America’s small businesses are growing increasingly anxious about the economy as uncertainty rises to its second-highest level on record. The National Federation of Independent Business’ (NFIB) Uncertainty Index surged in February, reflecting mounting concerns about economic stability and future growth. This level of unease, recorded in the NFIB’s latest survey released on March 11, has only been surpassed once since the index’s inception in 1973.
The outlook for expansion has dimmed significantly. According to the survey, the percentage of small business owners who consider it a good time to expand saw its sharpest monthly decline since April 2020. “Uncertainty is high and rising on Main Street, and for many reasons,” said Bill Dunkelberg, NFIB’s chief economist. “Confidence that the economy will continue to grow is fading,” he added.
Trade Policies and Recession Fears Weigh on Business Owners
The Trump administration’s erratic trade policies are one of the biggest contributors to this uncertainty. An unpredictable attitude towards tariffs leaves small business owners struggling to assess the possible impact of changes in trade relations. Additionally, Trump’s statements about not ruling out possible economic downturns by the end of the year indicate an upcoming recession, further contributing to the significant decline in major stock indexes.
For small businesses, concerns such as those outlined here are worrying indicators of a serious onset of economic instability. According to the U.S. Small Business Administration, there are over 33 million small businesses that employ nearly half of all private-sector workers in the U.S. Rising tariffs could drive up costs, disrupt supply chains, and inhibit growth in an already hostile environment.
“The uncertainty we face in the economy has no set timeline,” said Mark Valentino, head of business banking at Citizens Bank. “Business owners are reevaluating vendor contracts, labor force and borrowing strategies.”
Tariff Policy Adds to Small Business Struggles
Earlier this month, Trump followed through on his promise to impose a 25% blanket tariff on imports from Mexico and Canada after a temporary delay. However, in a swift reversal, he lifted those tariffs for all goods covered under the North American Free Trade Agreement. At the same time, tariffs on Chinese imports were doubled to 20%. This further exacerbated the economic strain on businesses dependent on global supply chains.
The administration has argued that the measures are intended to protect American jobs and industries, but the sudden pivots have thrown businesses into confusion as they try to keep up. Often citing NFIB data as an indication of economic health, the White House has pointed to the months after Trump’s election, when small business optimism saw its single largest surge in history. Since then, however, optimism has waned as policy instability continues to unsettle business owners.
Labor Costs and Immigration Policies Add to Uncertainty
In addition to tariffs, tightening immigration policy is another point of concern for small businesses. Stricter immigration laws affecting both legal and undocumented workers are putting more pressure on industries such as agriculture and construction, which are already facing labor shortages. The latest NFIB survey shows that labor costs are nearing record levels among the challenges reported by respondents.
Looking Ahead
Even with promises from the White House that the trade policies will ultimately benefit American businesses, many small business operators remain skeptical. The Trump administration has promised to introduce more tariff changes, including reciprocal tariffs on April 2, which could further aggravate economic uncertainties.
For now, small business owners must navigate an unpredictable economy, weighing investment decisions against the risks posed by shifting trade policies and potential economic downturns. With confidence in the economy slipping and uncertainty at historic highs, the future remains unclear for America’s small business community.
