How Tariffs Are Putting Pressure on U.S. Companies

As global trade tensions continue to rise, U.S. businesses—especially manufacturers and service providers—are starting to feel the weight of tariffs imposed by President Donald Trump. With fresh data set to be released next week, industry leaders and economists are closely watching to assess how deeply these tariffs are affecting economic activity and corporate sentiment. The outcomes could ripple across not only the United States but also the UK and the Eurozone.

U.S. Businesses Brace for Tariff Fallout

U.S. manufacturers and service companies are preparing to analyze the damage caused by tariffs introduced on April 2, followed by a 90-day suspension announced on April 9. The upcoming S&P Global monthly PMI survey, scheduled for release on Wednesday, will be a critical gauge of business sentiment and operational impact.

Forecasts suggest that the manufacturing PMI may slip from 50.2 last month to 49.4—signaling contraction. The services PMI is expected to decline from 54.4 to 52.8, still indicating growth, though at a slower pace.

Stephen Stanley, Chief Economist at Santander US Capital Markets, emphasized the significance of the data. “I’m particularly interested in how the manufacturing sector is responding,” he noted. “Are orders falling? Are inventories rising? How much have material prices increased?”

Though previous data (from March 12–21) showed robust service sector performance offsetting manufacturing weakness, many companies have lowered expectations for the rest of 2025, citing concerns over demand and new administration policies. The current PMI survey, collecting data from April 9 to April 22, is likely to provide deeper insight into evolving sentiment.

UK Economy Faces Uncertainty Amid Global Trade Tensions

In the UK, market analysts and investors await crucial economic updates as they evaluate the effects of global trade uncertainty and domestic tax policy changes.

April’s PMI figures, also due Wednesday, are expected to reflect a dip in business confidence. The services index is projected to fall from 52.5 to 51.3, indicating modest expansion, while manufacturing remains in contraction territory at 44.0, down from an earlier forecast of 44.9.

Despite the challenges, some analysts, including those at RBC Capital Markets, are cautiously optimistic about potential improvements. However, they note that recent U.S. tariff announcements could weigh on sentiment, even if UK service exports to the U.S. remain exempt.

Meanwhile, March retail sales data, to be published Friday, is anticipated to show a 0.4% monthly decline after a 1% increase in February. Although GDP and inflation figures have recently been better than expected, market participants still forecast that the Bank of England will cut interest rates at least three times before year-end, highlighting lingering growth concerns.

Eurozone Activity at Risk as Trade War Intensifies

Investors in the Eurozone are eyeing early indicators of the U.S. trade war’s economic toll. The HCOB Eurozone Composite PMI, a key measure of business activity, is expected to show a slight decrease—from 50.9 in March to 50.3 in April—suggesting slowing growth.

Carsten Brzeski, Global Head of Macro at ING Research, warned of “fear factors” driven by tariff uncertainty. The breakdown of PMI data indicates that manufacturing may fall further from 48.6 to 47.5, continuing a trend of contraction.

“Services will be the more interesting sector to watch,” said Brzeski, who expects a decline in service activity as well. “If services remain stable, that suggests solid domestic demand. If services PMI also falls, it’s clear Q2 will be another difficult quarter for the Eurozone.”

Amid these developments, the European Central Bank has already responded by lowering its benchmark rate by 0.25 percentage points to 2.25%, signaling concern over the bloc’s economic resilience in the face of escalating trade conflicts.

Conclusion

As the global economy enters a new phase of uncertainty, the impact of U.S. tariffs is becoming increasingly evident. For the United States, the data expected next week may confirm that the manufacturing sector is taking a hit, with spillover effects felt in services. Meanwhile, the UK and Eurozone face their own challenges, as the ripple effects of trade policy decisions extend beyond American borders. How central banks and governments respond will be critical in shaping the trajectory of global growth in the months ahead.

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