After Months of Worry Over Tariffs, Business Owners Now Feel More Confident
For much of 2025, U.S. business owners grappled with uncertainty as tariffs and shifting trade policies loomed over the economy. The year began with widespread concern about how these measures would impact supply chains, costs, and growth. However, as the months progressed, something unexpected happened: confidence began to rebound.
A national survey conducted by SurveyMonkey in July 2025, involving nearly 1,900 small business owners, revealed a notable shift in sentiment. Nearly half (46%) of respondents described the state of the economy as “excellent” or “good,” up from just 30% in the previous quarter. This rebound in optimism was fueled by a realization that the feared impacts of tariffs had not been as severe as anticipated.
While tariffs remained a significant issue, the number of business owners worried about their effects declined. In the third quarter of 2025, 54% of respondents expressed concern about tariffs, down from 59% in the second quarter. Similarly, fewer business owners believed tariffs would directly impact their operations in the near or distant future, dropping from 66% to 59%. This easing of concerns suggests that many businesses are adapting to the new trade landscape.
Inflation, however, remained the top challenge for small businesses. According to the survey, 22% of respondents cited rising prices as the biggest threat to their operations. Despite this, there were signs of improvement. Only 66% of business owners now expect prices to continue rising, down from 72% the previous quarter. More owners also believed that inflation had already reached its peak, further boosting optimism.
Economic indicators also pointed to improving sentiment. The ISM Manufacturing PMI, a key measure of business sentiment in the manufacturing sector, rose from 48.0 in July to 48.7 in August 2025. While still below the 50 threshold that typically signals expansion, the trend suggests that manufacturing could return to growth by year’s end. Additionally, tariff-sensitive industrial production saw a 3.5% increase since December 2024, recovering from a late-2024 dip.
Despite these positive signs, challenges persist. Small businesses, in particular, continue to feel the strain of higher input costs due to tariffs. While the U.S. generated significant revenue from tariffs in 2025, certain industries, such as manufacturing, faced employment pressures, with a slight decline in tariff-sensitive jobs. Supply chain disruptions and higher prices for both businesses and consumers also highlighted the ongoing complexity of the trade environment.
Consumer confidence, meanwhile, experienced mild fluctuations. The Consumer Confidence Index dipped slightly in August 2025, reflecting ongoing concerns about jobs and income. However, expectations for future business conditions remained stable, suggesting that consumers are cautiously optimistic about the economic outlook.
In summary, 2025 has seen a significant shift in business sentiment. While tariffs and inflation continue to pose challenges, the direct impacts of tariffs have been less severe than feared, and inflation concerns have moderated. As businesses adapt to the new trade reality, confidence has rebounded, offering a more hopeful outlook for the remainder of the year.
Industry-Specific Insights and Broader Economic Trends
While the overall sentiment among business owners has improved, the impact of tariffs and economic conditions varies significantly across industries. Manufacturing, one of the sectors most affected by tariffs, showed mixed results. The ISM Manufacturing PMI, while still below the 50 threshold that indicates expansion, rose from 48.0 in July to 48.7 in August 2025. This gradual improvement suggests that manufacturers are slowly adjusting to the new trade environment, though challenges remain[3].
Tariff-sensitive industrial production also saw a rebound, increasing by approximately 3.5% since December 2024. This recovery, however, has been a subject of debate among economists, with some attributing it to mean reversion rather than a fundamental shift in trade dynamics[2]. Despite this, the growth in industrial production has been a positive sign for tariff-impacted industries, indicating resilience in the face of ongoing trade uncertainties.
Small businesses in rural areas reported slightly different experiences compared to their urban counterparts. Survey data showed that rural business owners were more likely to cite tariffs as a major concern, with 62% expressing worries about their impact, compared to 52% in urban areas[1]. This disparity highlights the uneven effects of trade policies across different regions and business sizes.
Employment trends also reflected the broader economic shifts. While manufacturing jobs in tariff-sensitive sectors experienced a slight decline, the overall labor market remained stable. Business owners reported fewer concerns about employment pressures compared to earlier in the year, with 12% citing labor costs as a major issue, down from 15% in the second quarter[1]. This stability in the labor market contributed to the overall improvement in business confidence.
