Why Trade Policy Replaced Inflation as CEOs' Top Risk

Hiring plans softened in parallel. The share of executives expecting to increase headcount over the next six months fell to 36% from 42%. The decline was steepest in manufacturing and retail, where tariff-driven cost pressures are most acute. Technology and healthcare remained relative bright spots, with hiring intentions holding above 40%.

Capital expenditure plans also weakened. The net share of executives planning to increase capex – the share planning increases minus those planning cuts – fell to 12% from 18%. The pullback was concentrated in Europe and North America. Respondents cited policy uncertainty as the main reason for delaying investment decisions.

One area where sentiment improved: artificial intelligence. The share of executives who said their companies had adopted generative AI tools in at least one business function rose to 72% from 65% in the prior survey. Cost reduction was the most cited benefit, followed by faster product development. The survey also flagged a growing concern around AI regulation, with 44% of respondents saying new rules in the EU and U.S. could slow deployment.

On monetary policy, executives broadly expect central banks to hold rates steady through year-end. Only 22% expect the Federal Reserve to cut before December, down from 35% in the March survey. The shift reflects sticky services inflation and the tariff-driven pass-through to consumer prices, which has complicated the rate path.

The survey's bottom-line message: trade policy has replaced inflation as the dominant uncertainty. For companies with cross-border supply chains, the next six months look like a period of cost management and delayed investment, not expansion. The question is whether the tariff escalation stabilizes or accelerates through the second half of the year.