Tariffs and Business Uncertainty: The Current State of Play

The Trump administration’s highly fluid global tariffs campaign is increasingly testing the limits of mid-sized firms to plan and make operational decisions. Uncertainty clouds short-term outlooks for trade, consumer spending and the economy, and companies must decide how to respond.

PYMNTS Intelligence surveyed the heads of payments at U.S. middle-market firms generating annual revenues between $100 million and $1 billion in late March. At the time, the April 2 “Liberation Day” announcement was approaching, but no one knew exactly what that meant. Companies still largely don’t, amid a bourgeoning U.S.-China trade war, constant adjustments for some levies on major trading partners and mixed signals about “reciprocal” tariffs on nearly all countries. “Pervasive” uncertainty, as the Federal Reserve called it, leaves the picture as muddy now as when we collected the data.

Meanwhile, warning signs are building. The U.S. economy shrank 0.3% from January through March, the first quarterly contraction since 2022, and things could quickly worsen. The levies would broadly increase prices on everything from toys and electronics to luxury watches and cars, and crimp consumer spending. This hit would have knock-on effects for businesses, jobs and investments. PYMNTS Intelligence recently estimated that even a mild decline in consumer spending could vaporize $92 billion per year from the economy.

More than half of the heads of payments we surveyed in goods verticals believe tariffs will be bad for their companies, a sharp increase from the previous month. These firms are bracing for supply chain disruptions, with about 9 in 10 expecting product delivery delays or shortages and higher raw material costs. Respondents at services firms, which rely less on imports, are generally more ambivalent, but still flag many concerns of their own.

These are just some of the key findings in “Tariffs and Business Uncertainty: The Current State of Play,” a PYMNTS Intelligence study conducted from March 1, 2025, through March 27, 2025. Data was collected from a survey of 60 heads of payments, each representing a U.S. company with annual revenue between $100 million and $1 billion.

• Bad for Business
• Supply Chain Strain
• Lack of Confidence
• Pushing Back on Suppliers
• Read More
• Methodology

Bad for Business

More than half of heads of payments at goods firms say that tariffs will have a negative impact.

Middle-market firms are increasingly bracing for negative impacts from the tariffs. Among heads of payments at companies in the goods space, just over 1 in 2 believe the levies will be negative for them. Meanwhile, roughly 1 in 5 expect positive outcomes. The scales have tipped heavily since February, when the positive and negative camps were equally split, at 35%.

Services firms, meanwhile, remain more ambivalent and show little change from the prior month. Only slightly more of the heads of payments foresee negative impacts, at 27%, than positive ones, at just under 1 in 4. The growing divide between the outlooks of firms in goods verticals and those in services reflects the direct threat that tariffs pose to physical goods and products imported from abroad, with ripple effects across supply chains for many retail and manufacturing businesses.

For goods, the survey covered companies in construction or building materials, food and beverage distribution, manufacturing and retail and wholesale trade. For services, it covered companies in advertising and media services, business services (law, accounting, consulting and employment), education, finance and insurance, healthcare, real estate, travel and transportation, warehousing and waste management. The survey’s sample size (60 respondents) did not meet the threshold for a confident analysis of the technology sector.

Supply Chain Strain

Most heads of payments at middle-market firms expect supply chain disruptions, with those at goods firms especially concerned about shortages, shipping delays and higher prices for raw materials due to tariffs.

Mid-sized companies widely expect supply chain disruptions and rising costs, and those fears increasingly appear justified. Major U.S. ports are sounding alarms about precipitous drops in import volumes, and Walmart, Target and Home Depot CEOs reportedly warned Trump of product shortages and higher prices.

First-quarter financial results from some of the world’s largest companies also indicate rising prices and an impending downturn. For example, LVMH Moët Hennessy Louis Vuitton saw global sales dip 3% in the first three months. The luxury goods and alcoholic beverage giant warned it might raise prices and will reportedly cut 1,200 jobs. Meanwhile, McDonald’s posted its largest quarterly sales decline since the COVID-19 pandemic, with a 3.6% drop in U.S. sales. Chris Kempczinski, its CEO, stated that customers are “grappling with uncertainty.”

