Record Concern about Tariffs Expected to Increase Costs and Prices, Reduce Hiring and Investment

Financial decision-makers’ outlooks deteriorated in the second quarter of 2025, amid record concern about the impact of trade policy, according to the CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.

Forty percent of respondents indicated tariffs and trade policy were a pressing concern for their firm this quarter, a record share of respondents citing the same concern going back to the second quarter of 2020 — a time period that covered the pandemic, severe supply chain disruption, and the highest inflation rate the U.S. has seen since the early 1980s. Concerns about economic uncertainty, monetary policy, and weakening demand round out the top four. 

In the survey, which closed on June 6, CFOs revised higher their own-firm unit cost and price growth projections for 2025, while reducing their revenue growth expectations. Financial executives also lowered their expectations for real GDP growth over the next four quarters to 1.4 percent, from 1.9 percent in the prior survey. Moreover, the probability respondents assigned to negative year-ahead economic growth jumped to 23 percent from 15 percent last quarter.

A closer look at the 40 percent of respondents concerned about tariffs and trade policy reveals a starkly dimmer outlook among those executives. On average, compared with firms that did not report tariff concerns, these firms:

• Are less optimistic about the strength of the U.S. economy (57.5 for the tariff-concerned group versus 63.2 for those unconcerned)
• See sharply higher growth in input cost pressures building this year (6.6 percent versus 3.9 percent)
• Expect to raise prices significantly higher (6.6 percent versus 3.2 percent)
• See weaker nominal sales revenue growth this year (4.8 percent versus 5.9 percent)
• Project lower real GDP growth for the year ahead (1.1 percent versus 1.6 percent).

“Perhaps the most striking facet of the outlook for those that report tariffs and trade policy as a pressing concern is that their nominal sales revenue expectations fail to outpace their price growth projections, which means their real revenue growth is expected to contract in 2025,” said Atlanta Fed economist Brent Meyer. 

The impact of tariffs and trade policy uncertainty appear to have negatively impacted investment plans during the first half of 2025. More than four in 10 financial executives report having postponed, scaled down, delayed indefinitely, or outright canceled investment plans in response to trade concerns during the first half of 2025.

In a separate question regarding additional impacts of tariffs, about 40 percent of CFOs noted that they have or will pass tariff-related cost increases through to customers. Among the firms that reported they were passing along tariff-related costs, the median firm indicated that they plan to pass through 100 percent of tariff-related cost increases.

The CFO Survey is issued by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. The latest survey, as well as historical data and a detailed analysis of the impact of the election on the corporate outlook, can be found at www.cfosurvey.org. Sign up to receive email notifications when new results are posted.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

###