Corporate America is currently focused on tariffs, with mentions of tariffs on earnings calls skyrocketing. According to Bloomberg data, tariffs were mentioned 384 times on earnings conference calls over a three-month rolling period through March 5, significantly higher than the previous five-year average of 100 mentions. Sectors like Industrials and Consumer Discretionary are leading the mentions, but tariff talk has been seen across all 11 sectors of the S&P 500, suggesting a widespread impact on the US economy and the stock market.
President Trump has implemented 25% tariffs on Mexico and Canada, added 20% duties on China, and threatened tariffs on the European Union. He also ordered a 25% tariff on all imports of steel and aluminum into the US from all countries. Equity strategists warn that tariffs could be a headwind to earnings for the S&P 500 index this year. Citi equity strategist Drew Pettit estimates that Trump’s proposed tariffs could shave about $3 off the index’s earnings per share every three months the levies aren’t lifted.
On a company-specific level, tariffs have had a direct impact. For example, US automakers GM, Ford, and Stellantis rallied after the White House announced a one-month exemption on Mexico and Canada tariffs. Conversely, executives from Target, Best Buy, and Abercrombie & Fitch have warned that tariffs could materially impact their businesses. Best Buy CEO Corie Barry noted that around 55% of its products are sourced from China, and another 20% come from Mexico, making it highly likely that consumers will see a price impact from tariffs. Target CFO Jim Lee expects “outsized profit pressures” in the current quarter due to tariff uncertainty.
Tariffs have also affected economic data releases. The Institute for Supply Management’s manufacturing PMI was weaker than expected in February, with the prices paid index surging to 62.4, its highest level since July 2022. Institute for Supply Management chair Timothy Fiore attributed the price increases to the tariff issue, which could lead to lower new orders from businesses and impact hiring plans.
Leave a Reply