In a significant economic development, a recent survey by Duke University has revealed that one in four U.S. businesses has reduced their hiring plans due to the escalating trade tensions initiated by President Donald Trump’s tariff policies. The survey highlights tariffs as the predominant concern for chief financial officers (CFOs), causing a notable decline in economic optimism across the corporate landscape. As the trade war unfolds, executives are grappling with uncertainty surrounding tariff levels, affected products, and the duration of these trade measures, leading many to cut back on capital spending.
Amid this climate of uncertainty, confusion is growing among business owners regarding which imports from Mexico are exempt from the 25% tariff imposed by the Trump administration. Stephen Moore, a former adviser to President Trump, has urged Republicans to prioritize tax cuts over tariffs to bolster business confidence.
The survey, conducted between February 18 and March 7 by Duke University and the Federal Reserve Banks of Richmond and Atlanta, reveals a sharp drop in CFOs’ economic optimism, nearly erasing the post-election gains. Approximately 25% of CFOs have curtailed their 2025 hiring plans due to tariffs, while capital expenditure plans have also seen similar reductions. Only a minority reported adjusting hiring and spending plans due to immigration or corporate tax policy.
John Graham, a finance professor at Duke’s Fuqua School of Business, emphasized the immediate risk posed by tariffs, stating that they have quickly become the foremost concern in corporate America. The White House, however, maintains that President Trump’s economic strategies have significantly enhanced U.S. investments, and they anticipate continued success.
Despite the turmoil, some CFOs maintain a relatively stable outlook for their own firms compared to broader economic conditions. Notably, tariffs have surged to the top of business concerns, eclipsing other issues such as Covid-19 and financial crises in previous years. Graham characterized the situation as a self-inflicted predicament, attributed to both the tariffs themselves and their implementation.
Tariffs are a key component of President Trump’s policy agenda, aimed at addressing diverse issues ranging from trade imbalances to national security threats. However, the fluctuating nature of the trade war has caused investor unease, diminished consumer confidence, and unsettled various business sectors. Ryan Messenger, CEO of First Rate Blinds, expressed concern over the approximately 20% cost increases his company faces for certain imports from Mexico, directly impacting pricing and consumer demand.
Messenger highlighted the challenges in navigating exemptions under the United States-Mexico-Canada Agreement (USMCA), noting widespread confusion and rising costs from suppliers anticipating tariff implementations. The sentiment among businesses is reflected in the survey’s findings, with many bracing for potential cost increases in imported raw materials.
While some companies are absorbing additional costs, others are forced to pass them on to consumers, potentially affecting demand for U.S. goods abroad due to retaliatory tariffs. Despite the anticipated impact, some industry leaders remain unsurprised by Trump’s tariff usage, viewing it as a strategic measure to secure better trade agreements.
The findings from the Duke CFO survey mirror a broader erosion of economic sentiment. A separate report by The Conference Board noted a marked decline in consumer confidence, reaching its lowest level since January 2021. Stephen Moore, a former Trump economic adviser, cautioned against the potential real-world economic consequences of declining confidence, underscoring the importance of consumer and business behavior.
What This Means for You
The ongoing trade war and its repercussions on U.S. businesses hold significant implications for consumers and the broader economy. With companies scaling back on hiring and capital investments, job growth may slow, potentially affecting employment opportunities and wage growth. The uncertainty surrounding tariffs can also lead to higher prices for consumer goods, as businesses may pass on additional costs to customers.
As tariffs become a central issue in the business world, the volatility could have ripple effects on consumer spending and economic stability. The reduction in consumer confidence underscores the potential for decreased consumer spending, which could slow economic growth if not addressed. For ordinary citizens, this means staying informed about how trade policies might impact their cost of living and employment prospects in the coming years.
