Confusion over trade tariffs is beginning to erode business confidence, which has otherwise been resilient in the face of geopolitical tensions, according to the latest InterTradeIreland all-island business monitor.

Most firms are holding steady and remain profitable, but the new data shows declining sentiment amid wider uncertainty.

Some 750 business owners and managers were surveyed for the study between 7 April and 9 May, immediately after US President Donald Trump announced his Liberation Day tariff regime.

More than half of businesses surveyed (54%) said they are stable, while over a third (35%) said they are growing, and 8% are in decline.

Those figures compare favourably with Q4 when 55% of firms were stable, 32% were growing, and 11% were declining.

Regarding Q1 sales, 12% reported a decrease, 55% said no change, and 28% recorded an increase. Looking ahead to the next six months, 29% expect to grow sales, 56% anticipate remaining stable, and 5% project a decline in sales.

Overall, during the first quarter, 61% of businesses were profitable and 21% broke even. Some 6% said they were unprofitable, and 13% were not sure.

Martin Robinson, director of strategy at InterTradeIreland, said the lack of clarity is making it increasingly difficult for business leaders to plan with confidence.

"This is the first comprehensive, all-island sentiment survey since the announcement of tariffs - and it’s timely in the context of ongoing developments," he said.

"While core business indicators like profitability remain strong, the fast-evolving nature of the tariff situation is creating real uncertainty."

A third of SMEs (32%) identified global political and trade uncertainty as a key issue, and a fifth (21%) cited cooling business and consumer confidence as a concern, up 16 percentage points from this time a year ago.

The number one concern remains rising costs of other overheads (56%), which include staffing costs and insurance, while energy bills remain a concern for half (51%) of businesses.

Skills shortages are persistent, and competitive pressures are also rising, with more firms flagging issues such as weakening demand and late payments.  

According to the study, 14% of businesses surveyed are directly exposed to the impacts of US trade tariffs and potential retaliatory measures, and half of those affected have close trading connections with the US.

Those who reported they were most concerned about the impact of tariffs were in the manufacturing sector, with worries about increased raw material costs and supply chain disruption. 

The latest all-island business monitor survey also asked SMEs about their approach to sustainability and achieving net zero. While over half (55%) of respondents recognised its importance to their business, only 17% currently have a plan in place, with a further 12% developing one. 

Among those without a net-zero strategy, eight in ten (86%) do not expect to have one within the next three years. When asked about the main barriers, four in ten (41%) cited the demands of daily operations as taking precedence over sustainability planning. 

“On sustainability and net zero, intentions are not translating into action. There is a sense from the survey findings that companies do not have the time to focus on strategic priorities like skills development, sustainability, and competitiveness," said Robinson.

"At InterTradeIreland we have a number of innovation programmes that can help businesses to address these challenges and become more productive and resilient.”

Photo: Martin Robinson. (Pic: Supplied)