Small Business Optimism Slips as Owners Expect Worse Conditions, Lower Sales

‘Global and domestic actions are generating insecurities in abundance, both political and economic,’ the NFIB wrote in a commentary.

People walk outside the New York Stock Exchange, in New York, on April 7, 2025. Spencer Platt/Getty Images

Confidence among America’s small businesses fell in March, as more owners anticipated worsening economic conditions and a decline in real sales, according to a new report from the National Federation of Independent Business (NFIB), the country’s largest small business lobby.

The NFIB reported on April 8 that its Small Business Optimism Index dropped 3.3 points to 97.4, the largest monthly decline since June 2022 and the lowest reading since before the 2024 election.

The March reading erased the gains in sentiment seen after President Donald Trump’s reelection in November, which sent the NFIB optimism index soaring to a four-decade high on expectations that his administration’s pro-business policies would drive economic improvement in the year ahead.

The percentage of owners expecting better business conditions over the next six months fell 16 points to a net 21 percent, the sharpest drop since December 2020.

“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”

While the NFIB’s Uncertainty Index eased 8 points to 96 from February’s near-record high, sentiment remains fragile. The share of owners expecting higher real sales over the next three months fell by 11 points to just 3 percent, marking the third consecutive monthly decline.

The survey was conducted before the Trump administration’s sweeping tariffs were announced on April 2, which the president dubbed “Liberation Day” on the premise that the duties would—over time—reorder international trade to boost the U.S. industrial base and make the country less dependent on foreign supply chains.

Trump declared an economic emergency and announced a 10 percent baseline tariff on nearly all imports, with steeper duties applied to roughly 60 nations identified by the administration as “worst offenders” in trade imbalances with the United States—with China topping the list.

China responded with a 34 percent tariff on all U.S. imports, alongside other retaliatory measures—including a potential restriction on exports of rare-earth elements critical to technologies such as electric vehicles and defense systems. Trump then imposed an additional 50 percent tariff on China, raising the total to 104 percent, and then further increased the rate to 120 percent on Wednesday afternoon.

Uncertainty around the impact of U.S. tariffs and other countries’ retaliatory duties has roiled markets and could pose a headwind for small business optimism going forward.

“This year will be one ruled by uncertainty,” NFIB wrote in a commentary to its sentiment report. “Global and domestic actions are generating insecurities in abundance, both political and economic.

“President Trump’s administration is rearranging the deck chairs at a record pace. Is there an ‘iceberg’ looming ahead or will we sail through to a restructured economy safely?”

Although the NFIB survey predates the latest tariff impact, it shows that inflation—which hit a multidecade high under the Biden administration—remains a sticky problem.

The net percentage of small business owners raising their selling prices in March was 26 percent. While that’s far lower than the 66 percent who raised prices in March 2022, when inflation was soaring, it is still high by historical standards.

“From 1986 to 2020, the average was 8 percent!” the NFIB commentary states.

“It is no surprise that historically high numbers of small business owners have recently picked inflation as their most important problem.”

Despite market volatility, the White House remains firm on its policies, with Trump describing the tariffs as a generational opportunity to reorder international trade, reshore industries, and reduce America’s massive trade deficit with the rest of the world.

“You know it would be nice to serve a nice, easy term,” Trump said in the Oval Office on Monday. “But we have an opportunity to change the fabric of our country. We have an opportunity to reset the table on trade.”

Meanwhile, Trump on April 9 announced a 90-day tariff pause, with the exception of China, for which he raised tariff rates. Wall Street’s main stock indexes soared on Trump’s announcement.