How Tariffs Are Reshaping Household Budgets

Business Uncertainty Surges

Middle-market companies in the goods and retail sectors are experiencing heightened uncertainty. The proportion of these businesses operating under high uncertainty tripled from 11% in March 2025 to 33% in April 2025. Conversely, those reporting low uncertainty decreased from 45% in January to 29% in April.

Key drivers of this uncertainty include supply chain integrity (62%) and macroeconomic conditions (38%). These factors have overtaken previous concerns such as customer demand behaviour and competitive positioning.

Tariffs are compelling businesses to make strategic shifts. All heads of product in retail and goods segments reported that tariffs have impacted their product development. One-third have delayed, canceled, or reconfigured product plans. Additionally, 81% have shifted focus from long-term technology initiatives to short-term operational fixes, often leveraging artificial intelligence to adapt.

Confidence in managing tariff-related supply chain disruptions has declined sharply. Only 5% of heads of product in goods firms expressed high confidence in April 2025, down from 40% in prior months. All agree that tariffs are increasing costs for reconfiguring supply chains and raw materials.

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Consumers Adjust Spending Habits

Consumers are actively changing their spending habits to offset tariff impacts. Over 80% have made adjustments, averaging 4.7 changes per person. Those living paycheck-to-paycheck and struggling to pay bills have made an average of 5.7 changes, indicating a disproportionate impact on vulnerable populations.

These adjustments include reducing discretionary spending, seeking lower-cost alternatives, and delaying major purchases. The cumulative effect is a shift in consumer behaviour that reflects the broader economic uncertainty caused by tariffs.

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Why It Matters

Tariff-induced uncertainty is reshaping the strategies of businesses and the spending habits of consumers. As companies navigate supply chain challenges and increased costs, and consumers adjust to rising prices, the economic landscape continues to evolve. Understanding these dynamics is crucial for stakeholders aiming to mitigate risks and adapt to the changing environment.

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