Trump’s tariffs deal a blow to the bottom line of US companies

U.S. President Donald Trump is presenting the trade war as a way to protect American industry from foreign competition. The tariffs, however, are directly affecting his own companies’ bottom lines. Dozens of major businesses across multiple sectors have warned in their first-quarter earnings reports of the impact they will suffer from Trump’s new trade policy.

The blow to companies’ earnings and profits comes primarily through two channels. On the one hand, there is the direct effect on businesses with a global supply chain that import goods from countries subject to the new tariffs. On the other hand, there is the effect of uncertainty and loss of confidence, which translates into a slowdown in consumer spending and the economy in general.

Berkshire Hathaway, which presented its first-quarter earnings report on Saturday, coinciding with the shareholders’ meeting at which Warren Buffett announced his retirement as CEO after six decades, warned of the “considerable uncertainty” introduced by the trade war. The group, a conglomerate with companies in numerous sectors, warned in its quarterly report of the potential impact through changes in product costs, supply chain efficiency, and customer demand for its products and services.

Around three out of four companies have alluded to the tariffs in their earnings reports. The most drastic reduction in forecasts was made by General Motors, despite Trump’s repeated attempts to patch up the tariffs on the auto sector in an attempt to lessen the impact. The Detroit giant warned last week of a $4 billion to $5 billion impact on its financials this year. The company lowered its adjusted earnings before interest and tax from a previous range of $11.2 billion to $12.5 billion, down to $8.2 billion to $10.1 billion. Ford, for its part, suspended its annual financial guidance on Monday due to tariff-related uncertainty, after admitting a $1.5 billion impact on earnings, despite taking steps to mitigate an additional $1 billion.

Trump wants companies to shift production from abroad to the United States, but he has realized they can’t do it overnight. He referred to the temporary relief granted to the auto industry in these terms: “We gave them a little time before we slaughter them if they don’t do this.”

The president also awarded special treatment to imported phones, computers, and tablets from China. Although these products are exempt from the reciprocal 125% tariffs, Apple estimated that the impact of the current measures would still result in an additional cost of approximately $900 million in the second quarter. CEO Tim Cook hinted that the impact could be greater in subsequent quarters.

Meanwhile, Amazon stated that its future results could be affected by “tariff and trade policies,” which it didn’t mention in the previous quarter. “It’s hard to tell what’s going to happen with tariffs right now. It’s hard to tell where they’re going to settle and when they’re going to settle,” Andy Jassy, president and CEO, said on a call with analysts.

One of the companies that have quantified the direct impact of the tariffs is Colgate-Palmolive. The manufacturer of hygiene and cleaning products, with brands such as Colgate, Sanex, Palmolive and Ajax, estimates that the tariffs will cause $200 million in increased costs and will have inflationary effects, which could shift demand toward private-label products. Without providing a specific figure, Procter & Gamble indicated that it is even considering reformulating its products to try to mitigate the cost increases (and price increases) resulting from the new tariffs, while lowering its sales forecast to between $1.7 billion and $3.4 billion for the year. Clorox also lowered its growth forecast on Monday.

PepsiCo, meanwhile, lowered its full-year adjusted profit forecast due to uncertainty, rising supply chain costs, and signs of weakening consumer sentiment. McDonald’s has already suffered its biggest drop in sales since the pandemic in the first quarter, amid growing consumer distrust about the economy and fears of a recession.

Among the companies most affected by the economic downturn are travel companies. Consumers are choosing to postpone their plans and wait to see how events unfold. Airbnb and Booking.com cited increased economic uncertainty when they released forecasts that disappointed the market. American Airlines and Delta Air Lines have withdrawn their 2025 forecasts, citing uncertainty stemming from Trump’s trade policies, while Southwest Airlines and United Airlines are halting their growth plans in anticipation of lower demand for domestic leisure travel.

Many other companies have warned of the risks posed by U.S. trade policy. But some have also benefited. The head of steelmaker Nucor, Leon Topalian, expressed optimism about demand following the 25% tariffs imposed on aluminum and steel from his foreign competitors.

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