You might not know it from a rising stock market, but President Trump’s tariffs and other limits on global trade are causing widespread damage throughout the economy. The costs will eventually reach most American families through price hikes and less competition in many product categories.
US businesses are reluctant to criticize Trump’s tariffs, lest Trump retaliate against them. But they’re legally obligated to tell shareholders about anything that affects their financial performance. And there was lots of tariff talk during the second quarter earnings season, which is just wrapping up.
A Yahoo Finance analysis of earnings calls found that tariffs and other aspects of Trump’s trade war are harming profits and forcing price hikes in at least seven of the 11 sectors that comprise the S&P 500 stock index. Four sectors are relatively unscathed: Communication Services (XLC), Financials (XLF), Real Estate (XLRE), Utilities (XLU). Those sectors include 161 of the S&P 500 companies, and they generally involve services not subject to tariffs or are domestic in nature.
Read more: What Trump’s tariffs mean for the economy and your wallet
The other seven sectors are bearing most of the cost of new import taxes, which have jumped from $7 billion before Trump took office to around $30 billion now, and could go as high as $50 billion per month. Yahoo Finance’s Grace O’Donnell tracked specific mentions of tariffs in earnings calls for dozens of prominent companies during the second quarter. Here are some examples of steep tariff impacts among the seven sectors, which include 68% of the companies in the S&P 500:
Consumer Discretionary (XLY): General Motors (GM) cited a $1.1 billion tariff hit to profits in the second quarter. Ford (F) said tariffs will shave $2 billion in profits for the year. Deckers Outdoor (DECK) plans to raise prices because of tariffs. Home Depot (HD) plans to raise prices and offer fewer promotions. Discount retailer TJX (TJX)also plans price hikes.
Consumer Staples (XLP): Walmart (WMT) said, “We’ve continued to see our costs increase each week, which we expect will continue.” Keurig Dr. Pepper (KDP) said that “commodity inflation will build” and “tariff impacts will become prominent.” Kraft Heinz (KHC) said tariffs could reduce profit margins this year by 1 to 1.8 percentage points.
Energy (XLE): SolarEdge (SEDG) said the Trump tariffs could cut profit margins by 2 percentage points. Sunrun (RUN) pegged its tariff-related losses at around $1,000 per customer. Baker Hughes (BKR) said tariffs could cost it up to $200 million this year.
Story Continues
Health Care (XLV): GE Healthcare (GEHC) said profit margins dropped by 1.8 percentage points due to tariffs. Johnson & Johnson (JNJ) blamed tariffs for a $200 million hit to profits in the quarter. Medtronic (MDT), the huge medical device maker, said its tariff hit was $185 million.
Industrials (XLI): Caterpillar (CAT) expects tariffs to drain up to $1.5 billion from annual profits. Deere (DE) said its tariff hit will be around $600 million. Stanley Black & Decker (SWK) said it has already raised prices to offset higher tariff costs and may do so again.
Drop Rick Newman a note, take his quiz on tariffs, or sign up for his newsletter.
Technology (XLK): Apple (AAPL) said it incurred $800 million in tariff-related costs in the second quarter. Nvidia (NVDA) said new export restrictions relating to China blocked $5.5 billion of sales in the second quarter. AMD (AMD) said the same export restrictions cost it $800 million during the quarter.
Materials (XLB): Dow (DOW) said tariff-related uncertainties cut into sales in some units. International Paper (IP) said tariff uncertainty contributed to soft sales and earnings that fell short of expectations. Alcoa (AA) said tariffs cost it $115 million in the quarter.
Time, or earnings reports, will tell on tariff impact: U.S. President Donald Trump at the White House. (REUTERS/Joshua Roberts/File Photo) ·REUTERS / Reuters
Some companies are benefiting from the tariffs. Steelmaker Nucor (NUE)said less competition from imports allowed it to raise prices. Financial firms such as Citi have said greater volatility caused by Trump’s trade war is likely to be good for business, because it increases demand for their services and boosts fee income. But many economists argue that tariffs are still harmful, because the damage caused by higher costs and less competition far outweighs the benefits to a small number of protected firms and industries.
So if Trump’s tariffs are causing widespread damage, why do US stocks keep hitting new record highs? Three or four possible reasons.
One is that the artificial intelligence boom is so powerful that the upward march of Big Tech names such as Nvidia, Meta (META), and Microsoft (MSFT) swamps the smaller effect of tariff backpedaling.
Another is that large-cap US stocks are not the same as the real economy. Investors bidding those shares up may think US companies can ultimately pass along most of the higher costs tariffs are causing, which could lower economic growth but keep corporate earnings intact. The biggest US firms earn about 40% of their revenue outside the United States, providing a considerable cushion against an American downturn.
A third possibility is that the Trump tariffs really will weigh down stocks — and that it just hasn’t happened yet. It’s also worth pointing out that while US stocks have risen by about 10% this year, global stocks excluding the United States have risen by 20%. American shares are underperforming, and Trump’s trade war may be a big part of the reason.
Future earnings will provide many more clues.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
Click here for political news related to business and money policies that will shape tomorrow’s stock prices.
Read the latest financial and business news from Yahoo Finance
