Tariffs: Key Business Challenges Facing CFOs

For CFOs, tariff is far from the most beautiful word in the dictionary. It’s the cause of the most concern for the future of their businesses. Nearly 40% said tariffs were their top concern as their outlook for the future deteriorated in the most recent CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. Businesses—especially those that identified tariffs will impact them—said they expect to see increases in their costs, bump up their prices, and cut down on planned hiring and investments.

“Perhaps the most striking facet of the outlook for those that report tariffs and trade policy as a pressing concern is that their nominal sales revenue expectations fail to outpace their price growth projections, which means their real revenue growth is expected to contract in 2025,” Atlanta Fed economist Brent Meyer said in a written statement.

In the quarterly survey, CFOs are asked for their expectations of growth in revenue, price, unit cost and employment. Average revenue projections are down—from 6.8% in Q1 of 2025 to 5.4% in Q2—while price and unit cost increases have bumped up, both increasing more than 1%. Close to four out of five companies concerned with tariffs have postponed or scaled back capital expenditures. And most companies plan to pass the tariff increases on to their customers. Nearly 62% of those with tariff concerns are doing so, but more than a quarter of those without tariff concerns are also passing through new costs.

And while 68% of CFOs are optimistic about their own companies—a number only slightly changed compared to Q1—only about 61% are optimistic about the U.S. economy. They’ve projected a 22.7% probability of negative GDP growth over the next four quarters, with more than half revising their growth predictions for the next year downward—more than half expect growth ranging from zero to 2.4%.

All of this uncertainty does not lend itself to being the best backdrop for seeking financing, but some small and medium-sized companies will need more funds. Relatively high interest rates, inflation concerns and eligibility changes might make bank funding more difficult. I spoke with Brian Rosa, president of commercial finance for Mitsubishi HC Capital America, about the ideal times to consider alternative financing. An excerpt from our conversation appears later in this newsletter.

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ECONOMIC INDICATORS

Stock markets finally fully recovered last week from their early April “Liberation Day” drop, when President Donald Trump announced his slate of sweeping tariffs on other nations. The S&P 500 and Nasdaq hit their first highs in four months this week, setting a record level for both indexes on Friday. Leading analysts aren’t optimistic that the highs will keep coming, though. JPMorganChase top global strategist Dubravko Lakos-Bujas forecast the S&P will end the year 2% lower than Friday, citing the “lagged effects of new policies (i.e., tariffs, immigration, DOGE).”

Stocks have been able to rebound because, for the most part, the tariff threat has only been just that. While Trump has announced dates by which different tariffs would go into effect, those deadlines have often been moved forward or paused to allow for negotiations. And negotiations have been ongoing, sometimes to benefit the United States. After Trump abruptly ended negotiations on Friday with Canada over that country’s new digital service tax—a 3% charge on foreign tech companies for revenue generated from Canadian users—the Canadian government decided over the weekend to rescind the tax. Stocks were up on Monday, but dipped a bit to kick off the second half of 2025 on Tuesday.

But tariffs—and how suddenly they may go into effect—loom large. Trump said on Friday that he holds the cards on whenever tariffs start. Many were set to begin on July 9, and Trump said he could extend it—or expedite the deadline, which he said was his preference.

Tariffs and the economic uncertainty haven’t impacted prices too deeply just yet, though May’s inflation inched up more than expected last month, reaching 2.7%, according to the core personal consumption expenditures index—excluding food and energy categories. Some analysts expect a continued rise in inflation as Trump’s tariffs actually go into effect and raise consumer prices. The increase is above the Federal Reserve’s preferred 2% rate, so last month’s numbers may show further proof that the Fed acted appropriately when it didn’t lower interest rates—but Trump has been itching to dismiss Federal Reserve Chairman Jerome Powell because of his unwillingness to drop them on command. While Trump has said he will let Powell serve to the end of his term next May—even though he constantly berates him—the Wall Street Journal reported that Trump may name Powell’s successor this fall, allowing a “shadow” Fed chair to operate and share their preferred policy choices—something analysts have said would definitively undermine Powell.

