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U.S. Middle-Class Endures Tariffs as Customary Trade Circumstances

Half of product leaders in our Intelligence report predict that global taxes will become a permanent policy shift.

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3 min read
U.S. Middle-Class adapts to permanent tariffs as the prevailing standard
U.S. Middle-Class adapts to permanent tariffs as the prevailing standard

U.S. Middle-Class Endures Tariffs as Customary Trade Circumstances

The long-term strategic impact of recent U.S. tariffs on middle-market companies is largely negative, particularly among goods-producing firms, according to a recent survey by PYMNTS Intelligence. Over half of payments leaders expect harmful effects on their companies, reflecting a sharp increase in pessimism compared to earlier months.

This tariff era has fostered an environment of business uncertainty and caution, prompting companies to conserve resources, delay investments, and hedge against risks amid unclear trade policies. Middle-market companies, typically defined with annual revenues from $25 million to $1 billion, are actively rethinking supply chains and adopting tailored financing strategies to mitigate tariff risks.

Supply chain strategy is being treated as a critical financial decision, impacting investments and financing approaches. These firms view supply chain adjustments—including diversification of suppliers, inventory optimization, and reshoring—as critical financial decisions, not just operational changes. This reflects a strategic shift to manage the financial impacts on working capital and cash flow under ongoing tariff uncertainty.

Despite these challenges, a majority of middle-market companies remain optimistic about the overall economy and are planning strategic moves such as mergers and acquisitions to strengthen their market positions. Many firms are focusing on operational efficiency, digital transformation, and advanced analytics to counterbalance tariff-related disruptions and maintain competitiveness in a turbulent environment.

The U.S. has implemented new tariffs on regions such as Europe and South Korea. Goods firms, which have the most to lose from tariffs on imports from countries like China and Vietnam, are the least likely to view the duties as a long-term policy shift. The tariffs on imports from China and Vietnam are 55% and 20%, respectively. Services firms, more than half (52%), expect new tariff policy to last.

Corporate product leaders oversee the entire lifecycle of a product, including strategy, budgeting, production, and measuring success. The tariff era affects trade-finance credit, supply-chain hedging, and working-capital automation for banks, payments networks, and FinTech platforms. The findings are based on a survey conducted by PYMNTS Intelligence from July 21 to July 30, which polled 60 heads of product at middle-market companies.

Tariffs could make dynamic pricing more prevalent, potentially alienating consumers. Merchants may front-load tariffs into sticker prices, potentially forcing acquirers and payment platforms to revisit their fraud models and interchange. Nearly half of the executives view the "reciprocal" duties as embodying a strategic policy shift that is part long-term, part short-term. Only 7% of the executives regard tariffs as a flash-in-the-pan negotiating tactic that will pass.

The average U.S. tariff rate of 22.5% is the highest since 1909. Trump views tariffs as a way to reduce America's trade deficit and "correct longstanding imbalances" in international trade. However, economists are watching for higher prices on imported goods, which could lead to inflation and a slowdown in economic growth.

In summary, the survey highlights tariffs as a strategic challenge reshaping middle-market companies’ investment, operational, and financial decision-making over the long term. The findings suggest that companies are adopting cautious and strategic approaches to manage the financial impacts of tariffs, while remaining optimistic about growth and investing in technology to improve agility.

  1. Despite tariffs having the highest average rate since 1909, a majority of middle-market companies remain optimistic about the overall economy.
  2. Middle-market companies are rethinking supply chains and adopting tailored financing strategies to mitigate tariff risks, viewing supply chain adjustments as critical financial decisions.
  3. The tariff era affects trade-finance credit, supply-chain hedging, and working-capital automation for banks, payments networks, and FinTech platforms.
  4. Over half of the executives view the "reciprocal" duties as embodying a strategic policy shift that is part long-term, part short-term, while only 7% regard tariffs as a temporary negotiating tactic.
  5. Goods firms are the least likely to view the duties as a long-term policy shift, with tariffs on imports from China and Vietnam being 55% and 20%, respectively.
  6. The findings indicate that companies are adopting strategic approaches to manage the financial impacts of tariffs, while focusing on operational efficiency, digital transformation, and advanced analytics to maintain competitiveness.
  7. Services firms expect new tariff policy to last, and corporate product leaders oversee the entire lifecycle of a product, including strategy, budgeting, production, and measuring success. Tariffs could make dynamic pricing more prevalent, potentially forcing acquirers and payment platforms to revisit their fraud models and interchange.

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