The looming threat of new tariffs under a second Trump administration has American businesses rethinking their plans. Recent Federal Reserve reports reveal companies across the country are already adjusting operations despite the election still being months away. The uncertainty is forcing tough decisions about prices, investments, and hiring.
Many business owners now face a difficult balancing act. They must prepare for potential tariffs while hoping they won’t materialize. The Federal Reserve’s regional economic surveys, known as the Beige Book, show this uncertainty rippling through different sectors of the economy.
“We’re essentially planning for two completely different scenarios,” says Maria Chen, CEO of Midwest Manufacturing Solutions. “Either we absorb significant new costs or we completely rethink our supply chain. Neither option is ideal.”
The potential tariffs range from 10% on all imports to as high as 60% on Chinese goods. For businesses with international supply chains, this creates major financial concerns. Companies that shifted production overseas to reduce costs now wonder if they made the right choice.
The manufacturing sector appears particularly vulnerable. According to the Philadelphia Fed’s Manufacturing Business Outlook Survey, nearly 68% of manufacturers expressed concern about how tariffs might impact their operations. Many have already begun exploring domestic alternatives.
Retailers face a different challenge. They must decide whether to raise prices if tariffs increase their costs. The New York Fed’s Empire State Manufacturing Survey indicates 42% of retailers expect to pass at least some tariff costs to consumers. This could potentially fuel inflation just as the economy shows signs of cooling.
“Tariffs don’t just affect big corporations,” explains economist Robert Johnson of the Economic Policy Institute. “Small businesses often lack the resources to quickly adapt their supply chains or absorb higher costs.”
Some companies have paused expansion plans until the political landscape becomes clearer. The Atlanta Fed’s Business Uncertainty Index showed a 15% increase in business uncertainty over the past quarter, with tariff concerns cited as a major factor.
Construction companies report delaying projects that require significant imported materials. The Cleveland Fed noted that residential builders specifically mentioned tariff uncertainty when explaining recent project postponements.
The technology sector faces its own challenges. Semiconductor manufacturers and electronics companies rely heavily on global supply chains. The San Francisco Fed reported that tech firms are “actively developing contingency plans” for various tariff scenarios.
Agricultural businesses have additional worries. They fear retaliatory tariffs from trading partners could hurt exports. During the previous round of tariffs under the first Trump administration, China targeted American agricultural products, causing significant hardship for farmers.
“Last time, we lost markets that took years to develop,” says James Wilson, a soybean farmer from Iowa. “Some of those relationships never fully recovered.”
Not all businesses view potential tariffs negatively. Domestic steel producers and other industries that compete directly with imports see possible benefits. The Cleveland Fed noted that some manufacturers believe tariffs could “level the playing field” against foreign competition.
Economic research suggests mixed outcomes from previous tariff implementations. A study from the Federal Reserve Bank of New York found that the 2018-2019 tariffs cost the average American household approximately $831 annually. However, some domestic industries did see employment gains.
The banking sector reports increasing requests for advice about tariff mitigation strategies. Financial institutions have begun offering specialized consulting services to help clients navigate potential trade policy changes.
The labor market could also feel effects. Companies uncertain about future costs may hesitate to hire new employees. The Dallas Fed reported that 23% of businesses surveyed indicated they were slowing hiring plans due to trade policy uncertainty.
For consumers, the impact remains unclear. While direct price increases on imported goods seem likely under new tariffs, the extent to which these costs would spread throughout the economy depends on many factors.
The Federal Reserve’s challenge grows more complex with this uncertainty. Central bankers must consider how potential tariffs might affect inflation when making interest rate decisions. Fed Chair Jerome Powell has acknowledged trade policy as an important factor in the economic outlook.
Business advocacy groups have urged clarity on trade policy. The U.S. Chamber of Commerce recently called for “predictable trade policies that American businesses can plan around.” However, with the election still months away, such certainty seems unlikely in the near term.
As November approaches, businesses continue preparing for multiple scenarios. Some build inventory buffers, others diversify suppliers, and many simply wait and watch. The only certainty is that uncertainty itself has already changed how American businesses operate.
