Advertiser Perceptions outlines media budget risks from April tariff policy

The Trump administration’s April 2 announcement of reciprocal tariffs on imports from major global trading partners is prompting a reassessment across the industry. 

The new tariff structure imposes initial rates of 10 percent on imports from most countries, with higher duties applied to nations with larger trade imbalances. Imports from the European Union, China, Japan and South Korea will face additional duties of 20 percent, 34 percent, 24 percent and 24 percent, respectively.

Eric Haggstrom, vice president of business intelligence at Advertiser Perceptions, said the scale of the policy shift represents a notable departure from decades of U.S. free trade practices. He noted that while similar tariffs had been implemented during Trump’s previous term and maintained under Biden, the current increases exceed prior levels.

Haggstrom said businesses with domestic supply chains, particularly in sectors such as energy and defense, may benefit from the changes. However, he added that most consumer brands, which rely heavily on foreign production, could see increased costs. These costs are expected to be passed along to retailers and consumers, compressing profit margins and potentially leading to reductions in advertising budgets.

Retailers are anticipated to feel the effects most quickly, especially those dependent on Chinese imports. Products from Chinese sellers that had previously benefited from de minimis trade exemptions will now be subject to increased scrutiny and cost.

This environment, Haggstrom said, may lead to spending cuts in areas like marketing to preserve margins.

Social, search and retail media platforms are likely to see an immediate impact due to their reliance on performance advertisers and China-based brands. In a recent update, Advertiser Perceptions projected flat year-over-year U.S. ad spending growth in the second and third quarters of 2025. While that forecast remains in place, Haggstrom acknowledged it may now represent the high end of expectations.

Retail media in particular could face headwinds due to margin pressures, though platforms focused on consumer packaged goods may be more insulated because of their greater reliance on domestic suppliers. Other industry verticals—including automotive, pharmaceuticals, financial services, and technology—may see varying impacts over the next six months.

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Although performance marketing has historically been more resilient during economic downturns, brands with large performance budgets, especially in retail, are expected to face significant challenges. By contrast, upper-funnel brand advertising, which is less dependent on international supply chains, may be less affected.

Despite these anticipated challenges, a February survey by Advertiser Perceptions indicated that 40 percent of advertisers still planned to increase media spending in 2025 compared to the previous year, with only 8 percent expecting to reduce budgets.