ARTIFICIAL INTELLIGENCE

Intuit is bringing AI agents to QuickBooks today, which Chief AI and Data Officer Ashok Srivastava told me will help businesses get paid faster and make it easier for executives to operate them. The agents are projected to save businesses 12 working hours per month.

One of the agents tracks invoices, creating and sending them automatically if they’re unpaid, eliminating the need to track them manually. Srivastava said that in testing, this approach resulted in a 10% increase in invoices paid in full, and that invoices tend to be paid five days sooner than a manual method. Another agent automates bookkeeping and transaction categorization, putting a symbol next to categories that it groups together. Srivastava said that it simplifies both accounting and tax preparation. The other new offering is a finance agent that automatically analyzes KPIs and performs planning functions for different scenarios. Srivastava said it can also help businesses anonymously analyze benchmarks, comparing cash flow with other nearby businesses. The agents are included in QuickBooks but can be turned off, Srivastava said. There’s also an option of asking a human for help.

Srivastava said that the AI agents were built based on the needs and demands of Intuit customers. And more agents—including those that track and identify opportunities based on customers, marketing, payroll and projects—are coming soon. While the new agents are currently in QuickBooks, the ones in development will be integrated with many of Intuit’s other platforms, including Mailchimp.

“You want your bookkeeper in real life to talk to your finance expert, to talk to your marketing expert, and so the agents can talk to each other as well,” Srivastava said. “That’s a protocol and capability that we’re building.”

NOTABLE NEWS

Last week, Zohran Mamdani shocked the establishment of both parties to become the presumptive winner of the Democratic primary for mayor of New York City. Mamdani, who espouses more progressive socialist-leaning views, wants to make New York City more affordable for all, paid for through more taxes on wealthy individuals and corporations. This kind of tax change could upend New York’s population and businesses—not to mention its economy. Mamdani wants to raise the corporate tax rate to 11.5% from its current 7.25%. He also wants to add a 2% tax on New Yorkers earning more than $1 million per year, which his platform claims could raise $4 billion annually.

Forbes’ Kelly Phillips Erb analyzes Mamdani’s proposals. Opponents fear that this kind of tax may cause the ultra-wealthy to leave New York, but reviews of IRS data have found only 0.3% of millionaires move across state lines each year. However, just because Mamdani wants to make these changes, it doesn’t mean he’ll get the opportunity. First, he has to be elected in November, when he will face Republican nominee Curtis Sliwa; incumbent Mayor Eric Adams, running as an independent; and former N.Y. governor Andrew Cuomo, who fell short of Mamdani’s vote total in last week’s primary. Even then, tax increases for the city need wider approval. The state legislature would also have to agree to the higher taxes, which would then need to be approved by Gov. Kathy Hochul.

OFF THE LEDGER

Making The Case For Alternative Financing In Uncertain Times

Even in the midst of a hazy economic landscape, with relatively high interest rates and uncertain inflation, businesses don’t get to choose when they need capital. Funds for expansions, upgrades, M&A and operating costs are needed when they are needed, regardless of the larger situation. Brian Rosa, president of commercial finance for Mitsubishi HC Capital America, spoke with me about why small and medium-sized businesses might want to consider alternative financing right now. This conversation has been edited for length, clarity and continuity.

What are you hearing from CFOs and companies who work with you about some of the challenges with financing they are seeing today?

Rosa: When you layer in the economic uncertainty with the labor resources and talent shortage, investments in a high interest rate environment can be difficult. You’re dealing with smaller workforces. They have technology that’s outdated. Companies are still dealing with supply chain disruption.

The feeling we hear now is that people are on the sidelines until they see what happens. A lot of it is probably new administration-driven right now, especially with the tariffs. If you have any type of dependency on purchasing products or materials outside the U.S., it’s difficult to make decisions. People are holding back on major investment decisions until they get a little clarity. I’m probably more glass-half-full, and I’m hoping that comes in the next three to six months.

