On April 2, 2025, following months of warnings and widespread speculation, the Trump Administration announced a 10% baseline tariff on imported goods from all countries. It also introduced additional tariffs on dozens of individual countries, but the administration placed a three-month pause on these higher rates for everyone except China a week later, in a reversal that surprised many.
While it’s possible that the tariffs may have a positive effect on businesses over time, the general consensus is that very few will be left untouched in the short term, even with the baseline 10% rate. Part of the issue is that the concern around tariffs could cause changes to consumer behavior. In particular, digital advertisers could suffer from increased costs, softening consumer demand, and smaller ad budgets.
Trump’s Tariffs Explained
There is much speculation about the reasoning behind the Trump administration’s tariffs, but here’s what we know. Generally, tariffs are placed on imported goods to protect domestic industries and boost revenue. The Trump administration has suggested that tariffs are needed to address existing trade imbalances between the U.S. and dozens of countries worldwide. It is currently too early to say whether such a move will prove to be beneficial or not.
Hardest Hit US Trading Partners Under Trump’s Tariffs
While virtually all countries may feel the effects of Trump’s trade war, China has received the highest tariff rates, largely in a case of tit for tat. On April 9th, when the administration announced the 90-day pause on additional tariffs for other countries, the US instituted a 74% tariff on most Chinese imports. China retaliated almost immediately, with an 84% tariff. Things continued to escalate, and US tariffs on most Chinese goods currently sit at 145%, while China has set its reciprocal tariff rate to 125%. China’s export-dependent economy is already feeling the impact, but some pain could also be felt by US consumers soon, with various product shortages expected. According to a May 6 report from CNN, the first boats impacted by the 145% tariff rate are arriving in US ports, and “many of them are half full.”
Which products will be affected by Trump’s Tariffs?
Due to the universal 10% tariff applied to most goods, consumers may see increased prices on some products imported to the U.S. in the coming weeks. While it remains to be seen, you could, for example, find yourself paying more for items such as chocolate, coffee, an Apple iPhone, a new bike, or an imported car.
How Digital Advertisers May Be Affected By Trump’s Tariffs (and Why)
As noted earlier, the uncertainty around Trump’s newly announced tariffs may impact various industries, including digital advertising. In the short term, if the cost of imported goods rises, consumers could reduce spending. A pullback could hurt ad performance, with fewer people looking to make purchases.
At the same time, a weakening global economy could force many SMBs to cut costs. With marketing and advertising budgets often among the first to be scaled back, fewer dollars will flow into digital ads.
AdTech vendors could also be impacted. Many of these platforms rely on infrastructure that could become more expensive due to tariffs on countries such as China, Japan, and Taiwan. Vendors may have no choice but to pass these additional costs to advertisers, making it more expensive to run cost-efficient ad campaigns.
SMBs
SMBs rely on digital advertising to reach their customers, but many will find themselves having to pull back on already limited marketing budgets if tariffs reduce their profit margins. For example, an SMB selling imported goods is expected to see an increase in its cost of goods sold. SMBs could also see their ad performance drop if retail prices rise, as consumers will likely reduce their spending, especially on discretionary items.
Search and Social
Tariffs will directly impact the digital advertising business of tech giants such as Meta and Alphabet (Google’s parent.) Both companies bring in billions from the ad space annually from global companies selling products to U.S. customers. As new tariffs increase the price of these products, consumer demand is likely to decline, leading to fewer purchases being made and less money being spent on ads.
e-Commerce
The e-commerce industry, which relies heavily on digital advertising, is highly exposed to the global tariff fallout. Thousands of online D2C businesses sell imported goods to U.S. customers, and on marketplaces like Shopify and Amazon. These sellers, along with major brands, spend millions on ads through Meta, Google, and other ad networks. This revenue could be severely impacted if e-commerce sales plummet.
AdTech vendors
It’s not just advertisers who could potentially feel the pinch from tariffs — the platforms that facilitate digital advertising may also suffer. This includes demand-side platforms (DSPs) and ad networks that sell inventory across multiple marketplaces. If the tariffs remain in place for an extended period, these companies may face higher infrastructure costs, which could ultimately lead to increased advertising prices as they pass those costs on to clients.
How Can Businesses Prepare for These Eventualities?
If faced with a weakening market and/or growing economic uncertainty, brands should focus on flexibility, efficiency, and diversification. Proactive brand responses may involve, for example, adjusting supply chains, monitoring expenses more closely, and shifting marketing budgets toward performance-driven channels which can more accurately measure return on investment.
What Does the 90-Day Tariff Pause Mean for the Economy?
Despite the 90-day reprieve on additional tariffs announced on April 9th, many economists believe a certain amount of damage has already been done, and that the global economy will continue to suffer, at least in the short term. This, they explain, is due to the U.S. signaling a significant and surprising shift in trade policy, resulting in global uncertainty. The escalation of the U.S.-China trade war only compounds the problem. If the world’s two largest economies continue to battle it out, the fallout will be felt globally, regardless of the pause.
What Will Happen When the 90-Day Pause Ends?
According to President Trump, if countries fail to make a deal with the U.S. during the pause, “then we go back to where we were … We’ll have to see what happens at that time.” In other words, without any further policy changes or exceptions, the tariffs would be expected to resume at the end of the 90-day period.
On May 12, 2025, the United States and China reached a temporary trade agreement in Geneva, Switzerland, agreeing to significantly reduce tariffs for 90 days to allow further negotiations. The US reduced tariffs on Chinese goods from 145% to 30%, while China lowered its rate on US goods from 125% to 10%. While the tone from officials on both sides was positive, there is still much work to do. Mark Williams, chief Asia economist at Capital Economics, called it “a substantial de-escalation” but added that “there is no guarantee that the 90-day truce will give way to a lasting ceasefire.”
For digital advertisers, the 90-day pause provides a temporary reprieve from the threat of escalating costs on imported goods, which, if it came to pass, could lead to a reduction in consumer spending, potentially impacting companies’ ad budgets and ad performance. That said, it’s important to note that tariffs remain elevated over previous levels and that the exact impact of the temporary US-China agreement remains uncertain.
Key Takeaways
How long the Trump Administration’s tariffs will stand remains to be seen. Regardless, the sudden economic shift demonstrates how major geopolitical decisions can disrupt the digital advertising industry, from ad performance to budget spend.
Frequently asked questions (FAQs)
What is the difference between a tariff and a trade sanction?
A tariff is a tax placed on imported goods, and is primarily an economic measure aimed at raising revenue or protecting domestic industries. A sanction, on the other hand, is a penalty or restriction, usually imposed on a country to achieve a political or diplomatic goal. For example, the U.S., along with many other countries, imposed economic sanctions on Russia following its invasion of Ukraine in 2022.
Who pays for tariffs — the exporting country or U.S. consumers?
Tariffs are paid by the importer when they bring a foreign good into the country. The tariff is meant to incentivize companies to seek out domestic manufacturers and suppliers rather than paying higher prices on imported products or materials. However, this is not always possible, and the tariff cost is often passed along to U.S. consumers through higher prices.
Will the Trump tariffs hurt small businesses?
The long-term impact on small businesses remains to be seen. However, in the short term, tariffs can hurt small businesses by disrupting supply chains and increasing the cost of goods, leading to reduced sales, smaller profit margins, and cash flow problems.
