President Donald Trump’s November election win drove a surge in business optimism and expectations for capital spending. Four months later, executives have shifted to wait-and-see mode.

Uncertainty around how and when Congress will enact tax legislation, on top of Trump’s ever-changing tariff announcements, is dragging down expectations for investment, surveys from across the country show. Many firms are putting their investment plans, a key driver of economic growth, on hold. That’s one reason why economists are dialing back growth forecasts for this year.

Austin Ramirez, chief executive officer of Wisconsin-based Husco International — a maker of hydraulic and electromechanical components — says he’s put expansion plans and new investments on ice.

Ramirez says he’s still hoping for tax relief from the president and Congress, but it’s not clear when those “potential benefits” will arrive. Meanwhile his company, which shifted much of its supply base out of China since Trump’s first term, would be exposed to new duties on Europe, India and Southeast Asia — and “everybody’s seen the clear and present danger of new tariffs and trade barriers,” he says.

“The key to having a thriving US economy is having US companies that are investing and becoming more productive,” Ramirez says. “And when we can’t do that because we’re uncertain about the tax or trade environment, I think it becomes a real drag on the US economy over time.”

Those concerns continue to mount, with Trump poised this week to roll out his so-called reciprocal tariffs, the broadest increases so far, while Republicans in Congress are still negotiating the contents and strategy of a tax bill that may take months to pass.

‘Behind the Fog’

Business investment (not counting housing) makes up around one-seventh of US gross domestic product, or some $4 trillion at today’s levels. Multiple surveys of capital-spending intentions — by business groups including the National Association of Manufacturers as well as regional Federal Reserve banks — already show a decline in recent months after initial gains following Trump’s election.

In the Philadelphia Fed’s latest Manufacturing Business Outlook Survey, just 23% of firms expected higher capital spending this year, down from 51% in October.

Manufacturers with supply chains in tariffed countries are expressing the highest levels of uncertainty, Richmond Fed President Tom Barkin said last week, likening the business investment climate to a “dense fog.”

“Even those that believe the sun is still lurking behind the fog aren’t willing to take many risks today,” Barkin said Thursday. “They for the most part aren’t pulling back, but they’re not pushing forward either. They’re ‘on pause,’ ‘on hold,’ ‘frozen’ or ‘paralyzed’ until the fog lifts.”

‘Losing Profits’

The problem is especially acute for small businesses. The number of small firms planning capital expenditures in the next six months in the National Federation of Independent Business survey — which soared along with business optimism after Trump’s election — has now fallen for three straight months.

“The uncertainty plays a very big role here,” says NFIB Chief Economist Bill Dunkelberg. “What we’re hoping is that it will be resolved quickly, that we don’t have to wait too long to find out, because waiting of course means losing profits and sales.”

In the smaller-scale tariff war of Trump’s first term, there was also a flare-up in trade policy uncertainty — leading to a contraction in capital spending in late 2019, with outlays on equipment especially weak, according to JP Morgan Chase &Co. economists.

Back then, Trump had already passed major tax cuts. In his second term, the sequencing is different.

Courtney Silver, president of the precision machine shop Ketchie Inc. with 23 employees in Concord, North Carolina, says her plans to spend more than $1 million on equipment are on hold until it’s clear what tax measures will be enacted — especially around an expiring provision allowing businesses to fully expense most equipment purchases, called bonus depreciation.

“To me, it’s just been a roadblock to investment in innovation,” Silver says.

‘They Always Say That’

The Trump administration says its policy of trade protection and lower taxes will ultimately drive a manufacturing renaissance in the US and spur investment. Trump has cited spending pledges by companies including Apple Inc. as evidence. He’s also said the US economy could face a “period of transition” to the new trade regime.

Business chiefs increasingly see that transition as a time for caution. Tariffs and uncertainty have come up more than 600 times during quarterly earnings calls for S&P 500 companies since Trump took office, according to a Bloomberg analysis of transcripts. Executives point to potential retaliation by other countries, along with US actions, as clouding the picture.

Asked in a Fox News interview that aired March 9 to provide some clarity for businesses over tariffs, Trump suggested they’re using “uncertainty” as an excuse. “They have plenty of clarity,” Trump said. “That’s like almost a sound bite. They always say that: ‘We want clarity’.”

Still, Bloomberg’s latest survey of economists showed a drop in growth forecasts for 2025 — driven in part by lower expectations for business investment, especially in the next couple of quarters.

Plenty of new tariffs are due to kick in over that period, raising costs for business.

That increases the urgency for Congress and the administration to act on the tax provisions and deregulation, according to Jay Timmons, president and chief executive officer of the National Association of Manufacturers.

“If you’re going to use that tool in the toolkit — and the president certainly has the right to do that — what are we doing in other areas to lower the cost of doing business in the United States?” Timmons said in an interview in Ohio before delivering his “state of manufacturing” address last month.

In the meantime, Pat Weiler — president and chief executive officer of Iowa-based paving equipment manufacturer Weiler — says he’s detecting a wait-and-see mood among customers, and taking the same approach when it comes to his own investment plans.

“Business doesn’t like uncertainty and chaos,” Weiler said. “If it’s not really needed, we’re waiting to see what settles out.”