Kiplinger Business Costs Outlook: Uncertainty Lower, Costs Higher
Trade deals reduce tariff uncertainty, but lock in higher costs of imports.

Kiplinger Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
Measures of business uncertainty have begun to ease recently, with tariff deals being announced with Japan and the European Union. The National Federation of Independent Business (NFIB) Uncertainty Index declined in June and will likely come down further in July. When uncertainty declines, businesses tend to be more willing to invest and expand. Perhaps related to the decline in uncertainty is that bank lending for commercial and industrial purposes has bumped up in June and July after staying flat for two years. However, businesses are still showing their caution by limiting their hiring plans.
Labor costs continue to ease slowly at the mid-year mark. Annual wage growth has dipped from 3.9% at the beginning of the year to 3.7% now, and should hit 3.5% by the end of 2025. However, production worker/blue collar wage growth should stay a bit higher, at 3.7%, as slowing immigration reduces labor supply for these jobs. Of course, the construction, agriculture, retail, leisure and hospitality industries will be most affected by possible labor shortages because of their reliance on immigrants.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tariffs will add about 15% to the cost of most imports, on average. Businesses will face the decision of whether to pass that cost along to end-users or customers. Some will accept reduced profit margins in order to maintain current customer relationships. As more trade deals are made and the future landscape turns more predictable, businesses can project pricing decisions better. But the prices of raw materials like steel, aluminum, copper and graphite could jump, given special tariff rates of 50% or more. Commerce Department investigations are continuing for semiconductors, pharmaceuticals and lumber. A lumber import tariff of 35% is expected when that investigation concludes in the next month or two.
Other tariffs that have been implemented include an additional 20% on imports from China, bringing the rate to 30%; 25% on imported motor vehicles; 25% on imports from Canada and Mexico that were not covered under the previous USMCA agreement (which is up for renegotiation in July 2026); and 10% on energy imports from Canada. Recent trade agreements include 15% tariffs on Japan and the European Union, and 10% on the United Kingdom. Important for foreign automakers is that these trade deals mean a reduction from the original tariff of 25% imposed on auto imports back in April.
The cost of shipping by truck will follow the seasonal pattern of the past two years. Rates have fluctuated in a narrow band for a while, and won’t pick up appreciably until demand for manufactured goods and home construction improves. However, UPS and FedEx rates have spiked this year as earlier surcharges appear to be permanent. As a result, shippers are looking to slower, cheaper services like FedEx Ground Economy, UPS Ground Saver and, of course, the U.S. Postal Service.
Related Stories
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.
-
How to Add Your Driver’s License to Apple Wallet
Turn your iPhone or Apple Watch into a digital ID — here’s where it works and how to set it up.
-
Taylor Swift Can Shake Off Wedding Costs — But Most Couples Can't: The Price of Getting Married in 2025
From engagement rings to bachelor parties, here's what it really costs to get married in 2025.
-
S&P 500 Tops 6,500 Even as Nvidia Slips: Stock Market Today
The world's most valuable company closed lower after earnings, but the S&P 500 managed to notch a new record high.
-
DexCom, GE, SLB: Why Experts Rate These Stocks at Strong Buy
Wall Street gives these three diverse names Strong Buy recommendations with high potential upside.
-
Here's Why Munis Aren't Just for Wealthy Investors Now
Buyers of all levels should be intrigued by municipal bonds' steep yield curve, strong credit fundamentals and yield levels offering an income buffer.
-
Stocks Edge Higher With Nvidia, Fed in Focus: Stock Market Today
The AI bellwether reports earnings after today's close, while Wall Street is keeping a cautious eye on President Trump's attacks against the Fed.
-
The Smart Way to Retire: 13 Habits to Steal From the Wealthy
Check out these practical strategies that anyone can adopt, not just the rich, and get closer to achieving your retirement dreams.
-
Are There Opportunities to Invest in China?
Opportunities to invest in China are plentiful and, arguably, shouldn't be ignored in the U.S. Here's where to look.
-
Coulda, Woulda, Shoulda: Are These 5 Stocks Too Overvalued to Buy Now?
Investors worried about missing the boat on overvalued stocks need not fret. These five names, while expensive, are still seeing lots of love from analysts.
-
I'm a Financial Planning Pro: Do Your Family a Final Favor and Write Them a Love Letter
Specify your preferences in this personal document that shares your wishes on how you want to be remembered and celebrated. Your family will thank you for easing an emotional time.