Trump administration tariffs could significantly alter digital advertising strategies, forcing marketers to pivot toward performance channels.

"Brands and retailers are going to face really tough trade-offs," said our analyst Cindy Liu during a recent webinar examining the impact of new policies on businesses and consumers. "But their messaging with consumers is gonna be key. Having clear, consistent, transparent messaging about price changes will be critical to maintaining consumer trust."

Three tariff scenarios

The forecasting team at EMARKETER has developed three potential scenarios to help businesses navigate the uncertain trade environment:

• A limited scenario that includes 25% global blanket tariffs across major US trading partners and 20% blanket tariffs on Chinese goods.
• A moderate scenario with partial tariffs and some negotiated relief.
• A heavy scenario with full implementation of announced tariffs including global retaliatory measures.

"The moderate scenario isn't that moderate," said our analyst Zak Stambor during the webinar. "It's still a pretty significant shift in circumstances both for marketing and advertising and for retail."

Under the moderate tariff scenario, total ad spending would reach approximately $407 billion, with only the heavy scenario triggering an actual year-over-year decline in total ad spending.

"Even in a heavy tariff scenario, top-line digital ad spending, looking at it from a year-over-year growth standpoint, would still grow 4.5% year-over-year," said our analyst Oscar Orozco.

Digital channel divide

The impact of tariffs could vary significantly depending on the digital channel.

Social platforms could see growth flatten to just 1.5% under a heavy tariff scenario, representing a potential $10 billion reduction in spend compared to the limited scenario.

• "Temu and Shein have spent a tremendous amount of money on TikTok and Meta in particular," Stambor explained. "TikTok and Meta will feel the impact of Shein and Temu feeling a real threat to their business and pulling back rather significantly on their advertising spending."

Search is likely to be the most resilient digital channel, with only a 7.1% reduction between limited and heavy tariff scenarios.

• "[Advertisers] are focusing their limited budgets on performance and so search will stand to benefit from that," Orozco said. "However, like every ad channel there would be some impact. I think we would see, for example, luxury brands, electric vehicle manufacturers, or even household appliance companies hold off on spending, at least in the short term, while they see how the economy starts shaping up."

Connected TV (CTV) could see spending reductions exceeding 12% under a heavy tariff scenario—the highest among digital channels.

• "CTV is primarily a branding vehicle at this point, and so it is vulnerable to advertisers focusing their spend on performance-driven channels like search," said Stambor. "In the near term, we'll see budgets pull back."

Changing customer behavior

The retail sector faces potentially devastating impacts, with forecasts showing around $300 billion in lost sales under the heavy tariff scenario—a 7.9% reduction from baseline projections.

"Higher prices are forcing consumers to pull back and focus on essentials," said Liu. "But it's not just about shoppers slowing down. There's a real threat that even if consumers want to buy, there's a real risk of products simply not being there."

Consumers have quickly adjusted their behavior in response to tariff news, accelerating purchases of goods likely to see price increases.

"After that flurry of initial tariff-related purchases fade, demand could slump later this year as higher prices and weaker consumer confidence take hold," said Stambor.

Watch the full webinar.

This was originally featured in the EMARKETER Daily newsletter. For more marketing insights, statistics, and trends, subscribe here.