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Irish SMEs Navigate Ambiguity Amid US Tariff Fluctuations

Recent fluctuations in US tariff policy have manifested as growing ambiguity for Irish small and medium-scale businesses (SMEs). This sentiment is encapsulated in a recent business confidence study conducted by Linked Finance. The elevated hope that had spread across Irish SMEs a few months prior has seen a regression to more commonplace proportions. Linked Finance’s updated SME Tracker has observed that positivity within SMEs peaked at 67% towards the end of Q4 last year, only to descend to a standard 62% in the initial quarter of 2025.

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It was observed there hasn’t been a drastic, abrupt reduction in business operations, but an overall slight negative trajectory persists year after year. According to the sentiment tracker survey, the SMEs reported a 5% downturn in business activities by the termination of Q1 2025, compared to a shallower dip of 3% in the corresponding time frame of the previous year.

Next, the survey revealed an interesting contrast where exporters witnessed a significant uptick in operation last quarter, plausibly attributable to a rush in orders to stockpile due to foreseen alterations in trade policies and the introduction of fresh tariffs on April 2, as signalled by US President Donald Trump. A more substantial 36% of SMEs operating in the export sector indicated increased business activity in Q1, outperforming the 25% of such SMEs operating in the local segment.

Yet, the same exporting SMEs also expressed the highest level of trepidation regarding potential US tariffs, with 87% admitting to being either greatly or somewhat anxious. In a broader context, an average of 66% of businesses expressed worry about a prospective global trade conflict, with the concern growing to 80% among businesses with at least 10 employees.

Additionally, the survey highlighted that apprehensions surrounding a possible trade war are more pronounced among larger Irish SMEs, businesses located outside the Dublin area, and those operating within the retail and wholesale sector. A quarter of those surveyed are deeply apprehensive post the initial tariff announcements in the US.

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Among micro-businesses, those employing between one to three individuals, an ebb in concern was noted. This category expressed the lowest levels of worry since the Covid pandemic effected business operations in 2020. Nearly 70% of these micro-businesses are hopeful of maintaining or enhancing their level of business activity in the upcoming quarter.

Analysing employment trends, the survey found a stronghold in Dublin, where businesses are fuelling job growth, while counterparts outside the capital city are treading neutral waters. The survey also pointed out that any ripple caused by geopolitical instability has resulted in swift normalisation of business confidence levels, indicating a clouded outlook for the medium-term future.

Interestingly, micro-businesses only witnessed a minor shrinkage in their optimism levels. Furthermore, price escalations have started to ease, which is a favourable sign for consumers.

Regardless of the unstable circumstances and uncertainty arisen since the beginning of the year, Irish SMEs have shown resilience. While the macroeconomic circumstances have fed their fear, SMEs have been resourceful enough to seek out and explore new markets.

This ability to adapt and pivot is testament to why many SMEs remain successful, with an increasing number signalling their intent to concentrate on this strength over the long haul.

Essentially, the survey reflects a real-world environment wherein tariff changes and global trade disturbances have impacted business sentiment among Irish SMEs. Nevertheless, the negative impact hasn’t led to a substantial drop in optimism, and businesses continue to adapt by exploring new opportunities.

Ultimately, despite the global uncertainties weighing down on Irish SMEs, their resilience and adaptability in sourcing new markets instil confidence about their ability to tackle these challenges. The survey results imply a sense of robustness that permeates through the Irish SME landscape, as businesses maintain steadfast operations, marking the ethos of these firms.

Lastly, noteworthy progressions amidst the economic tremors embody the substantial gallantry of the Irish SMEs. As they chart their pathway in a landscape brimming with uncertainties, they neither allow apprehensions to wreak havoc nor let optimism wane. While the broader picture conveys mix sentiments, it is ultimately the agile approach to adapt and pivot that may hold the key to their sustained success over time.