March saw a surge of uncertainty among small business owners even before the market disruptions caused by Trump's tariff announcements. The National Federation of Independent Business reported a 3.3-point decline in their optimism index to 97.4, the most significant drop since June 2022. This figure, slightly higher than the predicted 99, indicates a dip below the 51-year average of 98, just months after hitting a near-record high of 105.1 in December.

NFIB chief economist Bill Dunkelberg attributed this decline to the heightened uncertainty stemming from new policy changes, especially related to tariffs on imports from Canada and Mexico. This led to a reduced outlook on sales growth as small business owners assessed the potential impacts on their businesses.

The decrease in optimism was mainly driven by a 16-point drop in expectations for future market conditions over the next six months, along with an 8-point decline in the uncertainty index from February. Expectations for business conditions and sales volumes also continued to decrease significantly.

Among factors affecting business profitability, weakened sales were cited by 35% of owners, while increased material costs and rising labor expenses were also noted as contributing factors. Labor shortages persisted as a challenge, with 40% of owners reporting unfilled job openings, and only 12% planning to create new jobs in the near future.

The report highlighted the ongoing turbulence facing small businesses as policy changes unfold, emphasizing the need for vigilance and adaptability.