Small Business Checkpoint: Tariff turbulence pressures profits

Taylor Bowley

June 2025

For the first time this year, small business optimism increased; yet, so did uncertainty, according to the National Federation of Independent Business (NFIB). This was driven in part by taxes, but tariffs remain top of mind. Though a majority of small businesses do not make direct tariff payments, of the small share of Bank of America small business clients that do, these payments increased 191% in May compared to the 2022 average.
Small businesses are, in some ways, more susceptible to tariff pressures than larger businesses as they tend to operate on thinner profit margins. In May, the inflow-to-outflow ratio for small businesses ─ which we view as a proxy for profitability ─ was up from the previous month, and nearly one-third of small businesses expect real sales growth in the coming months, per the NFIB.
Across sectors, those that are disproportionately impacted by tariffs, such as wholesale and retail trade, have seen profitability growth seesaw throughout the first half of the year. This could further underscore sector-level uncertainty around the impact of tariffs on prices and demand.

Read our full analysis for a more in-depth look at these trends.

Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.