Tariffs Turn Up the Heat as Product Leaders Confront Peak Uncertainty

Uncertainty about the impact of tariffs on business operations and consumer demand is hitting the middle-market goods segment particularly hard. The newest reason: a spate of worrisome—and missing—economic data. The federal government’s rare decision to cancel the advance estimate of third-quarter GDP left firms in the dark about the economy’s health. Meanwhile, the release of September retail sales data was delayed by nearly a month. When it finally went public, it revealed a deceleration, with spending rising just 0.2% month-on-month, down from 0.6% in August. For companies already swimming in uncertainty, the moving targets are piling up.

Product leaders at middle-market goods firms have a front-row seat to how levies on imports affect their company’s ability to design, produce, sell, market, plan and invest. Compared to CFOs, they are likely to report even steeper rises in tariff pressures. Nearly half describe the financial impact of tariffs as mostly or completely negative. Many expect shortages, delays and costly supply chain reconfiguration. Product leaders at service firms are feeling the strain, too, just not with the same intensity.

But beneath the headlines is a deeper shift in how companies manage these pressures. Tariff-driven disruption is pushing many firms into short-term survival mode, redirecting attention from growth and innovation to immediate operational fixes. More than half of product leaders say their companies have pivoted their focus from long-term technology initiatives to cost-saving adjustments such as renegotiating supplier terms, reshuffling workflows and tightening spending on automation and artificial intelligence capabilities. These defensive moves are far more common among goods firms and companies whose performance has weakened this year, underscoring the uneven impact of tariffs across the middle market.

These are just some of the findings detailed in “Tariffs Turn Up the Heat as Product Leaders Confront Peak Uncertainty,” a PYMNTS Intelligence exclusive report. This edition examines how firms are adjusting their product and operational strategies in response to tariffs. The study draws on insights from a survey of 60 product leaders, including chief product officers, heads of product and vice presidents of product, at United States-based middle-market companies with annual revenues between $100 million and $1 billion. The survey was conducted from Oct. 24, 2025, to Oct. 31, 2025.

• Tariffs Hit Goods Firms the Hardest
• Damage Control
• Uncertainty Is the New Normal
• Read More
• Methodology

Tariffs Hit Goods Firms the Hardest

Product leaders at goods firms are nearly twice as likely as CFOs to view tariffs as a drag on their business’s financial health.

Product leaders stand at the front line of where production costs meet customer demand, giving them a clear view of how tariffs impact their businesses. In October, 47% of product leaders at goods firms described tariffs as “mostly or completely negative” for their firm’s business finances—double the 23% share seen among CFOs in September. This suggests that those managing products directly are feeling tariff pressures earlier, translating external shocks into faster shifts in sentiment. On the services side, levels of concern are much lower: 15% of product leaders in October and the same share of CFOs in September assessed tariffs as mostly or completely negative.

Product leaders widely expect negative operational consequences from tariffs. Nearly nine in 10 (88%) of those at goods firms believe there will be shortages or delays, as do seven in 10 of their peers in services. About seven in 10 product leaders also foresee additional costs for supply chain reconfiguration, with similar rates among goods (71%) and services (67%), both above what CFOs reported a month earlier. This reflects product leaders’ closer vantage point to sourcing, logistics and production bottlenecks.

Firms show positive attitudes about the long-term impacts of tariffs.

When it comes to the longer-term effects of tariffs, though, the data offers some optimism. About two-thirds of product leaders at good firms and eight in 10 at services companies believe tariffs will enhance supply chain resilience. Even larger shares expect more resources to invest in innovation, with product leaders at goods firms at 71% and those in services at 89%. Zooming out, these findings suggest that most product leaders believe that pressure from tariffs will drive beneficial organizational changes—albeit after significant short-term pain.

Businesses are dealing with the impact of tariffs in different ways.

When it comes to managing the impact of tariffs, negotiating with suppliers is the preferred tactic for goods firms. About one in five (18%) have done so, slightly more than seen among services firms (15%).

In other areas, though, goods firms are more constrained in their responses. Due to high sunk costs in the form of physical inventory, production, and research and development, goods firms typically cannot adapt their product strategies on the fly. As a result, only 12% of goods firms have discontinued offerings affected by tariffs, compared to 22% for services firms. Raising prices is also generally harder for goods firms, given tight competition and highly price-sensitive customers. While 30% of services firms have raised prices, just 6% of goods firms have done so.

Scale also plays an important role in tariff management. Firms with $100 million to $400 million in annual revenue are much more likely to push for better terms with their suppliers than those in the $400 billion to $1 billion bracket. This gap points to the more limited pricing power wielded by smaller companies, which are much less likely than their larger competitors to resort to raising prices. Smaller firms also show less financial flexibility to drop products or services impacted by tariffs.

