Who’s Hit Hardest: Tariffs Widen the Business Resilience Gap

For middle-market enterprises today, the question is no longer whether they should adjust to the new global tariff agenda, but how. As the Trump administration’s tariffs shift from political rhetoric to operational reality, many middle-market firms, especially those heavily reliant on international suppliers, are seeing an impact on their business performance.

These highly exposed firms are grappling with intense regulatory uncertainty, higher costs, shrinking profit margins and softening customer demand. Conversely, businesses with minimal reliance on international suppliers are feeling positive about tariffs and confident about the year ahead. The gulf between the two is getting wider.

But even for companies expecting positive impacts from tariffs, any potential benefits remain out of reach in the near future. While some businesses anticipate improvements to local economies and supply chains over the next several years, many are facing increased costs now.

These are just some of the findings detailed in this edition of the PYMNTS Intelligence Certainty Project, sponsored by HSBC. “Who’s Hit Hardest: Tariffs Widen the Business Resilience Gap” examines how regulatory and macroeconomic uncertainty disproportionately affect the most exposed firms. The study draws on insights from a survey of 60 CFOs of U.S.-based middle-market companies with annual revenues between $100 million and $1 billion. The survey was conducted from Aug. 11, 2025, to Aug. 21, 2025.

• Exposure Determines Tariff Impact
• Businesses Show Optimism and Skepticism
• Short and Long-Term Effects of Tariffs
• Read More
• Methodology

Exposure Determines Tariff Impact

Firms that depend the most on international suppliers are struggling the most.

CFOs of firms that source commodities and products heavily from foreign suppliers are seeing worse business performance and experiencing more regulatory uncertainty than those that don’t.

Firms with fewer foreign suppliers are more likely to be doing better financially this year. Among enterprises highly reliant on international sellers (meaning more than 30% of their suppliers are located outside the U.S.), only one in five say they are having a good or great year. By contrast, at firms with low reliance on foreign suppliers (meaning that no more than 15% of their suppliers are abroad), nearly two-thirds of surveyed executives report that 2025 has so far been good or great.

International exposure compounds the perception of regulatory uncertainty. Six in 10 CFOs at mid-market businesses highly reliant on international suppliers report a high lack of both predictability and confidence in the regulatory environment, four times the rate of domestic-heavy firms, at 15%.

Business-to-business (B2B) firms are disproportionately bearing the brunt. More than one in three (34%) enterprises focused primarily on business customers report high regulatory uncertainty versus 21% of those more concentrated on individual consumers.

Increasing prices fails to protect business profits.

The impact of the macroeconomic environment can also be seen in declining profit margins. Three in four CFOs say they have raised prices for consumers or customers due to macroeconomic conditions. Yet these increases are not enough to buffer margins. Most businesses (58%) have experienced profit margin decreases despite hiking prices.

Firms with high reliance on international suppliers are the most likely to see shrinking margins. Among these, 73% report decreases. By contrast, only 38% of those with low reliance have seen the same.

Macroeconomic conditions aren’t just hurting margins; they’re also affecting demand. Almost half of CFOs report that the interlinked factors of regulatory uncertainty and macroeconomic conditions have reduced customer demand. Those highly reliant on international suppliers are the most likely to see decreased demand. Among highly reliant firms, 91% report a decline in B2B demand and 86% in business-to-consumer (B2C) demand.

It is worth noting that, in general, customer demand at B2B firms has fallen harder than demand at B2C firms. This is likely because tariffs directly increase the cost of the raw materials and intermediate goods that businesses rely on for production. This dynamic can force businesses to raise prices immediately, restructure supply chains and delay investments. Consumers, meanwhile, may see more gradual price increases or have their costs absorbed by merchants.

The multifactorial pressure doesn’t stop there. Mid-market companies highly reliant on international suppliers are also considerably more likely to be facing supply chain difficulties. More than nine in 10, or 93%, of these firms report that their suppliers have increased prices, and 60% have seen delays or reduced reliability in order shipments. Among enterprises with low reliance on international suppliers, fewer than half say the same.

Additionally, businesses breaking even or losing money are considerably more likely to report these issues compared to those reporting a strong year.

Businesses Show Optimism and Skepticism

A confidence gap is emerging as thriving firms express optimism and vulnerable businesses eye stormy weather ahead.

Firms now feel more negatively on average about the “America First” trade agenda than they did in the spring, likely because the reality of many tariff deadlines has already set in. More than half, or 55%, of CFOs report believing that the policy will have negative effects on operations, the business climate and the economy, up from 47% in May. Moreover, only 38% think it will help, down from 50% three months ago.

Not surprisingly, companies highly reliant on international suppliers are far more likely to be skeptical. Among these, 80% believe the impact of tariffs will be mostly negative and 20% think it will be mostly positive. By contrast, among those with a low degree of reliance, the shares amount to a more optimistic 35% and 54%, respectively.

