Discussion Paper

How Might Fifth District Firms React to Changing Tariff Policies?

Abstract: In March 2025, the U.S. implemented a 20 percent tariff on all imports from China and an additional 25 percent tariff on all steel and aluminum imports. The administration has also announced additional 25 percent tariffs on goods imported from Canada and Mexico to be implemented in April 2025 and proposed a set of tariffs targeting the European Union and automotive imports. In order to better understand how these implemented and proposed tariffs might affect firms in the Fifth District, we included questions about the impact of tariffs in our March business survey, which was fielded from Feb. 27 to March 19. Altogether, 72 percent of firms responded to the survey after the tariffs on Chinese imports were implemented on March 4 and 41% of firms responded to the survey after the tariffs on steel and aluminum were implemented on March 12. However, through the survey fielding period and continuing to today, there remains considerable uncertainty around which tariff policies will persist and the potential for retaliatory tariffs among trading partners. In fact, the tariffs on all Mexican and Canadian imports were supposed to be implemented on March 4, but tariffs on a large share of imports were walked back on March 6. Likely, those proposed tariffs were also on the mind of many survey respondents in much of the survey period. Thus, our questions were focused on both implemented and proposed tariffs.

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Regional Matters

Publication Date: 2025-03-25