09-07-2025
Tariffs are already squeezing corporate margins, new survey finds
Someone has to pay the cost of tariffs — and a new survey out Tuesday finds many companies are already feeling the pain.
Why it matters: Businesses trying to insulate customers from trade costs can only eat them for so long before raising prices, fueling the tariff-driven inflation many economists fear.
Driving the news: Some 57% of companies were already experiencing a tariff-driven decline in gross margins as of May, per the KPMG Tariff Pulse Survey.
Most of those hits were small — though a quarter of respondents said their margins had already fallen by 6% or more.
The firm surveyed senior and C-Suite executives at 300 companies across industries, all with annual revenue of $1 billion or more.
Zoom in: If higher prices haven't shown up for customers yet, the survey makes clear they're coming.
77% of respondents said their companies are considering price increases of at least 5% in the next six months.
What they're saying: " The survey underscores the Federal Reserve's fear that the bulk of the tariff-induced inflation has yet to hit," KPMG economist Diane Swonk said in a statement.
"The personal consumption expenditures index, the Fed's favored inflation measure, is forecast to peak above 4% in the second half of 2025; that is more than double the Fed's 2% target."
The intrigue: Earnings season for public companies kicks off next week, and investors will be closely watching to see whether — and how badly — corporate profits are being squeezed.
