CFOs Express Growing Concerns Over Tariffs Amid Declining Business Confidence

On the economic landscape, the first quarter of 2025 has marked a significant drop in optimism among chief financial officers (CFOs). A recent CFO Survey indicates that worries regarding tariffs and broader market uncertainty have heavily influenced this shift.

Key Insights: The survey, conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta, reveals perspectives from leading financial decision makers.

In this quarter, the economic optimism index for CFOs fell to 62.1, down from 66.0 in the previous quarter, which nearly negates the surge seen following the elections. While optimism concerning the financial health of individual firms also declined, the drop was comparatively milder.

Trade policy issues and tariffs emerged as major concerns, with nearly one-third of the surveyed firms expressing their unease—an increase from the previous quarter. Additionally, the term 'uncertainty' has now appeared in the top five concerns among CFOs for the very first time.

Top Concerns for CFOs

CFO Concerns	Q4	Q1
Trade/Tariffs	4.10%	15.20%
Inflation	8.80%	9.30%
Monetary Policy	10.70%	8%
Labor Quality/Availability	11.50%	7.20%
Uncertainty	3%	6.80%
Political Climate	7.30%	6.40%
Demand/Sales/Revenue	7%	6.30%
Health Of The Economy	4.50%	5%
Regulation	4.20%	3.80%
Non-Labor Costs	4.20%	3.60%

Importance of Concerns: The fluctuating trade policies from President Donald Trump have created an environment of uncertainty for investors and businesses alike.

Following a recent market correction, stock prices managed to recover slightly after rumors of potential tariff reductions. However, Trump also announced upcoming tariffs on automobiles and pharmaceuticals, alongside additional tariffs affecting the importation of Venezuelan oil and gas. While there are indications that some countries may receive exemptions from these tariffs, investors remain anxious about the "reciprocal tariffs" expected to take effect on April 2nd.

"Uncertainty and trade policies clearly weigh heavily on the minds of CFOs in this quarter's survey," stated Sonya Ravindranath Waddell, an economist with the Federal Reserve Bank of Richmond. "Close to one-third of the respondents indicated concerns about tariffs, and these concerns corresponded with notably reduced optimism, lowered expectations for GDP growth, and increased anticipation of price growth for 2025."

Market Update: As of Wednesday morning, the SPDR S&P 500 ETF Trust (SPY) was showing a slight increase of 0.045%, reaching $575.72, whereas the Invesco QQQ Trust ETF (QQQ) showed a minor decline of 0.018%, falling to $493.37, as reflected in Benzinga Pro data.

Further Reading:

• US Recession Risk Estimated at 30-35% by PIMCO, but Stagflation Less of a Concern, Says Chief

CFO, Tariffs, Concerns