Similarly, there is also a clear disparity in how confident mid-market firms are in their ability to adapt to potential tariff-related supply chain disruptions.

Businesses highly reliant on international suppliers are less confident. Among these, 60% report low confidence. Meanwhile, just 15% of firms with low reliance on international suppliers are similarly apprehensive. Of these low-reliance firms, 62% are very or extremely confident.

Additionally, most companies (55%) that are breaking even express low levels of confidence. Conversely, just 3% of firms that are having a strong year report a similar lack of confidence. Among these higher-performing businesses, 76% are very or extremely confident, up from 48% in May.

Notably, goods firms are also far less confident than services firms, likely because tariffs have a more direct impact on these companies’ supply chains and margins. In short, perceived uncertainty is closely linked to business performance. Companies breaking even or operating at a loss are seven times as likely as those reporting a good or great year to report high levels of regulatory uncertainty. Just 3% of CFOs in break-even or loss-making enterprises report strong confidence in their ability to adapt, a tiny fraction of the 76% of companies expecting a good or great year in 2025. Sentiment about the levies also varies based on how well a firm is currently doing financially, with struggling businesses four times as likely to be pessimistic about the policy’s impacts.

Short and Long-Term Effects of Tariffs

CFOs expect that while tariffs will raise costs in the short term, any benefits from the levies will materialize only later.

More CFOs now believe that tariffs will increase costs. But more also expect the levies to increase supply chain resilience, but not for a while.

Nine in 10 executives agreed the levies will increase the cost of raw materials, nearly 50% more than in February. In fact, inflation is the most commonly expected effect. Notably, however, that share decreased slightly from 95% in May. Among firms highly reliant on international suppliers, 100% expect tariff-related cost increases.

Similarly, the share of CFOs who believe tariffs will add costs related to supply chain reconfigurations rose to 80% from 75% in May.

At the same time, expectations of positive effects are also on the rise. In fact, 88% of CFOs say tariffs offer the opportunity to support the local economy. This figure is down from 95% in May but up from 77% in February. Among firms highly reliant on international suppliers, only 73% say the same, down 20 percentage points from May.

The share of CFOs agreeing that tariffs enhance supply chain resilience rose to 78% in August from two-thirds in May and just half in February. Yet only 60% of CFOs of firms highly reliant on international suppliers express the same view.

Many enterprises see potential benefits, but those most vulnerable to the impacts of tariffs are the most skeptical.

Among executives who have positive expectations for tariffs, none believe that any benefits will be immediate. Only 38% of CFOs overall expect the opportunity to support the local economy to yield results in the next year. Half expect it to take between one and five years. Similarly, just 35% anticipate enhanced supply chain resilience in the next year. Another 43% expect this effect in one to five years.

Conversely, a significant share—20%—of CFOs report seeing higher costs for raw materials and commodities. Another 62% expect this effect to continue into the next year. Among firms highly reliant on suppliers abroad, one in three reports higher prices for inputs. on raw materials costs. Among goods firms, 45% are currently experiencing this increase.

It seems evident that, while higher costs are here and hitting more exposed firms the most, any potential benefits are deferred and a matter of speculation.

As we engage with clients today, uncertainty is a word that resonates with everyone, and helping our clients navigate that uncertainty is at the core of the service we provide.

“The reality of increased input costs for most companies on the back of tariffs is settling in. In this current scenario scale matters, and mid-market companies are generally struggling more to absorb the rising costs without passing them on to consumers.

“This is putting a premium on finding efficiency in all aspects of operations, which includes optimizing cash and working capital and revisiting supply chains. In fact, there is not a single company we talk to that hasn’t looked at remapping their supply chain and many are also looking at remapping their distribution strategies in parallel.

“Through this period of enhanced uncertainty, what our customers are telling us is that they value content and insight on the latest geopolitical and economic trends as well as thought leadership on optimizing working capital and balance sheet use. As a leading international bank with a distinct global network and consistent global recognition for our trade solutions platforms, we are fortunate to be in a position that our clients trust us to deliver our insight and expertise to help them succeed during these times of volatility.”

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• Profit Slips, Policy Shifts: Product Leaders Navigate the Crossfire
• Tariff Turbulence: Product Leaders Shift Strategy to Blunt Fallout
• Tariff Uncertainty Craters Confidence to Zero at Exposed Consumer Goods Companies

Methodology

“Who’s Hit Hardest: Tariffs Widen the Business Resilience Gap” is based on a survey conducted from Aug. 11, 2025, to Aug. 21, 2025. Sponsored by HSBC, the report examines how regulatory and macroeconomic uncertainty disproportionately affect the firms most exposed to the trade agenda. It draws on responses from 60 CFOs of U.S. middle-market companies in the goods and services sectors with annual revenues between $100 million and $1 billion.