By Medha Singh
(Reuters) – U.S. businesses have talked a lot about tariffs in the past few months, but very few modeled for them in their earnings outlooks. With President Donald Trump’s multi-front trade war now in full effect, investors and analysts expect a barrage of corporate profit warnings in the coming weeks that could jolt the stock market.
Trump’s escalation of threats to major world economies since returning to office in January has increased fears that inflation will rise and disrupt economic growth.
The U.S. benchmark S&P 500 closed out its worst quarter in more than three years at the end of March. Tariffs of 10% across all imports to the United States, along with much higher levies on dozens of countries, are now set to take hold just about a week before big U.S. lenders kick off the quarterly reporting season, and companies now need to factor in the rapid deterioration of business and consumer sentiment and falling optimism among company finance chiefs.
Throughout the first three months of 2025, tariffs were mentioned more than 800 times on investor events or conference calls by non-financial companies globally, according to S&P Global Market Intelligence, highest in at least 15 years and nearly double the level seen during Trump’s first trade war in 2018-2019.
However, only about 88 U.S. companies specifically mentioned they had not modeled tariff impact into their forecast as the global trade outlook was still evolving, according to S&P. Numerous others were non-specific as to whether they had modeled the potential effect of tariffs – leaving open the possibility of numerous surprises on conference calls this quarter.
Wall Street analysts still expect record profit in 2025, leaving room for more potential downgrades. S&P 500 profits are expected to rise 8% year-over-year for the quarter as of March 28, down from a 12% growth forecast on Jan. 17, according to data compiled by LSEG.
“CEOs will latch onto an opportunity to lower expectations even if it’s painful – they can just say it’s the stupid tariffs, or headwinds, or currency conversion,” said Mark Malek, chief investment officer at Siebert Financial in New York.
The fears about tariffs have introduced an element of uncertainty into the economy, with consumers and businesses in some cases putting off purchases as the White House’s on-again, off-again approach to tariffs made the environment more unpredictable.
That may benefit some companies in the short-term – car sales were notably strong in March, increasing the likelihood for strong figures from Ford and General Motors. But other companies rapidly brought in inventories, which could be a drag on results for other sectors.
