U.S. tariffs implemented this year by the Trump administration have disrupted every industry, but none as much as retailers and automakers.
A new report from Emarketer expects that retailers and automakers will cut the most ad spending this year, slowing overall growth in digital ad spending. Across all categories, Emarketer now expects that U.S. digital ad spending will hit $338.27 billion this year, representing a 9.5% year-over-year growth.
That percentage is down from Emarketer’s previous guidance put out in 2024 that U.S. digital ad spending would grow 11.5% this year.
Automakers pump the brakes on ads
In April, a 25% tariff went into effect on foreign-made cars. The administration has since softened the impact some by preventing tariffs from being stacked atop other taxes.
Still, the automotive industry is the hardest hit ad category, according to Emarketer, which now expects ad spend by automakers to grow 2.2% year-over-year, down significantly from the research firm’s previous 11.1% estimation done during the third quarter of 2024.
Overall, automakers are expected to spend $22.5 billion on advertising this year, a drop from Emarketer’s previous forecast of $24.47 billion.
Automakers are also investing their ad spend into performance-driven channels like search, wrote Oscar Orozco, forecasting director at Emarketer.
Retailers rein in ad spending
Emarketer last forecast 2025 retail ad spend during the third quarter of 2024, estimating that retailers spent $83.09 billion in 2024 and would spend $93.64 billion in 2025, representing a 12.7% year-over-year increase. Retailers actually spent $86.29 billion on advertising in 2024, a slight increase in Emarketer’s initial estimation.
Now, the firm estimates that retailers will spend $92.64 billion on advertising this year, representing only a 7.4% year-over-year growth from 2024’s total ad spend.
Unlike foreign automakers, which were all hit with the same fees, there is more nuance for retailers based on where products are manufactured. Apparel and home decor brands have cut the most ad spend because they rely the most on imported goods, according to Emarketer. By comparison, restaurants and bars have maintained ad spend.
“Retail is responding to cost inflation and consumer caution by pulling back aggressively on large campaigns, while concentrating remaining dollars in highly measurable, sales-focused channels,” Orozco wrote in the report.
Confusion about tariffs is compounded by other shipping challenges for retailers like the loss of the de minimis import rule that allowed companies to skip paying fees on packages entering the U.S. if they are worth less than $800.
While retailers are slashing their ad spend, their own advertising businesses stand to benefit from an economic downturn. Retail media spend is projected to grow 18.7% year-over-year, reaching $60 million in 2025, according to Emarketer. Retail media is also expected to continue with double-digit growth in the coming years.
Emarketer also singled out the travel and media & entertainment categories where it expects ad spending cuts this year. The travel industry fared better than Emarketer expected in 2024 but is now expected to dip. Travel will bring in $8.74 billion this year, representing a 6.1% year-over-year growth, down from a previous forecast of 7.9%.
Tariffs have also trickled down to media and entertainment companies that rely on tariff-affected advertisers. Emarketer previously forecast that media and entertainment companies would bump digital ad budgets by 15% year-over-year to $32.37 billion in 2025. Now, Emarketer expects an 11.5% increase in ad spend, equivalent to $31.89 billion.
Streamers in particular are rethinking ad spend to find subscribers, Orozco wrote.
“Netflix, Disney+, and Warner Bros. Discovery are locked in fierce competition for subscribers,” he wrote in the report. “And while ad budgets remain active, they are increasingly focused on ROI-driven digital campaigns, promotions, and partnerships rather than blanket marketing pushes.”