Effects of Tariff Uncertainty on the Outlook of Small and Medium-sized Businesses

The survey, administered by Morning Consult, was conducted in three waves: in December 2024, February 2025, and late April 2025. Each wave contained a nationally representative sample of about 600 SMBs. We implemented additional quality assurance checks and used appropriate statistical techniques to ensure that the sample of businesses in the survey is nationally representative of all SMBs in the United States. See the accompanying appendix for details. The questions, a selection of which are included in the appendix accompanying this brief, focus on SMBs' uncertainty concerning what would happen over the ensuing 12 months with import tariffs and with their own growth in employment, investment, prices, costs, revenues, and profit margins.

Our analysis of the responses indicates that uncertainty about tariffs rose markedly for all SMBs-and especially for those that import-from the first wave to the third, increasing sharply in April 2025 and reflecting heightened trade-policy ambiguity at that time. Moreover, uncertainty about tariffs in April 2025 was closely linked to uncertainty about business operations-particularly about investment and worker head count among importers-indicating that SMBs view trade-policy risk as intertwined with their broader planning environment.

What is the effect of uncertainty on key economic variables for SMBs, according to responses to the April 2025 wave of the survey? When we asked a randomly chosen sample of SMBs how a hypothetical increase or decrease in their business uncertainty would affect their outlook for investment, demand, revenues, profitability, head count, and costs and prices, the respondents indicated that a reduction in uncertainty would improve their expectations, but another increase in uncertainty would not lead to further deterioration.

The responses reveal a clear asymmetry: A reduction in uncertainty elicits an outlook that is substantially more optimistic-again, more so for importers-whereas an increase in uncertainty does not trigger a similarly strong pessimistic response. The muted reaction to the latter hypothetical scenario suggests that by April 2025, the effect of increased uncertainty on firms' expectations may have already peaked. Another possibility is that financial conditions had not tightened enough to notably amplify any negative real effects of further increases in uncertainty. Together, these findings shed new light on how SMBs adjust their decision-making in the current economic environment, which holds important implications for the transmission of trade-policy shocks to the broader economy.