The July GTIA Channel Economic Tracker reveals a continued positive sentiment about the economy by U.S. IT channel firms and IT service providers (ITSPs), with a nearly 10% jump in number of businesses describing the overall economy as "strong” since May. Looking ahead to the next 12 months, however, attitudes shift downward a bit with slightly fewer respondents expressing optimism about the general economy and slightly more taking a negative view than did so in June.
On the positive side, tariffs on foreign goods can make U.S.-based ITSPs more attractive, especially when customers seek local alternatives to avoid cost increases or supply chain disruptions. And as hardware costs rise due to tariffs, customers may reallocate budgets toward services—such as cloud migration, cybersecurity and managed IT—to extend the life of existing assets and reduce capital expenditures. In fact, growth in services revenue is cited as the top benefit of tariff policy by respondents in this tracker survey.
Sunny outlook aside, a basic concern remains: Many ITSPs are still stuck absorbing or offsetting any higher costs driven by tariffs and supply chain issues. The percentage of ITSPs that reported a rise in the cost of goods—especially hardware and components—as a negative impact of tariffs rose nearly 10% between June and July. That has led more firms to pass those increases onto customers. Continued price hikes could threaten competitiveness and customer retention for ITSPs—especially in the small-to-midsize business (SMB) customer market where price sensitivity is high. Higher costs of goods could also curtail new investments by ITSPs themselves.
Overall, however, channel views of the economy since GTIA’s tracking began in May have trended up, based largely on services growth and the fact that full tariff impact has not yet been felt in full. To date, the government’s application of tariffs, timelines for doing so, and the percentages applied to individual foreign countries continue to shift in no reliable fashion. That haphazardness makes forecasting, pricing and other business decisions difficult for most channel firms.
