challenges facing their businesses. Six in 10 expect tariffs to add to economic uncertainty and planning challenges — and for high-uncertainty firms, this rate jumps to 77%.

The uncertainty factor touches on critical business issues. Nearly 7 in 10 CFOs foresee shortages of supplies or delays in getting products, with a similar share anticipating new costs to restructure their supply chains. Because mid-sized and smaller companies don’t have the purchasing power of larger ones, such costs can be substantial. Most CFOs also predict increased raw material costs and worry that retaliatory tariffs will complicate their exports. Worryingly for labor markets, slightly more than half of CFOs foresee potential layoffs or reduced hiring.

For the goods sector in particular, CFOs show elevated concern about higher raw materials costs and product shortages and delays. In contrast, respondents working in services companies are the most likely to worry about needing to cut back their workforce.

Plan B Needed

Just 1 in 5 middle-market firms have solid contingency plans in place for dealing with tariffs.

Most middle-market firms did not make concrete plans for dealing with the unfolding tariff onslaught. In fact, just 20% of CFOs say their companies have implemented contingency plans for the related supply-chain disruptions. Another 30% indicate that while their firms have taken some steps, they remain largely underprepared. The rest — 50% of CFOs at middle-market firms — have done little or nothing at all. Overall, firms in the goods sector tend to be better prepared than those in services.

High-uncertainty firms stand out as especially underprepared. Just 8% have put contingency plans into place, while 46% have not started planning at all. In contrast, more than 90% of medium- and low-uncertainty firms have at least begun to assess their potential risks.

Contingency plans reflect a firm’s ability to withstand a volatile business environment, especially its trade and supplies component. Overall, 38% of middle-market CFOs feel very or extremely confident about their ability to navigate tariff-related supply chain disruptions. However, this sentiment sharply diverges depending on their level of preparation. Firms with contingency plans in place, at 58%, and those with steps taken in this direction, at 50%, are far more likely than others to have strong confidence in their ability to adapt to the changes.

How To Respond

Two-thirds of firms in the goods sector plan to negotiate with suppliers for better prices after tariffs are implemented.

Firms have a range of ways to attempt to buffer the impact of tariffs. These include cost management tools, price hikes and expansion into new markets. Companies in the goods sector mainly focus on controlling the costs of their inputs. The most common response is to negotiate with suppliers, an option named by 65% of CFOs. Other levers that many firms will reach for include increasing prices and diversifying suppliers.

Firms on the services side focus on costs, with 65% of CFOs saying they plan to reduce operating costs. Notably, services businesses are much more likely than goods firms to say they will expand into new markets.

Of particular note is the survey’s finding that 45% of firms in goods verticals plan on increasing their prices in response to tariffs. At the same time, just 5% of such firms would do this as a first response, with the rest initially turning to other options, including negotiating better prices with suppliers (30%) and leveraging just-in-time inventory (15%).

Read More

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Methodology

This edition of the 2025 Certainty Project, “Tariffs and Business Uncertainty: The Current State of Play, March 2025,” is based on a survey conducted from Feb. 10 to Feb. 18. It examines perceptions of uncertainty surrounding the volatile trade and macroeconomic environment, with a focus on tariffs and how middle-market companies are managing the related risks. The survey collected responses from 60 CFOs from companies generating between $100 million and $1 billion.

^{1. Note: This survey preceded the Trump administration’s implementation of broad-based tariffs against Canada, China and Mexico in early March. Major tariff and trade developments remain in flux, creating more uncertainty for businesses, heightened risks and a greater need for mitigation strategies. On March 6, Trump suspended new tariffs on U.S. imports of most goods from Canada and Mexico. The reprieve came two days after he imposed a 25% levy on all products from those countries, including a lower 10% duty on imports of energy and energy resources from Canada. Still standing as of March 5 is a recently doubled tariff on Chinese imports of 20%. Trump has also announced that reciprocal tariffs will hit other countries, including Brazil and South Korea, starting April 2. Trading partners have announced retaliatory levies.↩}