Business confidence dives as tariff threats sabotage global economy

As the US continues to impose stringent tariffs on its global trade partners, business confidence has plummeted in many leading economies. But while the likes of the UK and Netherlands are counting the cost, US businesses are struggling too – with many passing costs to consumers as a way of preserving profit margins.

Trade barriers continue to dominate headlines. With America’s second Trump administration determined to punish other economies for supplying the US with products, materials and skills, tariffs have been imposed on many of its top trade partners.

In 2024, the European Union’s collective economy exported €582.5 billion worth of goods to the United States. The largest single sector in this figure was the pharmaceutical industry – which sent €122.1 billion in products and materials across the Atlantic. At the same time, the EU imported goods worth €356 billion – with mineral fuels accounting for the largest single share, at €76 billion. This illustrates both the importance of the US economy for the growth of European economies, and the precarious position they find themselves in now.

With Donald Trump having returned to power in one of the bloc’s key trading partners, his administration’s proposed tariffs on European imports to the US could have wide-ranging impacts on the strength of the Eurozone. Depending on the sector, European exports could be stung by charges between 10% and 25% – something which could also weaken the euro, and driving up import costs for essential goods such as energy and raw materials.

With similarly punitive measures hitting economies from the UK to Vietnam, business confidence has plummeted toward the end of 2025. Using November 2024 as a conspicuous jumping-off-point, the latest research brief from the Capgemini Research Institute shows that the percentage of business leaders optimistic about their outlooks has fallen most dramatically in economies closely aligned with the US.

A 69% of UK respondents told Capgemini they were optimistic, before the second Trump administration was confirmed. But by June 2025, that slumped to 19%. Similarly, Japan fell from 68% to 21% – and the Netherlands from 57% to 15%. Meanwhile, as much as China is maligned by the US, it responds to huge economic demand from its rival every year – and so confidence there also fell from 69% to 16%.  

Interestingly, despite the US president’s assertions that everyone is now richer than ever before, and that the economy is about to enter a new golden age, this trend did not exclude domestic respondents either. A 69% majority of US business leaders were optimistic for their prospects over the coming 18 months, before November 2024 – but six months in to 2025, that had more than halved to 32%. Globally, meanwhile, 50% of organisations expect a 10% decline in revenue and profit due to tariffs – prompting cost-cutting and pricing adjustments.

When asked what the tariffs were doing to their operations, the firms noted that their supply chains – the factor many cited when hiking prices amid the cost-of-living crisis of 2022 – had been upended. A 52% chunk had seen tariffs cause supply chain delays, while 51% had subsequently increased costs again – with consumer spending power taking a fresh hit in the process.

In a bid to adjust to this, Capgemini found that some manufacturing is shifting geographically: with 48% of organisations planning to expand manufacturing in the US, while 37% plan to scale back in China. However, it seems that many more firms simply see passing costs to consumers as an easier, more attractive option – meaning the Yale Budget Lab now estimates Americans face an average tariff rate of 17.4% — the highest since 1935 — an increase estimated to cost households an extra $2,300 in 2025.