Andy Wong/AP Photo

Commentary from businesses around the US shows disputes between the US and key trading partners Mexico and China are chipping away at sentiment.

The Federal Reserve's latest Beige Book, a report that takes the temperature of economic conditions across districts, featured businesses' concerns about trade-related uncertainty.

"Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty," the Dallas Fed said.

Visit Markets Insider's homepage for more stories.

The Trump administration's trade disputes with critical trade partners are eating away at business sentiment and shaping decisions spanning states, sectors, and industries.

That's according to commentary from businesses included in the Federal Reserve's latest Beige Book report, which monitors economic conditions across the 12 US Fed districts, published Wednesday.

"Trade uncertainty has delayed business investment, and tight labor markets have constrained expansion and spurred wage hikes," the Federal Reserve Bank of Philadelphia said. "Still, inflation remained modest, and the firms remained positive about the six-month outlook."

The central bank branches showcased local businesses' broad concerns about the way President Donald Trump's trade disputes with China and Mexico — and the uncertainty that comes with them — are injecting uncertainty into everyday operations.

A bonus just for you: Click here to claim 30 days of access to Business Insider PRIME

Despite threatening massive tariffs on Mexico for over a week, Trump announced Friday evening that the tariffs would be "indefinitely suspended" following negotiations with the country. Despite the declaration, Trump's economic threats seem to have spooked some.

"Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty," the Federal Reserve Bank of Dallas said.

Meanwhile, the three "negative" themes noted most often from businesses in the Federal Reserve Bank of Boston's district were "China, tariffs, and the semiconductor cycle; the three are related but distinct issues according to contacts."

"For example, Chinese cellphone manufacturers are big consumers of semiconductors so trade actions against them (as with Huawei, for example) are a big negative for semiconductor-related firms," the Boston Fed said.

The central bank's Boston branch also highlighted issues within the automobile industry. Economists and market strategists up and down Wall Street have warned investors in the past week that Trump's threatened tariffs on Mexico could have had a disastrous impact on the industry.

Read more: 'Mayhem,' 'Crippling,' 'Serenity now': Trump's threatened tariffs on Mexico would spur chaos, Wall Street warns

"Another area of weakness is autos; a firm supplying capital equipment to the auto industry said investment was depressed because uncertainty about trade policy has delayed new model launches," the Boston Fed said.

Businesses in the New York and Cleveland manufacturing and distribution sectors are also grappling with the trade war's implications, the Beige Book showed.

"Some businesses expressed ongoing concern about trade uncertainty, tariffs, and the increase in New York State's minimum wage," the New York Fed said.

Meanwhile, its Cleveland counterparts said, "Many contacts are concerned that the increased tariffs on goods traded with China will further exacerbate softening manufacturing activity in China, leading to less demand for American products from Chinese manufacturers."

And the Federal Reserve Bank of Atlanta said businesses in its district's transportation industry have begun taking precautionary measures to cut back on capital expenditure as a direct result of Trump's tariffs.

Read more: An increasing number of major US companies are warning that tariffs may force them to raise prices

"Regarding trade policy uncertainty, some transportation contacts developed contingency plans to reduce capital expenditures and headcount to offset tariff-related revenue shortfalls," the Atlanta Fed said.

Another major theme evident in the Beige Book was the issue of reported labor shortages amid ultra-low unemployment. The US unemployment rate held steady at 3.6% in May, the Bureau of Labor Statistics said Friday.

Despite Trump's threatened tariffs on US imports from Mexico, stock-market investors this week took the development in stride, as the Dow and the S&P 500 logged their best weeks of the year.

Still, the trade war remains a significant wildcard for the market.

"Financial market participants noted increased volatility and generally attributed it to investor concerns about the outcome of international trade negotiations," the Federal Reserve Bank of New York said.

Now read more markets and economics coverage from Markets Insider:

The job market is so hot that one restaurant 'moved to counter service and disposable utensils' to stay open

Stocks are having their best week of 2019 after the bleak jobs report fueled hopes for a Fed rate cut

US economy adds far fewer jobs than expected in May

How politics, miscommunication, and 'betrayal' of Nissan crashed Fiat Chrysler's deal with Renault

NOW WATCH: 'Blue's Clues' is making a comeback with a new look and new host. Here's what the original host, Steve Burns, did after he quit the show.