Tariff Business Impact: What Executives Think Now
Explore how businesses are leveraging technology and reshoring strategies to navigate the financial and operational challenges posed by rising tariffs.
Our recent survey of 300 executives sheds light on the impact tariffs are having on businesses across the United States. The findings reveal that a majority of companies are experiencing a decline in their gross margins, with 32 percent reporting a decrease of 1–5 percent, 22% a decline of 6-10%, and 3% a drop of more than 10%.
Most companies are facing a decrease in gross margins due to tariffs
How have tariffs impacted your company’s gross margin?(a) N=300; Single select
The full impact on consumers is likely still to come,” said Brian Higgins, Advisory Partner, Industrial Manufacturing, KPMG US. “Companies are modeling multiple scenarios, balancing pricing strategies with supply chain resilience and customer expectations. The leaders in this space are not just reacting but preparing now to compete in a more cost-sensitive, demand-volatile environment.
Brian Higgins
Advisory Partner, Industrial Manufacturing , KPMG US
Over 80% of companies anticipate raising prices in the coming six months, and consumer pushback could be on the rise
Is your company considering further price increases over the next six months? (a)(N=300; Single select)
To address these challenges, many companies are exploring the feasibility of reshoring their manufacturing and operations to the United States. Our research indicates that most respondents find this option viable, with an anticipated timeline of 1–2 years. However, reshoring is not without its obstacles. Higher operating costs, labor expenses, and capital investment requirements are the top three hurdles, cited by 66%, 61%, and 48% of companies, respectively.
Most companies say relocating to the US may take 1-2 years
How long would it take for your company to bring manufacturing and/or operations to the US?(a)(b) N=207; Single Select
Additionally, the time required to pivot supply chains in response to new or increased tariffs is a critical factor. According to our findings, 46% of companies need 7-12 months to make significant changes, indicating a moderate level of agility but also indicating a potential economic lag that could result from these adjustments.
Businesses are navigating a trade environment that’s no longer defined by short-term volatility but by sustained disruption,” said Joe Lackner, Advisory Partner, Industrial Manufacturing, KPMG US. “They’re investing in automation, rethinking supply chains, and prioritizing technology to protect margins and jobs—while preparing for longer-term shifts in cost structures, sourcing strategies, and global demand dynamics.
Joe Lackner
Advisory Partner, Industrial Manufacturing, KPMG US.
Businesses are increasingly turning to technology and data-driven strategies as their go-to approach toward mitigating the impact of tariffs. For example, 68% of companies are implementing predictive analytics for demand forecasting, 41% are using advanced production scheduling algorithms, and 40% are automating manufacturing processes. These tools are essential for improving efficiency, reducing costs, and maintaining competitive margins in a rapidly changing trade landscape. By comparison, only 14% of companies are considering reducing headcount, indicating that companies are aiming to preserve their workforce size while leaning on technology to preserve profitability.
Companies are prioritizing data-driven and automation-based strategies
What tool or capabilities is your company implementing or planning in response to tariffs?(a)(b) N=300; Multi select
The survey also highlights the impact of tariffs on sales in foreign markets. Eighty-three percent of companies report a decrease in sales in China due to retaliatory tariffs, and roughly one-third have seen a 16-25% drop in sales in foreign markets overall. This decline not only affects revenue but also underscores the potential for tariffs to disrupt international business relationships.
Most companies are experiencing a moderate decrease in foreign sales due to tariffs
Have you seen a negative impact on your sales in foriegn markets based on the current tariff environment?)(a) N=300; Single select
Moreover, over half of the companies surveyed have postponed major capital investments by up to a year due to tariff uncertainty. This delay can have implications for job creation, industry development, and overall economic health. To navigate these challenges effectively, businesses should consider the following strategies:
- Assess the feasibility of reshoring operations while carefully considering the associated costs and timelines.
- Invest in technology solutions such as automation and Artificial Intelligence (AI) to enhance efficiency and reduce operational costs.
- Monitor customer demand closely and be prepared to adjust pricing strategies to balance profitability and customer satisfaction.
- Diversify supply chain sources to minimize the impact of tariffs and improve resilience against trade disruptions.
For a deeper dive into the survey findings and recommendations, download our report.
Dive into thinking :
Tariff Business Impact: What Executives Think Now
The survey captured perspectives from 300 U.S. based C-suite and business leaders representing organizations with an annual revenue of $1 billion or more.
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