Supply chain disruptions, while still a challenge, became less of a focal point for business owners. The proportion of respondents citing supply chain issues as a major concern dropped from 18% in the second quarter to 14% in the third quarter[1]. This reduction suggests that businesses are finding ways to mitigate the impact of tariffs and trade uncertainties on their supply chains, possibly through diversification of suppliers or other adaptive strategies.
Consumer behavior also played a role in shaping business optimism. Despite a slight drop in the Consumer Confidence Index in August 2025, falling 1.3 points to 97.4, expectations for future business conditions remained stable[4]. This dichotomy between current concerns and future optimism suggests that consumers are cautiously hopeful about the economic outlook, which in turn supports business confidence.
The U.S. government’s tariff policy also had broader economic implications. The significant revenue generated from tariffs in 2025 has been a point of debate among policymakers and economists. While some argue that the revenue could be reinvested in key sectors to stimulate growth, others caution that the long-term effects of tariffs on international trade relationships and domestic industries remain uncertain[5].
The rebound in business confidence during the third quarter of 2025 reflects a complex interplay of factors. While tariffs and inflation remain significant challenges, the easing of trade policy fears and improving economic indicators have created a more optimistic outlook for many business owners. As businesses adapt to the evolving trade landscape, their ability to navigate ongoing uncertainties will be crucial in sustaining this momentum.
Conclusion
2025 marked a turning point for U.S. business owners, as initial fears over tariffs and economic uncertainty gave way to renewed confidence. Despite ongoing challenges such as inflation and supply chain disruptions, the direct impacts of tariffs were less severe than anticipated, and business sentiment rebounded significantly. Economic indicators like the ISM Manufacturing PMI and industrial production data signaled cautious optimism, while consumer confidence remained stable despite minor fluctuations.
While small businesses, particularly in rural areas and tariff-sensitive industries, continued to face pressures, the overall trend suggests resilience and adaptability. As businesses navigate the evolving trade landscape, their ability to mitigate risks and capitalize on emerging opportunities will be key to sustaining this momentum. The rebound in confidence underscores a hopeful outlook for the remainder of the year, even as policymakers and business leaders remain vigilant about long-term economic implications.
Frequently Asked Questions
1. Why did business confidence rebound in 2025?
Business confidence rebounded in 2025 as the feared impacts of tariffs were less severe than anticipated. A national survey showed that 46% of small business owners viewed the economy as “excellent” or “good” by July 2025, up from 30% in the previous quarter. Additionally, inflation concerns moderated, with fewer business owners expecting prices to continue rising.
2. How did tariffs impact specific industries?
Tariffs had varying effects across industries. Manufacturing, one of the most affected sectors, saw mixed results, with the ISM Manufacturing PMI rising slightly but remaining below the expansion threshold. Industrial production in tariff-sensitive sectors also rebounded by 3.5% since December 2024, though economists debated whether this was due to adaptation or mean reversion.
3. Did rural and urban businesses experience the same challenges?
Rural and urban businesses experienced different challenges. Rural business owners were more likely to cite tariffs as a major concern (62%) compared to their urban counterparts (52%). This disparity highlights the uneven effects of trade policies across regions and business sizes.
4. How did tariffs affect employment?
While manufacturing jobs in tariff-sensitive sectors declined slightly, the overall labor market remained stable. Fewer business owners cited labor costs as a major issue, dropping from 15% in the second quarter to 12% in the third quarter, contributing to improved confidence.
5. What role did supply chain disruptions play in 2025?
Supply chain disruptions became less of a focal point for business owners. The proportion of respondents citing supply chain issues as a major concern dropped from 18% in the second quarter to 14% in the third quarter, suggesting businesses were finding ways to mitigate these challenges.
6. How did consumer confidence impact business optimism?
Consumer confidence experienced mild fluctuations, dipping slightly in August 2025. However, expectations for future business conditions remained stable, suggesting cautious optimism among consumers. This stability supported the rebound in business confidence.
7. What were the broader economic implications of U.S. tariff policy?
The U.S. tariff policy generated significant revenue in 2025, sparking debate among policymakers and economists. While some argued the revenue could stimulate growth, others cautioned about the long-term effects on international trade relationships and domestic industries.