The answer is that businesses everywhere have experienced an unprecedented surge in tariff-related concerns in just the last half-year. New evidence from GlobalData points to this increasing fear. This study highlights that tariffs are playing a larger role in decision-making than ever before. Almost 50 percent of these surveyed companies said that these economic burdens have caused them to alter their long-term investment and expansion plans.
That’s why it’s so concerning that the report found that 45% of surveyed respondents reported that tariffs are influencing their decision-making. This major issue is a symptom of the long-term economic stress as companies adjust to a rapidly shifting trade landscape. In August, 77% of respondents said they anticipated inflation rising as a result of tariffs. This wait and see approach only adds to the fiscal uncertainty for all enterprises.
Price Adjustments and Rising Inflation
In response to the imposition of tariffs, nearly half of the companies surveyed are either increasing prices or planning to do so. Just 13% said they aren’t planning to increase prices in response to these financial pressures.
“Many companies already face rising expenses from a flat 10% tariff on exports to the US, along with broader pricing impacts from tariffs,” – GlobalData
Small businesses have been the first to pivot in this new economic reality. They’re having to make price changes to continue to operate profitably even as costs continue to increase. This welcome change in approach comes as part of a larger recognition that tariffs should be considered a permanent feature of trade relations.
Challenges in Long-Term Planning
The report names high input costs the top issue for 58% of enterprises. Furthermore, lack of certainty in long-term planning became a major obstacle, cited by 57% of firms. This fretting has remained at an alarmingly high level since April, a testament to continued fear over the state of the economy going forward.
Ongoing challenges notwithstanding, worry over uncertainty clearly had a most positive deceleration. This was the first significant drop in close to half a year. The bright spot in that figure suggests that even though challenges are still at record highs, some businesses might be recalibrating their expectations and strategies to match.
Moreover, reduced demand from international markets was reported as a challenge by 33% of companies, while increased regulatory complexity affected 35%. Combined, these factors make for an undeniably complex operational environment for any business with a global footprint.
The New Normal in Trade Relations
The unprecedented and changing nature of tariffs is requiring many firms to adapt and react quickly. Today they consider this state of affairs to be the “new normal” in U.S. trade relations. According to GlobalData, dozens of other companies have preemptively changed their supply chains and pricing strategies in anticipation of tariffs. They’ve very successfully been able to work these costs into their long-term strategic planning.
“Many firms may now consider tariffs as the ‘new normal’ in US trade relations, and having adjusted areas like supply chains and pricing, the effect of tariffs has been baked into long-term strategic planning,” – GlobalData
We know that businesses are under extraordinary stress at this moment. For those that decide not to pursue price increases in the upcoming 2025 negotiations, reducing costs associated operations or production is the key.