U.S. businesses have been vocal about tariffs recently, but few have incorporated them into their earnings forecasts. As President Donald Trump’s multi-front trade war escalates, investors and analysts anticipate a wave of profit warnings that could dramatically impact the stock market.
Heightened tensions with major global economies are fueling fears of rising inflation, jeopardizing economic growth. The S&P 500 experienced its worst quarter in over three years at the end of March.
With a 10% tariff imposed on all imports and significantly higher levies on several countries, companies must now adjust their strategies just as major U.S. lenders prepare for quarterly reports. The outlook has deteriorated rapidly, with business and consumer confidence diminishing and finance chiefs becoming notably less optimistic.
In the first three months of 2025, tariffs were mentioned over 800 times during global investor calls for non-financial companies—the highest frequency in 15 years and nearly double that of Trump’s initial trade war period between 2018 and 2019. Despite this, only about 88 U.S. companies explicitly acknowledged they had not factored tariffs into their forecasts, indicating potential surprises during this reporting quarter.
Wall Street analysts still foresee record profits for 2025 but predict more downgrades ahead. The S&P 500’s year-over-year profit growth expectations dropped to 8% as of March 28, down from a previous estimate of 12%.
Many CEOs may seize this opportunity to lower expectations, attributing it to external factors such as tariffs. Tariff-related uncertainties have created a cautious environment, prompting consumers and businesses to delay purchases.
While some sectors, like automotive, saw strong sales figures, others faced challenges. Analysts expect the upcoming earnings reports to echo previous sentiments about the unpredictable impact of tariffs, further complicating financial guidance for the future.