Concerns about tariffs have significantly shaken the confidence of U.S. chief executive officers (CEOs) in the first quarter of 2025. A report from Vistage reveals that the CEO Confidence Index has dropped by a historic 22 points, falling from 100.8 to 78.5. This decline contrasts sharply with the optimism seen in the last quarter of 2024.
Joe Galvin, the chief research officer at Vistage, highlighted that the previous quarter’s high confidence was likely fueled by hopes for the new administration’s economic plans. However, the latest figures reflect the harsh reality of ongoing economic challenges. Galvin noted, "This uncertainty, along with tariffs and growing concerns among consumers, is leading to a more cautious outlook for the U.S. economy."
The report indicates that a significant 69% of CEOs are worried that changes in trade and tariff policies will negatively impact their businesses. Galvin pointed out that the policies being considered are viewed as inflationary and disruptive, making it difficult for companies to plan ahead. The initial optimism surrounding the new administration has shifted to a more polarized view of economic instability.
In a recent announcement, President Donald Trump stated that tariffs on imported goods would start at a minimum of 10%, with some countries facing tariffs as high as 50%. Trump previously argued that these tariffs would benefit the economy by encouraging consumers to buy more American-made products and increasing tax revenue.
However, the fallout from these tariffs has been widespread. Some countries have retaliated with their own tariffs, leading JPMorgan to raise its forecast for a global recession from 40% to 60%. In response to rising costs, some companies abroad have announced layoffs, while others are considering expanding operations in the U.S.
The Vistage report also highlighted a growing pessimism among CEOs regarding the overall economic conditions in the U.S. Currently, 42% expect conditions to worsen, a steep increase from just 13% who felt the same way at the end of 2024. Additionally, the number of CEOs anticipating an increase in their workforce has declined, with only 45% expecting to hire more employees, down from 65% in the previous quarter. Conversely, the percentage of CEOs expecting to reduce headcount has risen to 14%, a significant jump from 5% last year.
Galvin mentioned that such high levels of concern among CEOs have only been seen during major economic downturns, like the 2009 recession and the pandemic in 2020. This indicates that the current uncertainty is a serious issue for small and midsize businesses.
Looking ahead, Galvin believes businesses face a mix of outcomes in 2025. Some may thrive with increased revenues, while others could struggle due to tariffs and trade tensions. For companies that are in a position to hire top talent, this may be an opportune moment to secure skilled workers as growth is expected to pick up later in the year and into 2026.