Heads of payments at middle-market goods firms show especially strong concern, with nearly 9 in 10 expecting shortages or delays in getting products delivered to them and the same predicting higher raw material costs. In both cases, these shares have climbed 9 percentage points since February. At 68%, most goods firms expect difficulty exporting due to retaliatory measures by other countries.

For services firms, higher material costs are the most widely expected negative impact, at 64%. Most also cite product delays or shortages, at 55%. The fact that most services firms worry about these issues, which on the surface would seem to impact only the goods space, underscores the complex and interconnected nature of today’s middle-market businesses.

While tariffs’ negative impacts loom largest, most heads of payments expect benefits as well. Nearly two-thirds of firms, 63% for goods firms and 64% for services companies, say the levies will create opportunities to support local economies. Enhanced supply chain reliance stands out as another expected benefit, cited by 53% of goods firms and 42% of services firms.

Lack of Confidence

One in four heads of payments surveyed lack confidence about their firms’ ability to handle supply chain disruptions from tariffs.

Just like the fluidity of policy signals on tariffs, companies have shifting assessments of their ability to deal with the related supply chain challenges. Overall, only 35% of the heads of payment at both goods and services companies expressed strong confidence that their firms can adapt to these disruptions, a dip from 38% in the prior month. But the picture is nuanced, reflecting the shape of uncertainty at companies lacking strong confidence. Four in 10 feel somewhat confident, up slightly from 35% a month earlier, and 1 in 4 say they are not or only slightly confident, down from 27% a month earlier.

Respondents at goods companies are somewhat less likely than those at services firms to express high levels of confidence in their firm’s ability to adapt to supply chain disruptions. Meanwhile, high-uncertainty firms are now much more likely to have little or no confidence in this area, at 40%, compared to around 20% for low- and medium-uncertainty firms.

Pushing Back on Suppliers

In response to tariff pressures, middle-market firms widely plan to push back on their suppliers by renegotiating, diversifying and shifting to domestic providers.

With some new levies already implemented and others pending, most heads of payments say their firms will take steps to mitigate disruption. For goods firms, the most common response is to renegotiate pricing with existing suppliers, at 63%. Most also plan to replace overseas providers with domestic ones, at 53%, while 26% say they will diversify their international suppliers. Meanwhile, 37% of goods firms plan to stockpile inventory before certain levies kick in, up substantially from 30% in February.

Turning to services providers, reducing operational costs stands as the most common response for nearly 3 in 4 firms. This likely means cutting jobs in many cases, as workers are typically the largest cost for services firms. Most services companies also plan to diversify their international providers, at 53%, with another 18% switching to domestic ones. Meanwhile, nearly half will renegotiate with their existing suppliers.

Notably, many firms — 16% for goods and 24% for services — have still taken no action. For high-uncertainty firms, this climbs to 27%. (These questions were posed for the first time in the March survey covered in this report.) These findings underscore that many firms lack confidence about how to respond to the fast-moving and unpredictable tariff situation. Meanwhile, consumers are growing increasingly pessimistic, with confidence now at a five-year low, The Conference Board, a nonprofit think tank for leading companies, said last week.

Read More

PYMNTS Intelligence is the leading provider of information on how the tariff situation impacts businesses. To stay up to date, subscribe to our newsletters and read our in-depth reports.

• Tariffs and Business Uncertainty: The Current State of Play
• Fraud in the Procure-to-Pay Cycle Hits Middle-Market Firms Hard — Fraud Prevention Automation Can Give an Edge
• Cybersecurity Risks Cause Middle-Market CFOs to Cancel Innovation Plans

Methodology

This edition of the 2025 Certainty Project, “Tariffs and Business Uncertainty: The Current State of Play,” is based on a survey conducted from March 17, 2025, through March 27, 2025. It examines perceptions of uncertainty surrounding the volatile trade and macroeconomic environment, with a focus on U.S. tariffs and how middle-market companies are managing the related risks. The survey collected responses from 60 heads of payment at U.S. companies with annual revenues between $100 million and $1 billion.