Tariffs Take a Toll: US Businesses Brace for Revenue Dip
Websites could experience the poorest future outlook due to tariffs, as price increases might not meet expectations, according to a Duke-Fed survey.
In the pulsating world of commerce, uncertainty surrounding tariffs and trade policies is causing a stir. According to the latest quarterly survey by Duke University and the Federal Reserve Banks of Richmond and Atlanta, a whopping 40% of businesses voiced tariffs and trade policy as their chief concern - a record-high since the pandemic era.
This wave of worry has sent shivers down the spines of finance chiefs, who predict a 6.6% increase in prices and a 6.6% surge in unit input costs, compared to a measly 3.2% and 3.9% respectively among those unshaken by tariff woes. This could spell trouble for businesses grappling with tariff anxieties, as their expected nominal revenue growth stands at 4.8%, lagging behind the projected price rises. In simpler words, while these tariff-weary businesses may earn more per unit, they'll likely be selling less, culminating in negative real revenue growth.
Atlanta Fed economist Brent Meyer highlights this disheartening trend in his official remarks about the survey. He notes, "The outlook for those tariff-concerned businesses is striking. Their nominal sales revenue expectations fail to outpace their price growth projections, which means their real revenue growth is expected to contract in 2025."
Interestingly, only 41% of businesses have responded to the tariff pressure by raising prices or planning to do so, suggesting that the actual impact of the Trump administration's trade policies remains ambiguous. On the other hand, businesses indifferent to tariff concerns still show a rosier picture, as their expected nominal sales revenue growth of 5.9% still surpasses their projected price increases of 3.2%, indicating a real revenue growth spurt, rather than a contraction.
But it's not all doom and gloom. The overall economic sentiment appears to be waning. Across the board, businesses show more pessimism about the broader economy than at the end of last year. Respondents slashed their median real GDP growth forecast to 1.4%, while the probability of economic contraction surged to 23%.
Tariff-fretting businesses prove to be outliers, exhibiting a phalanx of concerns that go beyond mere macroeconomic indicators. A noteworthy 41% of businesses admitted to having delayed, scaled down, indefinitely postponed, or canceled capital expenditure plans during the first half of 2025 due to trade-related uncertainties.
It's essential to acknowledge that this Q2 2025 survey from Duke University's Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta contains responses from approximately 465 U.S. firms, albeit with slight variations per question.
In conclusion, tariffs and trade policy concerns have succeeded in dampening real revenue growth expectations for US businesses, pushing prices higher, and shaking investment plans. This heightened uncertainty about trade policy might hamper U.S. economic growth in the near term. Keep up to date with the latest developments by subscribing to ourwebsite.com's free daily newsletter.
- Despite voicing tariffs and trade policy as their chief concern in a recent survey, only 41% of businesses have chosen to raise prices or plan to do so, leaving the actual impact of tariffs ambiguous.
- Due to trade-related uncertainties, a significant 41% of businesses have delayed, scaled down, postponed, or canceled their capital expenditure plans during the first half of 2025.
- In the pulsating world of commerce, a record-high 40% of businesses are worried about growth, with tariffs and trade policies being their primary concern since the pandemic era.
- The, expected nominal revenue growth for businesses grappling with tariff anxieties, is 4.8%, lagging behind the projected price rises, which could result in negative real revenue growth.
- By raising prices or planning to do so, businesses can potentially leverage margin to counterbalance the effects of tariffs on their finances.
- The overall economic sentiment appears to be waning, with businesses showing more pessimism about the broader economy than at the end of last year, slashing their median real GDP growth forecast to 1.4%.
- Crypto, as an alternative asset class, and effective savings strategies may provide businesses with opportunities to finance their operations and investments amidst the revenue dip caused by tariffs and trade policy uncertainties.
