Tariffs Cause Auto and Retail Sectors to Pull Back on Digital Ads

While some sectors have weathered the tariff storm, others have been hit harder due to their broader exposure to its economic impact. The hit to their businesses, in turn, has a direct impact on their ad spending.

According to Emarketer's latest forecast on ad spending by industry, the retail and auto sectors will pull back most on their digital ad spending this year, as tariffs hit their businesses hardest. Sectors such as telecom, financial services, and healthcare are the least affected and will continue spending on digital. Other sectors, such as media and entertainment, consumer electronics, and consumer packaged goods (CPG), are moderately affected by tariffs. Total US digital ad spending will grow 9.5% by the end of this year to reach $338.27 billion. That’s a slight downgrade compared with the forecast last year, in which eMarketer predicted 11.5% growth in 2025.

The biggest adjustment in Emarketer's digital ad spending forecast was made for the auto sector, the industry hit hardest by Trump’s tariffs. In the 2024 forecast, automotive companies were expected to grow their digital ad spending by 11.1% this year. Emarketer now expects growth to be just 2.2%. That means the industry’s digital spending will reach $22.25 billion, below $24.47 billion anticipated in the last forecast. “A 25% US tariff on imported cars and parts, introduced in April, immediately raised vehicle prices by thousands of dollars,” said Oscar Orozco, forecasting director at Emarketer.  “While this sparked a brief surge in pre-tariff sales, demand has cooled sharply in the second half of the year. In response, the industry is shifting what spend remains toward performance-driven digital channels, where ROI can be more closely measured.”

The retail sector will also pull back on digital ad spending, although not as much as the auto industry. Last year, Emarketer predicted retailers would spend $93.64 billion this year on digital ads, up 12.7%. Now they expect that figure to grow by just 7.4% to reach $92.64 billion. “Not all retail categories are made equal: apparel and home furnishings, reliant on tariffed imports, have cut advertising most deeply,” said Orozco.  “Athletics and baby/children’s products are moderating spend but remain visible. Restaurants and bars, less tied to import costs, have shown stability. Overall, 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.” On the US side, retailers are reallocating reduced budgets toward channels that can demonstrate near-term ROI. Retail media networks (RMNs) are the clear winner, forecast to grow 18.7% this year to nearly $60 billion. Double-digit growth will continue in the years to come, with the ad channel taking up an increasing share of total digital spending.

Travel and tourism are facing sharp headwinds, making this one of the hardest-hit advertising categories. 2024 forecast predicted 7.9% growth in the sector’s digital ad spend, reaching $8.34 billion. However, Emarketer now expects 2025 growth to be 6.1% or $8.74 billion. The current forecast predicts a higher dollar value due to 2024 figures coming in higher than expected. “Unlike essential goods, travel is highly discretionary—and with tariffs driving up the cost of everyday items, households have less disposable income for vacations, flights, and hotels,” said Orozco.  “The result is softer demand and more conservative ad budgets.”

While not directly affected by tariffs, the media and entertainment industry feels indirect pressure from advertisers in product-heavy verticals pulling back and from changing consumer behavior. Entertainment companies themselves continue to advertise, but strategies are more selective and performance-driven. In the 2024 forecast, the industry was expected to expand its digital ad spending by 15.0% to $32.37 billion in 2025. New forecast expects media and entertainment companies to increase their digital ad budgets by just 11.5%, reaching $31.89 billion. This is the first time the sector has surpassed $30 billion in digital ad spend. “Netflix, Disney+, and Warner Bros. Discovery are locked in fierce competition for subscribers,” said Orozco. “And while ad budgets remain active, they are increasingly focused on ROI-driven digital campaigns, promotions, and partnerships rather than blanket marketing pushes. Companies will also heavily invest in mobile—both because of the younger cohorts they target and the platforms they utilize to reach these consumers.”

Consumer electronics companies will increase their digital ad spend this year by 9.6%, reaching $26.32 billion. That’s a pullback from the 16.4% growth, or $27.46 billion, expected in the 2024 forecast. “Hardware margins are being squeezed, and marketers are responding with selective cuts and redeployment of budgets,” said Orozco. “Smartphone and PC makers reliant on Chinese manufacturing have been particularly affected. New tariffs have prompted some brands to redirect advertising to less-impacted regions or product lines. On the US side, major players like Apple, Google, and Amazon continue to advertise actively, though with more emphasis on performance marketing and product-specific campaigns.”