Survey Finds Over Six in Ten Businesses Predicting Double-Digit Expenses Boost from Tariffs
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In a new poll by Endeavor Business Intelligence, a staggering 45% of business chiefs admit that President Donald Trump's tariffs will pump up their operating costs by at least 15%, with over half of the businesses planning to pass a significant portion of these increases onto their customers.
Our parent company's research arm, Endeavor Business Intelligence, surveyed more than 400 business leaders from various sectors following Trump's announcement of tariffs against most of the United States' trading partners in early April.
Two-thirds of the respondents anticipate that the tariffs will negatively affect their operations, while a quarter believes they could potentially benefit to some extent from the trade measures. Nearly half of the respondents reported that the tariffs were already starting to significantly impact their operations.
Our website readers showed considerable concerns about Trump's tariff plans back in February, and the recent results echo those sentiments.
The potential cost implications, as reported by the respondents, are substantial. A fifth of the respondents forecast their operating expenses to escalate by over 25%, while another 27% are expecting increases between 16% and 25%. More than 60% of the people surveyed predict double-digit increases in their operating costs. On the other hand, close to a quarter of respondents predict that their costs will remain flat or rise less than 5%.
"For many companies, the most immediate consequences of tariffs are cost increases and logistical hurdles, not just shifts in global demand," according to the report.
Executives' most probable response to the tariffs is to hike the prices of their goods and services: 51% are looking to pass along most of their new tariff-related costs. The second most popular strategy is to invest in domestic operations or production capacity in the long run: about one in eight respondents are prioritizing this action.
Download the full EBI report here. For a comprehensive roundup of post-April tariff coverage across a range of our parent company brands, click here.
Tariffs: Opportunities and Challenges for the Economy
Professional Insights for Manufacturers | Corporate Finance
Manufacturing sectors are grappling with Donald Trump’s latest tariffs, which encompass a 10% levy on all Chinese imports, a 25% tariff on steel and aluminum imports, and increased rates on other trading partners (up to 34% for China in certain cases). Here's how the companies in these industries are likely to respond:
Strategies for Cost Management:
- Supply chain modifications: Firms may consider migrating sourcing to non-tariff-affected countries; however, this could lead to higher logistics costs or quality degradation.
- Temporary cost absorption: Companies with razor-thin margins, particularly those heavily dependent on steel, might choose to absorb short-term costs to avoid immediate price increases.
- Automation investments: To counterbalance rising labor or material costs, firms could expedite automation projects, although this could risk reducing low-skilled jobs.
Passing Costs to Consumers:
- Price increases: Industries with little domestic competition (e.g., specialized machinery, certain electronics) will likely raise prices.
- Tiered pricing: Premium products could witness steeper hikes, while companies maintain budget options to retain price-sensitive customers.
- Delayed implementation: Companies may delay passing costs until tariffs fully apply for goods already in transit (e.g., China-exempt goods up until April 12).
Workforce and Production Challenges:
- Skills gaps: Amplifying domestic manufacturing requires workers with expertise in advanced sectors (e.g., semiconductor packaging, advanced ceramics), which current U.S. training pipelines may fall short.
- Retaliation risks: Tariffs on U.S. exports (e.g., the EU’s planned duties on bourbon, jeans) could further pinch margins, forcing firms to cut costs elsewhere.
Long-Term Adaptations:
- Reshoring feasibility: Auto and established industries might scale up U.S. production, but sectors like electronics face deeper supply chain dependencies on Asia.
- Policy advocacy: Affected industries (e.g., agriculture) may lobby for exemptions or subsidies to lessen losses due to retaliatory tariffs.
In summary, responses will differ by sector, with price hikes likeliest in unprotected markets, while others may focus on supply chain restructuring or automation to sustain competitiveness.
By adhering to innovative strategies and staying agile, businesses can surmount the challenges presented by tariffs and capitalize on the opportunities for growth that lie ahead.
- In response to Donald Trump's tariffs, manufacturing sectors are likely to implement cost management strategies such as supply chain modifications, temporary cost absorption, and automation investments to counterbalance rising costs.
- To cope with tariffs, some companies may choose to pass the costs onto consumers through price increases, tiered pricing, or delaying the implementation of price hikes until tariffs fully apply for goods already in transit.
- As tariffs may pose workforce and production challenges, businesses may need to address skills gaps in advanced sectors, take retaliation risks into account, and explore long-term adaptations like reshoring feasibility and policy advocacy for exemptions or subsidies.
