Tariffs continue to erode small business confidence [WSJ/Vistage March 2025]

The reversal of post-election optimism continues, with small business confidence declining for the third consecutive month. This follows the surge in November and December driven by expectations for business-friendly policies of a new administration.

The WSJ/Vistage Small Business CEO Confidence Index dropped 9.4 points to 85.4. While the cumulative decline of 26.5 points since December is steep, the WSJ/Vistage Small Business Index has returned to levels recorded last summer.

The most notable driver in this decline is the rapidly increasing pessimism about current and future economic conditions in the U.S. The proportion of small businesses that believe the current conditions of the U.S. economy have worsened compared to last year has grown 20 points since last month, reaching 42%, while those who believe the U.S. economy will worsen in the next 12 months have increased 11 points, reaching 43%.

Tariffs’ role in declining optimism

Since the inauguration, we have been taking the pulse of how small businesses expect different policy changes to impact their business. Last month, 54% of small businesses expected negative impacts of trade and tariff policies, a proportion that has risen 10 points to 64% in March. Those who expect positive impacts of those policies have also shrunk in that time, with just 8% reporting that tariffs would benefit their business. While changing tax policies might bring some optimism, the current focus has been on tariffs and trade.

Uncertainty is the top challenge small businesses are facing, followed by talent

What are small businesses most challenged by? Analysis of over 700 open-ended responses about the biggest business challenge small businesses are facing reveals that:

1. Economic uncertainty is the top challenge. This includes unpredictability in government policies and leadership changes, tariffs, trade wars, shifting regulations, and delayed customer decisions, project starts, and investments.
2. Talent remains a perennial challenge for small businesses. Whether finding qualified talent, developing leaders, or keeping existing employees engaged and motivated, this is a challenge all leaders face.
3. The third biggest challenge is cash flow and access to capital. This includes cash flow pressure from delayed payments or seasonal revenue, difficulty accessing loans or capital at affordable rates, tightened lending and difficulty funding capital or covering rising operating costs.

How small businesses invest in their people remains a top priority. Ensuring there are great leaders in place, employees receive the necessary training and development to succeed, and that they are both engaged and productive are challenges all business leaders face, whether managing unprecedented growth or crippling uncertainty.

March highlights

The March WSJ/Vistage Small Business CEO Confidence Index was calculated from an online survey sent to CEOs and other key leaders who are active U.S. Vistage members. The survey collected data from 931 respondents with annual revenues of $1-20 million and was open between March 3 and 17, 2025, capturing small businesses’ sentiment as tariffs began to be implemented under the new administration.

• Current economy: The proportion of small businesses that believe the economy is worse has grown to 42%, a 20-point increase from last month, while 21% believe the economy has improved compared to last year, a 9-point decline from last month.
• Future economy: Optimism about the U.S. economy in the next 12 months declined for the fourth month, reaching 27%, down 36 points from November’s high. Small businesses that expect the economy to worsen increased to 43%, an 11-point increase from last month.
• Revenue projections: 59% of small businesses expect increased revenues over the year ahead, a 5-point decline from last month. Those that expect decreased revenues were recorded at 14%, consistent with last month’s 13%.
• Profitability projections: Less than half (47%) of small businesses expect profitability to improve in the next year, a 6-point decline from last month, while those that expect a decline rose for the fourth month to reach 21%, a level not seen since October 2023.
• Fixed investment plans: The proportion of small businesses planning to increase fixed investments over the next 12 months increased incrementally to 36%, while the proportion planning to decrease fixed investments also rose slightly, reaching 16%.
• Workforce expansion plans: Less than half (48%) of small businesses plan to add personnel over the next 12 months, consistent with last month, while the proportion who plan to decrease investments rose to 12%, a level not seen since November 2012.

To explore the full March 2025 WSJ/Vistage Small Business data set, visit our data center or download the infographic.

The April 2025 WSJ/Vistage Small Business CEO Confidence Index survey will occur April 7-14, 2025.

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