Small Business Optimism Slips on ‘Dramatically Changing’ Tariff Policy

Optimism among small businesses in the United States continues to fade, thanks partly to tariffs.

The April installment of the National Federation of Independent Business (NFIB) optimism index, released Tuesday (May 13), found that sentiment among small businesses declined for the fourth straight month.

“Uncertainty continues to be a major impediment for small business owners in operating their business in April, affecting everything from hiring plans to investment decisions,” Bill Dunkelberg, NFIB chief economist, said in a Tuesday news release. “While owners are still trying to fill a high number of current job openings, their outlook on business conditions is less supportive of future business investments.”

The survey found that the net percentage of business owners anticipating better business conditions fell six points between March and April to a net 15%, the lowest reading since October, according to the release. This component, plus unfilled job openings, contributed the most to the index’s decline.

The number of business owners expecting higher real sales volumes dropped four points from March to a net negative 1%, marking the fourth consecutive month the reading fell.

Small business owners also have concerns about tariffs, per the report.

“Very few small businesses export their goods and services, but millions acquire imported goods as inputs to their operations, and those supply chains are currently at risk,” the report said. “Tariff policy is suddenly and dramatically changing relative prices (costs), and relative prices drive all decisions. Uncertainty remains elevated and thus caution clouds spending, hiring and investing decisions.”

The NFIB’s findings are in keeping with PYMNTS Intelligence research showing that 20% of small- to medium-sized businesses (SMBs) are worried they will not survive the next five years because of the tariffs.

“For SMBs, tariffs aren’t just a line item; they’re an existential threat,” PYMNTS wrote last month. “Prices for goods and services climbed to their steepest rate in over a year this month, with tariffs fueling an especially sharp increase in prices of manufactured goods. SMBs account for around one-third of total imports to the United States.”

While bigger companies can diversify suppliers or negotiate bulk contracts, most SMBs can’t. These businesses represent most of the U.S. economy, “many in ways that are difficult to understand until their products are suddenly off the table due to supply chain and pricing pressures,” the report said.

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