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History Shows High Tariffs Pose ‘Extreme Danger’ To Corporate Profits
If there's a silver lining (there's not), it's that US corporate profits are extremely elevated by a
Higher tariffs feeding into inflation requires actual importation of goods and actual assessments of higher duties on said goods. I have importing clients that fall into three different camps at the moment. First, those who have decided to carry on operations normally, but are either slowing deliveries or parking them in foreign trade zones pending further clarity on tariffs. Second, I have clients who have raced ahead, higher tariffs be damned, and their experience is either one of feeling screwed amid the subsequent delays and carve-out talk, or very happy they did because, incredibly (tho I guess not), Customs isn’t always collecting the additional tariffs due to administrative snafus and general chaos prevailing at many ports. And third, I have clients who have halted everything, and are pissed that Customs isn’t collecting the additional tariffs against competitors who forged ahead.
Guess we need to update our tariff models to include an exogenous variable for opacity and incompetence.
I’m about to build out another store and was just told by shelving/refrigeration vendor that if I can get the order in his pipeline in the next week to two then his company and the fabricators will eat any tariff. After that it’s an additional 10% on my ~$100k order.
Tracking 1Q2025 earnings.
So far 22% of S&P 500 by count (23% by cap) have reported, 61% (65%) beat cons rev, 77% (73%) beat cons EPS, 42% (53%) saw next quarter cons rev go up, 28% (29%) saw next qtr cons EPS go up, and average reaction on report was +0.7% (+0.5%). Based on next qtr cons change, best sectors so far Comm Srvcs (no Mega so far, just telcos etc), Healthcare, Real Estate (RE sample = 1), worst sectors Energy, Financials, Industrials. Discretionary and Staples were midpack for revenues but among worst for EPS.
Broadly makes sense.