KPMG LLP Survey: U.S. Businesses Grapple with Tariff Fallout Six Months In

New York, October 2, 2025 – The resilience of U.S. businesses is being tested as tariffs place a drag on margins and continued uncertainty pauses hiring and investments. The latest KPMG Tariff Pulse Survey finds that nearly 40% of businesses report gross margin declines in six months following the signing of Executive Orders 14256 and 14257, referred to by the Trump Administration as “Liberation Day.” 

“Despite efforts to optimize supply chains, we continue to see profits decline due to increases in tariffs,” said Brian Higgins, US Sector Leader for Industrial Manufacturing, KPMG LLP. “Uncertainty is not going away. Instead of taking the wait-and-see approach, U.S. businesses need to invest now in driving meaningful productivity gains as well as to help build resilience.”

63% are Actively Considering Reshoring Operations to the U.S., but Only 10% Have Taken Action

The current trade environment is causing many companies to consider reshoring operations to the United States. 63% of businesses surveyed reported early-stage discussions or active evaluations, though only 10% are currently taking action. The main obstacles cited include higher labor costs (65%), higher operating expenses (61%), and capital investment needs (46%).

“Businesses are making strategic changes that can have immediate impact instead of major, structural changes that would require time and capital investments,” said Joe Lackner, Advisory Partner, Industrial Manufacturing, KPMG LLP.

Sales in Foreign Markets Continue to Take a Hit but Shows Signs of Stabilizing

Companies report that sales in foreign markets have been adversely affected by the current tariff environment, but the recent findings show improvements since our July tariff survey. While 60% of businesses reported decreased overseas sales, this marks an improvement as only 22% experienced declines between 16-25%, a 5% drop from a 27% in the July survey.

In the Face of Uncertainty, almost 4 out of 10 Businesses are Pausing Hiring  

Facing economic uncertainty due to tariffs, nearly 40% of businesses have paused hiring. Another third of companies reported reducing their US workforce by 1-5% and 15% have reduced their US workforce by 6-10%. On the other hand, 13% have created new jobs by moving production to the U.S., and 22% have hired staff to manage tariff complexities.

At the same time, companies are investing in their current workforce. 60% of businesses are offering specialized training and development to handle increased workloads and complexity caused by new tariff policies. Almost half (47%) are reskilling staff, 39% are cross training employees, and 44% are investing in workforce analytics to adapt to tariff-driven volatility.

Price Increases are Here, and Will Continue

Tariffs have led to price increases, with 44% of businesses reporting that they have already adjusted prices to cover the costs of tariffs. Two-thirds of businesses have already passed through up to 50% of tariff costs, with nearly a quarter transferring more than half, up from 13% in July. Further increases are on the horizon as 42% expect price increases of up to 5%, and 29% foresee increases between 6-15% over the next six months.

Businesses are Focused on Repositioning Supply Chains and Investing in Automation

In response, businesses are optimizing supply chains, with 62% reconfiguring them for efficiency, 72% restructuring them for tax benefits, and 61% adjusting export pricing and product positioning. Though diversification efforts into new markets have decreased to 30% from 40% in July, businesses continue to utilize operational strategies to mitigate tariff exposure, including adding tariff clauses to agreements, dynamic pricing contracts, and financial hedging. 46% of the businesses are postponing major new capital investments, similar to the previous survey data.

Andrew Siciliano, Tax Partner, Trade and Customs Global and US practice lead, KPMG LLP, adds: “In today’s fast-moving trade landscape, agility isn’t just an advantage—it’s a necessity. With our AI-powered KPMG Tariff Modeler, we're empowering clients to harness their data, anticipate every scenario, and take decisive action to reduce tariff exposure and unlock new supply chain opportunities.”

Uncertainty is Now the Norm, Bringing an Opportunity to Restructure

Only 23% of businesses are fully confident in tariff stability. 44% of businesses expressed doubt or moderate confidence, highlighting persistent uncertainty. The survey revealed opportunities for companies to build resilience. 69% have yet to establish cross-functional teams, and 72% have not yet assigned a specific leader to oversee tariff decisions.

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.