Tariffs and Trade Remain a Top CEO Challenge Heading into 2026

Frequent changes in tariffs and trade rules continue to complicate budgeting, quoting, and long-term decision-making for small and midsize businesses. CEOs have cited project delays, paused capital spending, and customer hesitation — especially in construction, manufacturing, and export-dependent sectors.

While CEO Confidence Rises, the Negative Impact of Tariffs Increases

Back in April, when the U.S. announced sweeping new tariffs — including a 10% baseline on nearly all imports and higher “reciprocal” duties on major trading partners — global business leaders were jolted. The abrupt shift in trade policy rattled the CEOs of small and midsize businesses, as evidenced by the cooling of CEO confidence in the Q2 2025 Vistage CEO Confidence Index, published in early July. At that time, 69% of CEOs reported that tariffs had negative impacts.

The question for CEOs was no longer simply “What’s coming next?” but “How do we adjust when the rules themselves can change overnight?” This has been a theme throughout the year, with different announcements, implementations, and delays. Small and midsize businesses have adapted, and CEO confidence crept up in September in the Q3 2025 Vistage CEO Confidence Index.

Tangible Tariff Impacts on SMBs

Despite rising confidence, tariffs continue to take a measurable toll on small and midsize businesses. This latest research shows that 71% of CEOs now report negative impacts; 35% report direct negative impact, while another 36% report indirect negative impacts. These adverse impacts include:

1. Cost Pressures and Profitability Declines

The majority of CEOs (62%) report rising operational costs, and nearly half (46%) are seeing reduced profitability as a direct result. Declining customer demand (37%) and shrinking revenues (33%) underscore the broader economic strain.

While tariff revenues may boost federal income, the burden is falling squarely on businesses through compressed margins and elevated input costs.

2. Operational Adjustments in Response to Tariffs

Among CEOs who have experienced increased costs, nearly two-thirds (64%) report increases of 4%-10%, while 10% report increases of 10% or more.

CEOs are responding decisively. Price adjustments are already widespread, as 43% have increased prices, and 51% plan to raise prices in the next three months.

Other cost-controlling actions employed by CEOs include:

• 23% are decreasing capital expenditures
• 16% are reducing hiring
• 15% are cutting marketing investments

3. Shifts in Supply Chain and Production Strategy

Many CEOs who are dependent on supply chains are reevaluating their sourcing of materials and goods. Some companies are sourcing more materials domestically or relocating production to lower-tariff countries, such as Mexico or Australia. These options often increase costs but provide greater predictability. Domestic producers, meanwhile, may find new competitive advantages as international prices rise.

The New Normal: Tariffs and Trade as a Permanent Variable

This analysis was conducted on data collected before the latest tariff announcement, which came in late September. It included a 25% duty on imported heavy trucks, 30% on upholstered furniture, 50% on kitchen cabinets and bathroom vanities, and even up to 100% on branded or patented pharmaceutical products unless they were manufactured in the U.S. The move unleashed another wave of uncertainty, which will be measured in our Q4 survey.
Tariffs show no signs of being a short-term disruption. Their continued presence is driving organizations toward shorter planning horizons and more frequent operational adjustments. In this environment, strategic planning, combined with the agility to adapt quickly, is now essential for navigating ongoing uncertainty and protecting profitability.

Economist’s Perspective from ITR Economics’ Lauren Saidel-Baker:

“While we do not currently believe stagflation is present, we are closely monitoring rising input costs driven by wages, energy, commodities, and tariffs. Small and midsize businesses should strive to avoid ‘profitless prosperity’ where growth occurs at the expense of margins,” says Saidel-Baker, a Sr. Economist at ITR. “Tariff effects will take time to appear in consumer prices, but businesses already feel the impact through higher costs and margin pressure. As businesses plan for 2026, they should focus on fundamentals: filtering headlines, protecting margins, and building resilience.”

Key Tariffs and Trade Takeaways for CEOs:

• Take strategic action despite uncertainty.
• Rely on credible and trusted economic data.
• Protect margins and avoid unprofitable growth.
• Approach headcount reductions with caution.
• Anticipate and plan for persistent inflation.

As the new year approaches, CEOs should focus on strategic, data-informed decision-making.

Related Resources

Tariffs Resource Center

CEO Confidence Remains ‘In Neutral’ [Q3 Vistage CEO Index]

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