One third of middle market executives say profits will suffer due to tariffs, and more than half will raise prices.

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Three months ago, the Middle Market Indicator documented a leap in concerns about the costs of trade—tariffs in particular—from data collected just after the U.S. taxed steel and aluminum imports from Canada, Mexico, and the EU. An escalating series of levies and counter-levies followed between June and early September, when we collected 3Q data. Since the survey date, the United States, Canada, and Mexico have shaken hands on a revised free-trade agreement, while the U.S. and China have shaken fists with tariff hikes on $260 billion worth of goods.

It takes about six months for tariffs to work their way from sales to shipments to shelves, according to Grant Thornton chief economist Diane Swonk, so their full effects won’t be clear until well into 2019. By a two-to-one margin, middle market executives say tariffs will hurt their business. A third say profits will suffer, and more than half will raise prices. The worst affected companies are in the core middle market, with annual revenues between $50 and $100 million. These are companies big enough to participate in global markets, but in all likelihood not big enough to have overseas operations that might allow them to avoid tariffs by shifting production from one side of a border to another. (For a discussion of industry and other effects, see Perspectives)