There are some folks that obviously can’t hold back on their investment decisions and they need to move forward now, which is where alternative lenders come into play. But people are being more cautious than they’ve been over the past couple of years.

What are some of the benefits and drawbacks of going to an alternative lender?

We can be more nimble. Banks typically have more rigid credit and product boxes, and alternative lenders tend to be a little bit less rigid. Not to say that we’re not risk focused and we’re taking a whole bunch of risks that banks aren’t. We have the ability to customize because we have flexibility that banks don’t. There’s also speed and certainty of execution with us.

If we’re working with someone who’s interested in an alternative lender and they’re committed to us, then we’re committed to them. We’ll be there for the ups and the downs. In certain businesses that are more volatile than others, as soon as things get rough, banks will leave the market. We’ve always prided ourselves on being with our customers through the highs and the ride through any kind of volatility that there is in these business cycles.

On the flip side, if you’re looking for a standard loan product, you’re targeting the cheapest alternative and you don’t need a lot of customization, those customers will go to banks. A lot of it comes down to what payments you’re making on a monthly basis. If a customer knows that he’s going to own equipment for five years, it’s going to be a straight amortization loan, they’re really looking for the cheapest cost of funds and they don’t need a lot of flexibility in the structuring, a bank is where they’re going to go.

How should medium-sized or small businesses evaluate where they should look for funding and what kind of product they need?

It’s based on their specific needs and business case. A good example is they know they need to make an investment in equipment. An area we play a lot in is warehouse automation technology, which is a growing industry. If you look at some of the labor issues that they’ve had in manufacturing and production facilities, and the move towards more technology and automation in those facilities, that’s become a big area of focus. The challenge that CFOs have right now is that it requires a substantial upfront investment.

When they’re doing their return-on-investment analysis, if they’re looking at a traditional loan, the economics maybe aren’t going to make sense. In a situation like that, they really need to be thinking beyond what’s my cash outlay in the first few years, and are there opportunities with other lenders to structure something where I can make this work? I know I need to make this investment. I know a traditional bank loan isn’t going to solve this investment. How can I make this happen outside of the traditional products I’ve had access to before?

Depending on the business case, they have to approach each of their business and investment decisions with some creativity right now. That’s what they’re facing: We have all these headwinds right now, there’s all this uncertainty, but we absolutely need to make these investments.

COMINGS + GOINGS

• Aerospace firm Boeing announced Jesus “Jay” Malave will be its next executive vice president and chief financial officer, effective August 15. Malave was previously CFO at Lockheed Martin and L3Harris, and will succeed Brian West, who is transitioning to become a senior advisor to CEO Kelly Ortberg.
• Pharmaceutical company Bayer appointed Priyal Patel as cluster chief financial officer for North America, effective July 1. Patel joined Bayer in 2008, is currently head of treasury for Bayer North America, and will continue in that role. She succeeds Guru Ramamurthy, who was recently appointed the new CFO for another Bayer division.
• Taxicab fleet operator Marblegate Capital Corporation selected Michael Hutchby as its next chief financial officer, effective July 3. Hutchby steps into the role from Cherry Hill Mortgage Investment Corporation, and will succeed Jeffrey Kravetz who will remain with the firm.

STRATEGIES + ADVICE

For startups, fundraising can be difficult, but not for the reasons they may think. Here are eight less obvious reasons why finding investors may be challenging and how to remedy them.

Tariffs and economic uncertainty may be dominating financial outlooks, but the numbers don’t lie: Small businesses increased their earnings in May, according to Biz2Credit’s monthly report. Here are tips to keep that growth going, even in the sometimes-less-reliable summer months.

QUIZ

Which company was especially hot last week on the stock market, dramatically boosting the net worth of both the company and its CEO?

A. Nvidia

B. Palantir

C. Amazon

C. AMD

See if you got the right answer here.