Nathan Place
4 min read
In This Article:
Where others see uncertainty, middle-market businesses also see opportunity.
According to a new survey by KeyBank, the vast majority of midsize companies are focused on adapting to President Trump's volatile trade policies — but they also see it as a good chance to improve their businesses.
The survey found that the No. 1 priority for 91% of U.S. companies with between $25 million and $1 billion of annual revenue is limiting the damage from new tariffs. At the same time, 92% of the same firms view the policies as an opportunity to innovate and restructure.
"That's an overwhelming majority saying that tariff management is a top priority," Ken Gavrity, president of Key Commercial Bank, told American Banker.
He noted encouraging signs in the firms' answers about how they're managing the tariffs. "Nowhere in the top five was 'pausing my growth initiatives,'" Gavrity said.
Since early April, the Trump administration has sporadically imposed, paused and made exceptions to a series of historically high tariffs on almost 90 U.S. trading partners.
The new costs for businesses, combined with an atmosphere of unpredictability, caused many firms to put major investments on hold, a number of bank CEOs have said.
"You're definitely hearing people start to mention a slowdown," Edward Barry, CEO of Capital Bank in Rockville, Maryland, told American Banker last month. "I have heard that other banks are seeing their loan pipelines start to come in a bit from what they thought earlier in the year."
A recent survey by HSBC found that 72% of American companies with between $50 million and $2 billion in revenue saw their operating costs increase due to the tariffs, and almost three-quarters had "paused or reconsidered long-term investments due to policy uncertainty."
Key's survey makes it clear that middle market firms share those concerns. Sixty-one percent of the respondents told the bank that "clarity on U.S. economic health" is the most important factor right now for making decisions about investing in their business.
But unlike HSBC's respondents, most of the business leaders who talked to Key said they were not reacting to the tariffs by putting investments on ice. In fact, almost half of Key's respondents — 49% — said the levies may open opportunities for market expansion. Technology companies were even more optimistic, with 68% seeing this upside.
To seize those opportunities, companies were adapting to the new tariffs in a number of ways. The most common tactic, used by 60% of companies, was to adjust their supply chains. Another 53% said they were passing the costs onto their customers, and 47% shifted the burden to their vendors.
