Tuning Out Tariffs: AI Is the Biggest Influence on International Outlook

Tariffs, inflation, layoffs—there’s no shortage of alarms to ring when it comes to the current state of the international market. But despite the doomsday chatter, most business leaders are tuning out the noise and taking on a more positive outlook on global expansion, with nearly 4 in 5 leaders (79%) feeling optimistic about their growth prospects.

The reason for their sunny attitudes? AI.

While tariffs present roadblocks, leaders' attitudes are most shaped by the adoption of AI and other new technologies, and their concerns are more focused on issues like compliance and strategy than trade policy. Almost half (48%) of business leaders say AI is influencing their outlook on international expansion.

Leaders will need practical, region-specific tools and partnerships that can support expansion in order to transform their enthusiasm into real results.

To learn more about the outlook for international business, BambooHR surveyed 780 decision-makers and senior leaders from the United States, the United Kingdom and Northern Ireland, Canada, and Australia.

Read on to discover insights into international sentiment, key drivers and obstacles for expansion, and what’s really keeping business leaders up at night.

• AI and new technology have the biggest influence on people’s outlook on international growth, both positive and negative (48%)—outpacing tariffs, political instability, or economic uncertainty.
• 79% of leaders are optimistic about their company’s growth prospects, prompting them to enter new markets (29%) and expand in existing ones (39%).
• 33% of leaders are only slightly confident or not at all confident in their ability to expand, citing key concerns like costs (41%) and tariffs (34%).
• Top obstacles for expansion include soaring costs (41%), tariffs and trade restrictions (34%), and tax complexity (27%).

AI and new technology are driving the global business outlook, with lesser influence from tariffs and other current economic pressures dominating headlines.

The top influences on leaders' outlooks include:

• Adoption of AI or new technologies (48%)
• Opportunities in new or emerging markets (44%)
• Availability of skilled talent (44%)

Only 1 in 5 companies (20%) report their perspectives being influenced by tariffs or trade policy.

Simply put, AI is shaping global business strategy more than classic economic factors. Not only is AI the leading driver for outlook, but it’s also a cause of anxiety: 15% of leaders say the adoption of AI and new technology keeps them up at night. For better or worse, AI is top of mind, from AI-fueled economic gains to AI-related layoffs and growing concerns of an AI bubble.

Despite the volatility of the past year, international business leaders believe the future is bright: 79% of leaders are optimistic about their company’s growth prospects. Good feelings are on the rise, and 65% of leaders say they feel more optimistic now than they did 12 months ago.

More than one-third (39%) are already hiring internationally, and another third (29%) expect to enter new markets within the next year. Additionally, 39% of companies plan to expand within their existing markets.

Still, while the outlook is optimistic, confidence is mixed. One-third (35%) are very or extremely confident in their expansion capabilities, but an almost equal proportion (33%) have little to no confidence. When it comes to international expansion, the gap between enthusiasm and capability is a growing source of tension: Companies are ready to pursue international growth, but leaders aren’t certain how to pull it off.

This lack of confidence may explain some leaders’ hesitation around international hiring. Nearly half (49%) of respondents describe their leadership’s feelings as open but cautious.

That said, excitement levels also vary across countries: the UK leads the way in enthusiasm at 38%. In contrast, Canadian business leaders are some of the most hesitant or opposed to global hiring (20%).

The greatest challenges to international expansion are financial and regulatory. Top obstacles include costs (41%), tariffs and trade restrictions (34%), and tax complexity (27%).

Cost increases are hurting everyone; only 3% of companies report no significant increases in the past year.

Inflation is the most common contributor to rising costs, with 63% of companies saying they’ve experienced inflation-related expense hikes. Inflation is also having the biggest monetary impact: 1 in 4 respondents (24%) name it as the highest cost increase for their company.

However, business leaders may soon cool on their inflation anxiety, as the World Bank reports that global inflation is declining, despite rates still being higher than preferred.

Other sources of skyrocketing costs include:

• Labor (51%)
• Technology and software (50%)
• Utilities and energy (49%)

So what do companies need to get over those hurdles? Respondents say strategic partnerships (36%), financing (34%), and compliance support (32%) would make expanding easier.

Although costs are spiking, most companies aren’t planning to dramatically adjust their spending. Leaders report plans to selectively invest in areas like technology, cybersecurity, training, and research and development.

Soaring costs and modest spending choices point to a more nuanced outlook on the part of businesses: Expansion is happening, but financial strain and regulatory complexity are major headwinds.

Business leaders are meeting the push for international growth with ample enthusiasm, but faltering confidence. There’s a clear need for more adaptive tools and strategic foresight in workforce planning.

As HR pros support their organizations’ expansion initiatives, they’ll need to focus their hiring strategies on a few key talent pools. Most companies plan to stay conservative with their spending, but leaders do report plans to invest more in some areas, including:

• Technology and software subscriptions (43%)
• Cybersecurity (42%)
• Training (40%)
• Customer support (40%)
• Research and development (39%)

With uncertainty in the air, most leaders are maintaining a pragmatic mindset: 42% say they’re taking an opportunistic approach, and 34% are selectively investing—expanding in some areas while pulling back in others.

For HR leaders, leveraging technology and professional development will be crucial to recruiting and retaining talent in an international market.

This report is based on a global survey conducted in partnership with Qualtrics in 2025, targeting 780 decision-makers and senior professionals involved in HR, payroll, finance, and business operations in the United States, the United Kingdom and Northern Ireland, Canada, and Australia.

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