New Data Shows US Businesses Already Experiencing Impacts from Tariffs: More Price Increases and Customer Pushback Expected

New York, July 9, 2025 – More than half of U.S. companies (57%) reported declining gross margins as a direct result of tariffs, according to the new KPMG Tariff Pulse Survey. As tariffs continue to reshape the global trade landscape, American businesses are already feeling negative impacts, while anticipating that they may experience more price increases and customer pushback in coming months.

“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.”

Companies are Seeing a Decline in Gross Margins and Foreign Sales

Nearly 60% of companies reported a decrease in gross margins due to tariffs, with roughly a quarter seeing drops greater than 6-10%. International sales are also being hit hard, particularly in China where 83% of companies report reduced sales due to retaliatory tariffs. Nearly a third have seen a 16-25% drop in foreign sales overall, underscoring the wide-reaching impact of current trade tensions. To manage the immediate cost pressure, companies are aggressively leveraging various tariff mitigation strategies, focusing on customs valuation, origin determination, and duty deferment. Many are also engaging in forceful negotiations with suppliers, some of whom are agreeing to share the costs associated with tariffs.

Price Increases Loom Indicating that Consumer Resistance May Soon Follow

83% of companies expect to raise prices in the next six months, with nearly three quarters already passing on some costs to customers. However, customer pushbacks at this time remain limited with only about one-third of businesses reporting it as a challenge. “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.”

Companies are Reevaluating Supply Chains and Putting Capital Investment Plans on Hold

Tariffs are forcing companies to rethink their supply chains and investment timelines, but strategic change takes time. Nearly half of businesses reported it takes 7 to 12 months to implement significant supply chain adjustments, and more than half are already working to reconfigure their supply chains in response, including reshoring manufacturing to the U.S. However, higher labor and operating costs, along with the capital required to make these moves, remain major barriers. In fact, many companies have delayed capital investments by up to a year while they reassess long-term strategies in an increasingly uncertain trade environment.

AI and Automation as the First Line of Defense

Despite these pressures, companies are prioritizing their people over job cuts. Only 14% plan to reduce headcount, while investment in technology is rising sharply. Predictive analytics, manufacturing automation, and advanced scheduling tools are being widely adopted to help businesses manage costs and improve efficiency. Over two-thirds are using predictive analytics, and nearly half have automated manufacturing processes as a strategic response to tariff-related challenges.

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. Read additional findings below.