#United States #Cleveland #CBIZ #Tariffs #Tax Policy

Middle-Market CEOs Express Alarm Over Tariffs and Tax Uncertainties

A recent survey conducted by CBIZ in partnership with Hofstra University has shed light on the growing concerns faced by middle-market CEOs regarding tariffs and the unpredictability of U.S. tax policies. These issues are causing significant shifts in business strategies as leaders work to cope with the evolving economic landscape.

Key Findings from the CBIZ-Hofstra University CEO Survey

The findings indicate that tariffs are a central concern for many leaders, with 53.2% of CEOs expressing serious worries about their financial implications. In response to this tariff-related anxiety, many companies are considering critical adjustments to their operations:

• - 80.9% of CEOs are thinking about relocating production to counteract the financial effects of tariffs.
• - 75.4% may be forced to reduce their workforce to maintain financial stability.
• - 72.3% are planning to postpone investment decisions amid uncertainty.
• - 66.4% are exploring new supplier relationships to further mitigate costs.
• - Additionally, 50.0% are contemplating increases in product prices due to the rising expenses from tariffs.

Jerry Grisko, President and CEO of CBIZ, noted, "These findings reveal the extensive ripple effects tariffs create within the middle market. Companies are being pushed to rethink strategies and operational frameworks at all levels. It's crucial for leaders to stay ahead of these changes."

Mixed Perspectives on U.S. Tax Policies

The survey also uncovered a divergence in opinions regarding the benefits of recent tax reforms. While 42.6% of CEOs observed moderate benefits from the Tax Cuts and Jobs Act (TCJA), related data showed:

• - 51.9% foresee potential positive impacts if TCJA provisions continue.
• - Conversely, 30.1% expect no significant changes.
• - Regarding the Inflation Reduction Act (IRA), 43.3% reported benefits, but 47.7% claimed no substantial gains.

Bill Smith, National Director of Tax Technical Services at CBIZ, commented on the findings, saying, "Although some tax reforms have alleviated certain financial burdens, the overall impact varies greatly among industries. This underscores the complexity inherent in tax-driven policies and the necessity for tailored strategies."

Broader Trends Affecting CEO Outlook

Beyond the immediate policy implications, the survey indicated broader persisting issues influencing CEO decision-making:

• - Economic concerns remain the foremost challenge for 55.1% of CEOs.
• - Talent availability is a close second, noted by 37.5%, indicating ongoing hiring hurdles.
• - Cybersecurity threats have become increasingly prominent, rising 6.7% since the last survey in September.

Interestingly, in light of these challenges, the sentiment among CEOs showed signs of recovery; 45.0% rated their outlook as highly positive this December, an increase from 34.5% in September.

The survey was primarily developed and analyzed by MBA students at Hofstra University's Zarb School, under the expert guidance of Dr. Andrew Forman, alongside CBIZ’s team. Dr. Forman remarked on the significance of the results, emphasizing the increasing sensitivity of middle-market companies towards tariffs and uncertain tax policies.

Janet A. Lenaghan, Dean of the Zarb School of Business, added, "In these fluctuating times, the ability to adapt is vital for future business leaders. Adopting a growth mindset will enable leaders to transform challenges into opportunities, promoting innovation, effective problem-solving, and a strategic stance for enduring success."

About the Survey and Participants

The CBIZ-Hofstra Survey is a regular assessment of mid-market CEOs' feelings and intentions for the forthcoming year, targeting businesses with revenues between $5 million and $1 billion. Conducted in December 2023, it attracted responses from 256 mid-market leaders. Previously named the Marcum-Hofstra Survey, it has recently adopted the CBIZ name following an acquisition.

About CBIZ

CBIZ, Inc. (NYSE: CBZ) stands out as a leading advisory firm for middle-market businesses nationwide, equipped with vast industry insights and professional expertise across various service areas including accounting, tax, and advisory. With over 10,000 team members located in more than 160 offices nationwide, CBIZ is committed to delivering innovative solutions and insights that drive growth. For more information, please visit www.cbiz.com.