KeyBank has released the results of its Middle Market Sentiment Pulse Survey, which was conducted in May 2025 to gauge the current state of the middle market amid economic uncertainty. The survey polled executives of middle market businesses with annual revenues ranging from $25 million to $1 billion and found that potential tariffs are significantly influencing investment decisions, with most companies prioritizing supply chain adjustments and closely monitoring market signals before implementing growth strategies.

Tariffs at the Forefront:

• 91% of companies are focused on managing tariff impacts as a top priority, showing the broad-based nature of the potential impacts.
• 61% of respondents say clarity on U.S. economic health is the most important factor for making business investment decisions.

Resilient and Forward-Thinking:

• 92% of companies view current economic policies as an opportunity to innovate their business models and restructure their organizations.
• Middle market firms are somewhat ambivalent about tariffs and the doors they might open for market expansion (49% see the upside). In contrast, 68% of technology companies are quite confident, likely due to the burgeoning demand for software to navigate supply chain expenses.

Strategic Adjustments in Response to Tariffs:

• 60% of companies are adjusting their supply chain strategies to manage tariff costs, the top choice among respondents. This increases to 74% for larger companies with revenues between $500 million and $1 billion. 53% are passing costs to customers and 47% to vendors.
• Among these larger companies, 88% are in the process of enhancing technology to improve supply chain visibility and 71% are broadening their supplier base to mitigate risks.

Economic Clarity and Capital Access:

• 87% of companies are actively seeking to expand their access to capital, strengthening their balance sheets and demonstrating the proactive nature of this segment.
• The top three methods for achieving this expansion are adopting technology and automation (52%), expanding equity capital (43%) and improving cash flow management (43%).

Ken Gavrity, Head of Key Commercial Bank commented, "Despite the uncertainty surrounding tariffs and economic policies, our pulse survey shows that middle market companies are not just reacting but proactively innovating and adapting. This resilience and forward-thinking approach are key to gaining a competitive edge. It underscores the entrepreneurial spirit that drives America's middle market and reinforces our commitment to supporting their growth ambitions.

"Middle market companies aren't waiting for perfect conditions – they are creating their own opportunities," Gavrity added. "The businesses that thrive will be those that can adapt quickly, invest wisely in technology, and maintain strong relationships with capital providers who understand their vision."

Methodology
KeyBank surveyed 300 owners and executives of businesses with annual revenues between $25 million and $1 billion in May 2025.