Data Book: Tariffs Drive Price Pressures as SMBs Weigh Supply Chain Overhauls

They’re here, and so far, they’re sticking. The big “what if” surrounding President Donald Trump’s sweeping tariffs is now a “what’s next” for consumers and small businesses. As of March 4, the implementation of 25% tariffs on Canada and Mexico, alongside the increase of Chinese tariffs to 20%, represents a significant escalation in trade tensions. With additional measures scheduled for the coming weeks — including the March 12 expansion of steel and aluminum tariffs and April 2 automotive tariffs — the full economic impact can only be called “developing.”

That economic impact will be seen in consumer spending and business supply chains. Tariffs on imported goods elicit various reactions and anticipated strategies from consumers and small to mid-sized businesses (SMBs). A recent study from PYMNTS Intelligence that surveyed 2,000 consumers and 500 SMBs sheds light on these groups’ knowledge, expectations and planned responses, revealing nuanced perspectives on the potential economic impacts. While there’s a general awareness of tariffs, the depth of understanding and the expected consequences vary significantly. Here’s a breakdown of the key findings:

General Tariff Knowledge

Some 7 in 10 consumers and SMBs are at least somewhat knowledgeable about potential import tariffs. This indicates a general awareness of the issue. However, very knowledgeable consumers and SMBs are more likely to view potential impacts negatively. Consumers expect higher prices (72%) and product shortages (66%). Likewise, SMBs anticipate product shortages (62%) and higher raw material costs (66%). These expectations highlight concerns about the tariffs’ immediate economic repercussions for consumers and businesses.

Consumer Expectations

Some 72% of consumers expect higher prices, and 66% expect product shortages due to the potential tariffs. Fifty-three percent expect higher support for local businesses. Many consumers admit to not being sure about the impacts of tariffs on issues beyond higher prices. Three in 10 are unsure of the extent to which the tariffs will affect the quality of products.

Tariffs’ Adverse Effects: SMBs

More than 4 in 10 consumers and SMBs expect the U.S. economy to face adverse effects due to tariffs on imports. Specifically, 45% of consumers and 43% of SMBs anticipate a negative impact on the U.S. economy, compared to 26% and 22%, respectively, who foresee a generally positive impact. This reveals a prevalent concern about the broader macroeconomic implications of tariffs.

Tariffs’ Adverse Effects: Consumers

Consumers are more likely than SMBs to worry about the impact of tariffs on their financial lives. Forty-five percent foresee adverse effects on their personal finances. In contrast, 35% of SMBs anticipate negative impacts on their business finances. This discrepancy suggests that SMBs might be more divided or uncertain (“ambivalent”) about how these tariffs will affect their business performance.

The SMB Factor

Sixty-two percent of micro-SMBs have either not started planning or are just beginning to assess potential risks. Despite this apparent lack of preparation, most SMBs express confidence in their ability to adapt to potential supply chain disruptions successfully. This combination of unpreparedness coupled with confidence could lead to unforeseen challenges or, conversely, the discovery of unexpected opportunities.

Pricing Issues

Twenty-six percent of SMBs expect to raise prices in response to tariffs, but just 9% consider it the first step. Retailers would rather discontinue an affected product (14%) than raise prices (3.8%) — at least initially. This suggests that SMBs are initially reluctant to pass these costs directly to inflation-weary consumers, preferring to explore alternative strategies first. Replacing suppliers with domestic vendors is the first step SMB owners plan to take (18% average, 28% retail). The smallest SMBs are primarily responding to potential tariffs by replacing suppliers and reducing operational costs. The largest SMBs (those generating $1M-$10M in annual revenues) are more diverse in their strategies. This indicates an initial preference for adapting supply chains and operations rather than immediately increasing prices for consumers.

Widespread Concern

A consumer’s job status has surprisingly little effect on their concern about tariffs. Employment status shows a mixed relationship with perceived impacts. This suggests concern is more widespread than simply affecting those in difficult financial situations.