Tariffs Cloud View from Corner Office

CEOs at small and midsize business confidence in the economy decreased significantly in the first quarter of 2025, led by worries about tariffs and inflation. Those are the conclusions contained in the latest CEO Confidence Index compiled by coaching/peer advisory organization Vistage with ITR Economics.

Specifically, the index dropped 22 points from the previous quarter, from 100.8 to 78.5. That sharp decline is primarily driven by growing concerns over tariffs and heightened inflation.

“CEO confidence took a significant hit in Q1 2025, a stark juxtaposition to the gains we saw in Q4,” said Vistage Chief Research Officer Joe Galvin. “While such a drop would typically raise alarm bells, it brings levels back near those seen in Q3 2023. The high confidence in the previous quarter was likely driven by optimism about what the new [Trump] administration might accomplish, while the current reading reflects the reality of ongoing economic challenges. This uncertainty, along with tariffs and growing concerns among consumers, is leading to a more cautious outlook for the U.S. economy.”

Said ITR Economics Economist Lauren Saidel-Baker: “Price increases are going to be critical, as there will be a continued margin squeeze caused by tariffs, the labor market and wage increases. Margin is the critical differentiator of winners and losers going forward.”

Some noteworthy results from the latest survey:

Tariffs are a major source of concern for CEOs, with 69% of respondents saying trade and tariff policy changes will negatively impact their businesses.

When asked how overall economic conditions have changed over the past year, 41% of SMB CEOs report that conditions have worsened, and 42% expect the economy to continue to worsen in the year ahead.

Finding and retaining qualified employees remains a widespread challenge. Despite that, 45% of CEOs plan to add personnel in the year ahead and only 14% intend to reduce hiring.

Established in 2003, the Vistage CEO Confidence Index surveys small and midsize business CEOs, presidents and business owners about the U.S. economy every quarter. The Q1 2025 Vistage CEO Confidence Index includes responses from 1,796 U.S. CEOs surveyed between March 3 and 17, 2025.