From Yahoo Finance: 2025-04-03 05:53:00

U.S. businesses are facing uncertainty as President Trump’s trade war escalates, with many failing to model for potential tariff impact in their earnings outlooks. Analysts anticipate a wave of profit warnings in the coming weeks, potentially shaking the stock market after the S&P 500’s worst quarter in over three years.

Tariffs were mentioned over 800 times by non-financial companies in the first quarter, nearly double the level during Trump’s first trade war. Only 88 U.S. companies explicitly noted they hadn’t modeled tariff impact due to evolving trade outlooks, leaving room for surprises in upcoming earnings reports.

Wall Street analysts still anticipate record profits in 2025, but projections have been revised down to an 8% year-over-year growth for the quarter. The uncertainty surrounding tariffs has introduced an element of unpredictability in the economy, causing hesitation in consumer and business spending.

Investor earnings calls in the first quarter often omitted tariff impact in profit assumptions, a trend likely to continue as companies lack visibility and refrain from forecasting tariff effects. Morgan Stanley identifies consumer discretionary goods, tech hardware, and capital goods as sectors most vulnerable to tariff pain.

C-suite executives are expected to adjust guidance through the 1Q reporting period as more clarity on tariffs emerges. Analysts predict earnings declines in consumer staples, energy, materials, and real estate sectors. Managing tariff risks is likely to be an ongoing challenge as threats persist throughout Trump’s second term.

Read more: Trump tariffs set stage for wave of profit warnings