Top executives at Wall Street banks are concerned about higher inflation and economic deterioration due to tariffs, leading to more cautious behavior from corporate clients. They expect consumer spending to cool if prices spike in the second half of the year.

Executives like Wells Fargo’s Charles Scharf have met with commercial banking clients to navigate the new environment, finding ways to avoid passing on tariffs. However, they are preparing for downsides by not growing inventories or hiring aggressively, developing contingency plans.

Despite concerns, all six major U.S. banks beat profit expectations in the latest quarter. CEOs are cautious due to uncertainty around tariffs, although they praised the resilience of the U.S. economy amid trade tensions.

U.S. stocks initially plummeted after Trump unveiled tariffs but have since recovered, hitting all-time highs. Companies are navigating uncertainty as some tariffs are paused, adding unpredictability to business.

Following a period of economic uncertainty, brokerages initially saw a high chance of recession, but outlooks have since improved. Executives are concerned about consumer reactions to price surges due to tariffs.

Inflation rose in June due to increasing prices, with economists attributing it to rising import taxes. Yields on the 30-year Treasury hit a six-week high, and the S&P 500 ended lower following the inflation data.

JPMorgan Chase CEO Jamie Dimon remains cautious about the U.S. economy, citing significant risks. Goldman Sachs CEO David Solomon highlighted uncertainty ahead, particularly in geopolitical concerns and trade agreements.

Executives expect dealmaking to pick up in the second half of the year as businesses adjust to the new tariff environment. Banks have already seen gains from an M&A rebound in the second quarter, with corporations focusing on strategic growth.

Read more at Yahoo Finance: Wall Street CEOs see some tariff impact filtering into customer behavior