How is tariff uncertainty impacting business owners? Advisors weigh in

After a 90-day wait for President Donald Trump to lift a pause on tariffs he imposed on other countries – with various walkbacks, escalations, and additions  announced along the way – business owners are facing more uncertainty ahead.

With just days to go before his self-imposed July 9 deadline to secure favorable trade deals for the US, President Trump revealed new plans Monday to impose 25% tariffs on goods coming in from Japan and South Korea. Those unilateral rates, set to kick on on August 1, came on the heels of a weekend social media post in which he threatened an additional 10% on any country that would align with "the Anti-American policies of BRICS."

Since then, he has bared plans to send a flurry of letters announcing new tariff rates on dozens of other countries. On Wednesday, letters were sent out to seven more countries including the Philippines, Sri Lanka, Moldova, Brunei, Algeria, Libya and Iraq, slapping tariff rates as high as 30% on those nations.

In a new report published on Monday, US Bank found 96% of business owners it surveyed from March 13 to April 4 said their business is currently successful, with 88% seeing growth over the past year. Still, a smaller pulse survey it did in May revealed 58% feeling at least some concern tariffs could have an impact, with 57% anticipating higher input costs as a result.

The US bank report also hinted at possible succession challenges, noting that just 54% of owners have created a succession plan.

Peter Malone, director and portfolio manager at Crestwood Advisors in Boston, says the family businesses his firm works with have largely covered their bases.

"We are fortunate to work with business owners whose companies span across a wide array of industries with different volume of revenue and earnings," says Malone says. "Many of these clients are part of family businesses whose potential succession plan or sale has been years in the making."

According to Malone, the tariffs' impact on business owner clients has been dictated almost completely by the industry they operate in. In particular, he says those in retail dealing with products coming from Europe and China have shifted their 2025 plans on a dime.

"While it seems obvious, it is important for us, as advisors, to understand the clients, their businesses, and the risks that come with how they make their livelihoods," Malone says. "Issues like tariffs will obviously have an outsized impact for one individual or family over another."

At Wealthspire Advisors, senior vice president Jenny Giemza says the April 2 tariff announcement triggered widespread concern and unease across business owner clients of all sizes.

"The biggest question on everybody's minds is who's going to pay for these tariffs?" Giemza says. "Initial information I've seen around US import prices supports the notion that it's not foreign or overseas producers, meaning US businesses and consumers will be on the hook for those."

When it comes to succession plans, Malone says the tariff threats have not had a direct impact on his clients, but businesses whose revenue streams and earnings face an impact from tariffs could also see a hit to short-term valuations.

"In theory, however, there is still so much uncertainty that remains around 'Liberation Day' and where the actual tariff figures will fall, for which countries, on which goods, and for how long," he said. "An attempt to extrapolate out a very short-term compression in earnings based on the recent rhetoric would be difficult at best, and most clients we work with have done the work to show the value of their businesses irrespective of tariff implications."

Giemza says her clients who manufacture goods and those with auto dealerships will tend to be affected more adversely, leading to longer timelines for them to be comfortable moving forward with succession plans.

"Not only do they need to get their business valuations back up, but on the other side of the equation, we need to make sure their personal financial situation post-sale or succession planning isn't at risk either," she says. "If we had planned for a certain net sale amount to last the rest of their lives, and that number goes down significantly, are their retirement goals at risk?"

In some cases, diminished valuations could be a blessing in disguise. Jere Doyle, senior vice president and estate planning strategist at BNY Wealth, says business owners trying to pass theirs down to the next generation could see a benefit from the impact of tariffs.

"If you want to transfer that down with the lowest estate tax consequences, you'll have less of a taxable gift going to the children ... If the tariffs hit, your costs go up, your EBITDA goes down, and so will the book value of the business," Doyle says. "Then you can transfer that to your kids, and after the tariffs go away, they'll be left with a more valuable business."

For business owners eyeing a sale in the next year or so, he says the short-term uncertainty around tariffs pose a legitimate concern. But the ones looking to sell further down the road are more apt to wait on the sidelines.

"This is not going to continue forever, so I don't think it's going to dramatically affect people in the long term," he says.

While many businesses don't need to be "tariff-proofed," Malone says preparation is the best policy, encouraging clients to get started on the exit process well in advance of any sale or transition taking place.

"This provides the business owner ample time to understand the exit strategy that makes the most sense for them and to work on building the value within the company itself," he says. "On the personal side, understanding a client’s post-exit goals is extremely important. These include both investment and 'life' goals."

Along the same vein, Giemza says business owners often get caught up in day-to-day demands, leaving their personal financial plans by the wayside.

"As their advisor, it's critical we keep both that business and personal financial picture in perspective when providing the guidance to business owners," she says.