It’s been difficult to get a clear view on how US businesses are dealing with President Donald Trump’s tariff roller coaster. Now, two reports show how they’re raising prices and slowing hiring.
The Federal Reserve released its Beige Book on Wednesday, which explores economic conditions across the Fed’s 12 regional banks based on interviews and surveys of business owners, economists, and others. Half of the districts reported “slight to moderate” declines in economic activity, and three reported no growth.
The Beige Book and a separate report from the Federal Reserve Bank of New York showed that businesses stockpiled goods expected to be hit by tariffs.
“All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,” the Beige Book said.
Trump’s administration has maintained that the tariff policies are in the best interest of the US, even if they create some short-term pain.
Kush Desai, a White House spokesperson, told Business Insider that “the Trump administration is closely tracking every economic indicator that has come out in recent months — expectation-beating jobs and inflation reports, surging consumer confidence, and strong real income growth — to evaluate the current state of the economy.”
Trump’s roller coaster tariffs are hitting small businesses
Beatrice Barba, who owns a small business that produces plastic-free items for babies and young kids, like sippy cups, told BI that the tariff whiplash is “almost worse” than having a consistently high tariff rate because it’s made it nearly impossible for her to predict the prices of her purchases.
“I don’t know what it’s going to be tomorrow, what it’s going to be today, what it’s even going to be later today,” Barba said. “No one can run a business that way.”
The Beige Book echoed some of Barba’s concerns. Examples the book highlighted on the impact of tariffs on businesses included:
- “A manufacturer of store displays noted that clients became flighty due to uncertainty and tariffs, leading to postponed and cancelled orders,” New York’s regional bank said.
- “Staffing services contacts said that employers across many industries delayed hiring because of uncertainty related to tariffs,” Boston’s regional bank said. “Manufacturing contacts echoed that description, reporting that headcounts were down slightly amid cautious hiring.”
- “Many auto dealers reported an increase in purchases ahead of planned tariffs, and one dealership expected tariff-related sticker shock to hit customer demand starting in early June,” Cleveland’s regional bank said.
- “Capital expenditures were largely unchanged; however, one firm considered making additional investments in the U.S. to mitigate the impact of tariffs,” Boston’s regional bank said.
- “While some firms said they were absorbing tariff-induced cost increases, most reported that they were passing through some or all of such cost increases to their customers by raising prices,” New York’s regional bank said.
Additionally, survey results from the Federal Reserve Bank of New York showed that many service firms and manufacturers in the New York—Northern New Jersey area that import goods have increased prices, and some have done so for goods not directly affected by tariffs.
Half of manufacturers in the region saw an increase in prices for tariffed goods, 31% stockpiled inventories, and 43% reported lower net income.
Service firms reported similar results on prices, inventories, and incomes, and nearly a quarter said they were reducing capital investments in the US.
Small business owners told BI that they were facing headwinds amid the uncertainty. Bookstore owner Emily Autenrieth could be facing the slowest month for her business for the year so far.
“The chaos and fear Trump has created in the American and global economies has damaged businesses like mine,” Autenrieth, owner of A Seat at the Table Books in California, told BI.
She said sales and profits are looking low for May.
“We had to pull from our line of credit to cover bills this month,” Autenrieth said.
The changing tariff policy makes it difficult to keep track of which ones are and are not, in effect. Most recently, Trump doubled the 25% tariff on steel and aluminum to 50%, while the 10% baseline tariffs on most imports that started in April remain in effect. Trump’s sweeping tariff announcement on April 2, in which he announced “Liberation Day” tariffs on over 100 countries, was blocked by a federal court following a lawsuit brought by small business owners who said the tariffs would have been catastrophic for their companies.
An appeals court lifted the block soon after, while a separate case to block Trump’s tariffs is still pending.
Michael Salvatore, who has multiple Chicago businesses, had a short-lived glimmer of hope with the trade court’s decision.
“But the more I think through the legal back-and-forth, the more I realize we’re entering a period of more uncertainty,” he told BI.
Salvatore — whose businesses include bars and a combination coffee and bike shop — has had to think about raising prices directly due to tariffs, but said “it’s a delicate balance.”
“As a small business owner, uncertainty is just as damaging as the tariffs themselves,” Salvatore said. “I can’t make clear purchasing decisions or long-term plans when I don’t know what rules I’m playing by.”
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