CLEVELAND, Ohio — Businesses across Northeast Ohio are bracing for economic fallout from President Donald Trump’s tariffs, with many reporting concerns over rising costs, shifting supply chains and uncertainty that is beginning to reshape their operations.

A recent report from the Federal Reserve Bank of Cleveland paints a mixed picture of the regional economy, describing overall activity as “flat” this spring, an underwhelming performance for a season typically marked by growth.

“We described it as a weaker-than-expected spring,” said Lisa Barrow, vice president in the research department of the Federal Reserve Bank of Cleveland. “… We’re not seeing the growth we’d usually expect this time of year.”

The April 22 report, which included more than 100 responses, is based on the Federal Reserve’s Survey of Regional Conditions and Expectations, or the SORCE survey, which compiles insights from businesses across Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia every six weeks. Some businesses were surveyed just ahead of Trump’s official tariff announcement on April 2, and some were surveyed immediately after.

Nearly two-thirds of companies surveyed said tariffs will impact their business. Of those respondents, 85% anticipate higher input costs, 75% plan to raise prices and 60% expect a decrease in demand. However, most do not expect an impact on employment.

When asked what actions they are taking in anticipation of tariffs on imports, 46% of companies said they are planning to pass cost increases on to customers. Others reported looking for new domestic suppliers (29%) or accelerating purchases ahead of potential tariff changes (27%).

Twelve percent of businesses surveyed expect no impact from tariffs, while 24% remain unsure.

“Tariffs are absolutely at the top of their minds,” Barrow said in a Thursday interview.

Despite the turbulence, some manufacturers see an opportunity and are optimistic that tariffs could increase demand for domestic goods.

Some companies in Ohio — like Cincinnati-based Procter & Gamble, which makes items like Crest toothpaste, Tide detergent and Charmin toilet paper — are adjusting products and hiking prices to offset new costs from Trump’s tariffs, Barrow said.

“Other (companies) in Northeast Ohio are concerned about their ability to compete because some of their inputs are coming from countries that are hit with higher tariffs,” Barrow said.

Local manufacturers in particular expressed alarm, she said. The shifting trade policies are causing foreign customers to cancel orders, while others noted that they’re rushing purchases to get ahead of price hikes tied to anticipated increases in steel or other costs.

Labor market eases

The region’s labor market showed some slight improvement, with businesses saying they are increasingly able to fill open positions.

“The somewhat more optimistic employment report, I think, was a little bit surprising,” Barrow said.

Moderate wage pressure persists across the district, with many employers continuing to hire primarily to replace workers lost to natural turnover, rather than to expand their workforce.

Consumer spending dips

Auto dealers reported an uptick in sales, which was attributed in part to consumers trying to beat potential price increases from tariffs, Barrow said.

Consumer activity, another key driver of the regional economy, has softened overall. The report pointed to a drop in spending, likely tied to political and economic uncertainty, though seasonal effects such as a late Easter muddled some retail data.

“There is some concern that the consumer can’t continue to support the economy. The consumer was really strong in 2024,” Barrow said.

Looking ahead

Barrow said the Cleveland Fed will continue to monitor regional conditions closely, with another survey planned in the coming weeks. While future survey topics haven’t been finalized, questions related to tariffs are likely to be included given current concerns.

“We are leaning heavily on our contacts in the district to help us see what’s going on on the ground, closer to real time,” Barrow said, explaining that official data on economic development can lag.

One unexpected takeaway from the latest survey cycle, Barrow added, was the disconnect between rising input costs and stable selling prices. While many businesses reported their suppliers were raising prices, sometimes preemptively due to tariff concerns, most said they were not yet passing those increases on to customers.

“That’s something we’ll be watching closely moving forward,” she said. “It’s a key issue as the Federal Reserve continues to monitor inflation and its broader economic impacts.”