A year into tariffs, US businesses see declining sales, plan price increases: KPMG survey
Summary
A KPMG survey finds that one year into the current tariff regime, 34% of U.S. companies are now passing more than half of their tariff-related cost increases directly to customers. At the same time, 82% of respondents report a decline in foreign sales, suggesting that price transmission is eroding export competitiveness. The findings indicate that tariff absorption strategies are shifting as cost pressures prove unsustainable.
Why It Matters
For plant operators and supply chain managers, these numbers reflect a compressing margin environment with no clean exit. Passing tariff costs downstream protects short-term unit economics but risks volume loss in price-sensitive export markets — a particularly acute problem for manufacturers in sectors like industrial equipment, automotive components, and specialty chemicals where foreign buyers have alternative suppliers. The 82% foreign sales decline figure signals that U.S. manufactured goods are losing competitive positioning on landed cost, which has direct implications for capacity utilization and production scheduling. Facilities running below optimal throughput face rising fixed-cost burden per unit, which can trigger further price increases in a self-reinforcing cycle. Procurement teams are simultaneously under pressure to re-source inputs domestically or from tariff-exempt countries, a process that carries qualification lead times of six to eighteen months for many engineered components. The net operational picture is one of constrained flexibility: higher input costs, softer export demand, and limited near-term options for supply chain restructuring.