Zooming out, broader macroeconomic conditions are clearly weighing on the minds of product leaders—and on their firms’ ability to raise prices. Nine in 10 goods firms focused on the business-to-consumer (B2C) segment say the economic situation is cutting into demand, as do 61% of B2C services firms. Even on the more resilient business-to-business (B2B) side, three-quarters of goods firms and 52% of services firms believe macroeconomic headwinds are hurting demand.

Damage Control

Over half of firms have shifted their focus from long-term tech bets to short-term operational fixes.

Tariffs aren’t just impacting immediate decisions about products and pricing. They are pushing firms to focus on short-term operational adjustments that can save money and reduce uncertainty right now, at the expense of longer-term investments and innovation. Over half of product leaders agree that tariff-related disruptions have caused their firms to shift their priorities in this latter direction. Unlike in many other areas, there is relatively little difference here between goods (59%) and services (56%) firms. While these numbers are considerably lower than what we saw from the CFOs we surveyed in October, they confirm that product leaders are being forced to focus more on surviving the short term than on innovating and growing in the future.

The data also reveals two important dividing lines between firms. The first is their recent business performance. When things have gotten worse for them in 2025, companies are much more likely to go into defensive mode than if they are having a good year. The other is how firms view the impact of tariffs. Despite all the negative headlines, tariffs are benefiting some companies, as shown by how they are adjusting their strategies. Only 38% of product leaders who see tariffs as benefiting their company’s finances report a pivot to short-term operational fixes, but this more than doubles to 85% for those who see the tariffs as hurting their bottom lines.

AI investments impacted by tariff strategy changes.

Investment in artificial intelligence (AI) is a critical area impacted by this shift in focus from long-term growth to immediate survival. Across all firms surveyed, 60% of product leaders agree that uncertainty caused by tariffs has constrained their firms’ ability to fund AI and automation. Those at goods firms are more likely to say that tariffs had this impact, at 71%, than their peers in services, at 56%. Another key split is recent business performance. Nearly seven in 10 (69%) firms that are performing worse in 2025 than the year before say funding for AI and automation is constrained by the impact of tariffs, versus 52% for those having a good year.

Importantly, funding constraints do not necessarily imply zero investment. In fact, about two-thirds of product leaders agree that tariff-related cost pressures are a key factor in their firms’ decisions to invest in AI-driven supply-chain optimization. Those in the goods segment are especially likely to indicate this, at 82%. This points to pressure to use AI for efficiency gains that are immediately tangible rather than deeper, more forward-looking organizational improvements. Conversely, only about a third (37%) of product leaders indicate that their companies are accelerating AI or automation adoption to offset the impact of tariffs on product pricing. Even fewer (22%) cite reducing reliance on labor—generally seen as a high-impact area for AI—as a reason for using AI and automation in response to tariff pressures. It appears that, if AI was a pre-tariffs long-term strategic initiative at many companies, it now has an immediate, practical function.

Uncertainty Is the New Normal

Product heads report far more uncertainty than a year ago.

Taking a step back, the changes in outlook among product heads today compared to a year ago are striking. Over one-third of respondents at goods firms (35%) now report a high level of operational uncertainty, a 2.5x increase from just 14% in October 2024. This marks a clear shift into a more strained operating environment for firms tied to physical goods, logistics and inventory cycles. Uncertainty also rose among product leaders at services firms, but the climb is less dramatic: 33% now face high uncertainty, up from 27% a year earlier.

The data shows a partial silver lining, however. Nearly half (47%) of product leaders in the latest survey expect uncertainty to decline over the next 12 months, as do 59% of those at services firms. That said, these responses likely reflect “how could it get any worse?” sentiment more than unrestrained optimism.

Deeper cuts of the data emphasize that smaller firms struggle much more with uncertainty than larger ones. Half of product leaders at firms with $100 million to $400 million in annual revenue report an impact on overall business performance at their firms in the last 30 days, up from 31% in October 2024. Conversely, just 19% of those in the $400 million to $1 billion range say the same, and this has actually fallen slightly since last year.

The goods-versus-services gap is even wider. In the latest survey, 53% of product leaders at goods firms say business performance took a hit due to uncertainty in the last 30 days, something that just 9% reported a year earlier—nearly a 6x increase. Among services firms, little changed during the same period, with three in 10 product leaders reporting a recent impact on business performance in the latest survey, versus 33% in October 2024.

Read More

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• When Tariffs Meet Strategy: The New CFO Calculus
• Who’s Hit Hardest: Tariffs Widen the Business Resilience Gap
• Profit Slips, Policy Shifts: Product Leaders Navigate the Crossfire

Methodology

“Tariffs Turn Up the Heat as Product Leaders Confront Peak Uncertainty” is based on a survey conducted from Oct. 24, 2025, to Oct. 31, 2025. The report examines how firms are adjusting their product and operational strategies in response to tariffs. It draws on responses from a survey of 60 product leaders, including chief product officers, heads of product and vice presidents of product, at U.S.-based middle-market companies with annual revenues between $100 million and $1 billion.