The breadth and magnitude of tariff imposition continue to evolve 
. Similarly, the effect of tariffs on CFOs' outlooks has changed since we first examined the topic prior to the events of early April. Concern over tariffs expressed by financial decisionmakers in The CFO Survey has risen sharply during the past two quarters. In the most recent survey, which closed on June 6, 40 percent of respondents cited tariffs or trade policy as their firm's most pressing concern. Prior to mid-2024, these concerns were essentially nonexistent (see figure 1).
To understand the evolution of firms' expectations amid a fast-changing trade policy landscape, we analyze a matched sample of firms responding in each of the last three quarters (during which time tariff concerns increased dramatically) and reexamine how CFOs' expectations evolved for firms that sourced their inputs/supplies from abroad versus those that did not.
Firms exposed to tariffs see much dimmer economic prospects
Relative to firms' views at the beginning of the year, the economic outlook of most firms has deteriorated. Even so, we continue to observe a dichotomy between firms sourcing their inputs/supplies from the United States and those importing them from abroad. The latter category of firms expects a much slower growth trajectory for the overall US economy and assigns double the probability to negative real GDP growth as those not importing from abroad (see figures 2 and 3). Interestingly, the delineation appears to be centered on whether a firm sources inputs from abroad, as we do not observe any meaningful difference based on the share of inputs/supplies sourced internationally.
Firms ratchet up price and cost expectations, further downgrade expected revenue
Compared to last quarter, firms importing supplies/inputs from abroad expect even worse performance than their peers across most key metrics. Figure 4 demonstrates that expected unit cost growth has increased for all importing firms, with firms more heavily reliant on imports expecting the highest unit cost increases. The expected unit costs are more than a percentage point higher than what firms expected last quarter, and in most cases they are more than double what firms expected in the fourth quarter of last year. This pattern is quite striking for firms that source more than 30 percent of their inputs from abroad. From the fourth quarter of 2024 to the second quarter of 2025, these firms have revised up their unit cost growth expectations for 2025 from 3.3 percent to 6.8 percent and have ratcheted up their anticipated price growth for 2025 from 3.4 percent to 5.6 percent. That tariff-impacted firms expect to increase prices by 70 to 80 percent of their unit cost growth suggests that margins will likely shrink as these firms absorb some portion of this cost rather than pass it through to customers.
Interestingly, figure 5 reveals that all firms—including those sourcing all supplies/inputs domestically and expecting more subdued unit cost growth—have revised higher their expected price growth from last quarter. Firms that exclusively source inputs/supplies domestically see their price growth as outpacing unit cost growth in 2025 (4.6 percent versus 4.1 percent, respectively), suggesting some growth in margins and, at least in aggregate, consistent with the notion that anticipated price growth from tariff-impacted firms will allow nonimpacted competitors to raise prices (albeit more modestly) without sacrificing market share.
Firms sourcing all supplies/inputs domestically expect significantly higher revenue and employment growth than their peers (see figures 6 and 7). The sizeable increase in expected employment growth among nonimporting firms might result from their much stronger revenue growth expectations, consistent with the potential for these firms to capture market share.
Firms that sourced inputs/supplies from tariff-hit countries have downgraded their expected revenue growth relative to last quarter, though their employment growth has curiously remained only little changed since the fourth quarter of last year.
Looking across all three quarters, we observe a meaningful deterioration in firms' expected performance between the first and second quarter surveys, which corresponds to the period when most of the additional tariffs were announced and when uncertainty surrounding trade policy peaked (see figure 8). To the extent that greater certainty exists surrounding trade policy, or that progress in negotiating policies more favorable to respondents occurs, we might expect their expected performance to improve somewhat moving forward.
Conclusion
Firms' outlooks continued to darken in the second quarter. Respondents to The CFO Survey have revised downward their expectations for real GDP growth and sales revenue growth, and at the same time they anticipate much higher cost and price growth during 2025. Tariff-exposed firms appear to be driving much of the overall deterioration in own-firm expectations. That said, at least to date, firms not importing supplies/inputs from abroad anticipate raising prices too, suggesting some ability to grow margins as their competitors face sharply higher cost growth due to tariffs. Trade policy remains fluid, and further developments are likely to have an impact on firms' expectations for the economy and their own performance. We will continue to closely monitor these developments and provide additional updates later this year.
By Zach Edwards , research analyst on the Regional and Community Analysis team at the Richmond Fed,
, research analyst on the Regional and Community Analysis team at the Richmond Fed,
Brent Meyer, assistant vice president and economist in the Atlanta Fed's Research Department, and
Daniel Weitz, survey director at the Atlanta Fed