Online businesses predicted the poorest outlook due to tariff concerns, as potential price increases might not sufficiently cover costs - According to a Duke-Fed survey
The Q2 2025 survey by Duke University’s Fuqua School of Business, in collaboration with the Federal Reserve Banks of Richmond and Atlanta, has revealed a significant impact of tariffs on the U.S. economy. Conducted between May 19 and June 6, 2025, the survey polled approximately 465 U.S. firms, providing insights into the current economic climate.
Key findings indicate that trade policy, particularly tariffs, has become a top concern for financial decision-makers. Forty percent of respondents cited it as a pressing issue, surpassing figures seen during the pandemic and U.S.-China trade tensions. This marked a record high dating back to Q2 2020.
CFOs revised upward their own-firm unit cost and price growth projections for 2025, suggesting that tariffs are expected to raise costs and prices within firms. However, these executives lowered their revenue growth expectations and cut the forecast for real GDP growth over the next four quarters from 1.9% to 1.4%. The probability assigned to negative year-ahead economic growth jumped from 15% to 23%, reflecting heightened recession fears.
Firms concerned about tariffs forecast real revenue contraction in 2025 since their expected sales revenue growth does not keep pace with price increases, effectively meaning that higher costs and prices are not translating into sales growth but compressing real income. In contrast, sites that did not report tariff concerns raised prices but still have an expected nominal sales revenue growth of 5.9%, outpacing their projected price increases of 3.2%, indicating real revenue growth for this group, rather than a contraction.
Due to tariff-related uncertainty, 41% of CFOs reported postponing, scaling down, or cancelling capital investment plans in the first half of 2025, which is a drag on economic expansion. Atlanta Fed economist Brent Meyer identified this trend in his official comments about the survey.
The survey data does not determine the impact of the Trump administration’s trade policies conclusively. Only 41% of all the surveyed websites said they’ve passed or plan to pass tariff-related cost increases on to customers. Although tariff-weary organizations may make more money per unit or service, they will charge more while selling less, leading to negative real revenue growth.
Those not concerned about tariffs forecast price increases of 3.2% and unit input cost growth of 3.9%. Across the entire dataset, the websites indicated a growing pessimism about the broader economy, with a median real GDP growth forecast cut to 1.4% from 1.9% in Q1. The probability of economic contraction also rose, coming in at 15% in Q1, but increasing to 23% this time around.
In sum, tariffs are driving up costs and prices at the firm level while dampening investment, hiring, and real revenue growth expectations, collectively signalling a slowdown in economic growth prospects in the near term. This deteriorated outlook highlights the growing concern among CFOs that trade policy is a substantial headwind for the U.S. economy in 2025.
[1] Duke University press release, Q2 2025 CFO Survey: Tariffs and Trade Policy Top Concern for U.S. Firms, Available at: https://www.fuqua.duke.edu/news/q2-2025-cfo-survey-tariffs-and-trade-policy-top-concern-us-firms [2] Federal Reserve Bank of Richmond press release, Q2 2025 CFO Survey: Tariffs and Trade Policy Top Concern for U.S. Firms, Available at: https://www.richmondfed.org/news/press-releases/2025/q2-2025-cfo-survey-tariffs-and-trade-policy-top-concern-for-us-firms [3] Federal Reserve Bank of Atlanta press release, Q2 2025 CFO Survey: Tariffs and Trade Policy Top Concern for U.S. Firms, Available at: https://www.frbatlanta.org/newsroom/press-releases/2025/q2-2025-cfo-survey-tariffs-and-trade-policy-top-concern-for-us-firms [4] National Bureau of Economic Research, Business Cycle Dating Committee, Available at: https://www.nber.org/business-cycle-dating-committee
- The survey by Duke University, Richmond, and Atlanta Federal Reserve Banks found that 40% of financial decision-makers regard tariffs as a pressing issue, raising concerns about their impact on the growth of firms' revenue and the overall U.S. economy.
- CFOs have revised their price and cost growth projections for 2025, suggesting that tariffs will drive up costs within firms, causing a decrease in firms' expected revenue growth and increasing fears of economic recession.
- The survey data indicates that firms concerned about tariffs forecast real revenue contraction since higher costs and prices may not result in increased sales, compressing real income. In contrast, firms not affected by tariffs expect nominal sales revenue growth of 5.9%, exceeding their projected price increases of 3.2%, suggesting real revenue growth for this group.
- The survey also revealed that 41% of CFOs have either postponed, scaled down, or cancelled capital investment plans due to tariff-related uncertainty, which could potentially limit economic expansion. This trend was noted by Atlanta Fed economist Brent Meyer in his official comments about the survey.
