‘Tariff' mentions spike 132% in earnings calls. ‘Uncertainty' pops, too.

Mint

30-04-2025

Tariffs are top of mind for U.S. corporate executives, as evidenced by their comments during first-quarter earnings season, now roughly at its midpoint.
The assessments of the 50 or so S&P 100 companies that had reported through Tuesday morning varied greatly, however. Some companies offered a detailed analysis of the negative impact tariffs would have, while others said they weren't yet concerned.
Barron's combed through the earnings-call transcripts of these companies with the assistance of AlphaSense, and found a 132% increase in mention of 'tariffs" in the past 90 days compared with the previous quarter, and a 20% increase in the word 'uncertainty," presumably resulting from the Trump administration's tariff policy, unveiled April 2.
That lack of certainty is already creating shock waves through the economy by pausing business activity, shaking consumer confidence, and hampering companies' ability to make projections for the year ahead.
'The world hasn't been faced with such enormous potential impacts to trade in more than 100 years, so the only thing we're certain of is we don't know which, if any, of our scenarios will play out," said Carol Tomé, CEO of UPS, on a call with investors Tuesday. ('Uncertainty" cropped up 22 times throughout the course of UPS' earnings call.)
Here are seven other takeaways from earnings season so far:
Investors were anxious to hear company commentary about how tariffs would affect the economy at large. Many executive teams obliged them, largely noting that higher levies would have a negative impact on the economy. Most, however, added a caveat that the effects won't be evident until the tariff levels are settled.
'The simple truth today is that we don't yet know where trade policy will settle, nor do we know what the actual transmission effects will be on the real economy," said Morgan Stanley CEO Ted Pick, adding that the consensus among economists is for softer growth this year.
Goldman Sachs' expectation for growth in the U.S. has fallen 'meaningfully" to 0.5% from over 2%, said Goldman Sachs CEO David Solomon, adding that the prospect of a recession had increased.
Bank of New York Mellon CEO Robin Vince had a similar message: 'The read-through of this uncertainty into both capital markets and the real economy creates elevated risks in the near- and medium-term," he said.
Given that spending accounts for roughly 70% of U.S. gross domestic product, it isn't surprising that businesses are tracking consumer activity as they make their forecasts for the year. The general gist is that consumers are hanging in there, but tariff anxiety is driving their spending.
Some Americans are pulling their spending forward to try to get ahead from tariffs. Others have halted shopping altogether until they have more clarity on the tariff environment.
'The consumer has been hit with a lot, and that's a lot to process. So, what we're seeing, I think, is a logical response from the consumer to pause," said Procter & Gamble Chief Financial Officer Andre Schulten.
Wealthier Americans may be an exception. American Express, which caters to higher-income consumers, said that the company isn't seeing any changes to shopping behavior.
'Our card members may say they don't have any confidence in the economy, but they still continue to spend," said American Express CEO Stephen Squeri.
Several companies noted that the uncertainty surrounding tariffs is making businesses hesitant about investment decisions. That means they are delaying stocking up on inventory (or in some cases, overstocking), hiring, and dealmaking.
'Everyone would like less uncertainty and more clarity on forward policy, and that's what we're hearing from clients," Goldman Sach's Solomon said. 'They want to understand where the policy will settle out so that they can make capital decisions, investment decisions, planning decisions."
Even technology companies that derive a big chunk of their revenue from services, rather than hardware, could see a slowdown as policy settles.
'In the near term, uncertainty may cause clients to pause and take a wait-and-see approach," said IBM CEO Arvind Krishna. He added that the company's consulting business was also 'more susceptible" to discretionary pullbacks and government cuts.
Small and medium-size businesses could be big drivers of the pullback in spending. Many source directly from China, and while they are working with manufacturers to move to different countries, they don't have the size advantage or financial flexibility that bigger players do to diversify their supply chain, UPS's Tomé said.
All the uncertainty has made it hard for companies to make accurate projections for the year ahead, and as a result, 'S&P 500 companies have gotten creative with how they are talking about the future," notes Callie Cox, chief market strategist at Ritholtz Wealth Management.
PepsiCo aimed to rerate investor expectations from the get-go and lowered full-year earnings guidance, citing more volatility ahead and a subdued consumer environment. Some firms decided to do away with guidance altogether, including airlines American, Southwest, and Alaska. General Motors pulled its profit guidance for 2025, saying the prior forecast 'can't be relied upon."
Most companies, however, maintained guidance for the year. Some of these, such as science-equipment producer Danaher, said their guidance was unchanged because they believe they can completely offset the projected tariff impact. Others, like defense and aerospace giant RTX, maintained guidance but noted that tariff impacts weren't factored into their outlook for the year.
3M executives reiterated its earnings guidance, but said tariffs could crimp earnings per share by anywhere from 20 cents to 40 cents a share, barring any mitigation strategies.
Even in the midst of the chaos, there were still a few guidance raises. AbbVie tweaked its adjusted earnings per share guidance higher—but it doesn't reflect any shifts in trade policy, including the potential for pharmaceutical-specific tariffs.
'It's premature to speculate on the impact, and once we have that information, we'll communicate at the appropriate time," said AbbVie CEO Robert Michael. Other healthcare also companies refrained from making sweeping guidance changes until the sector's tariffs are completed.
Companies are pursuing a host of initiatives to soften the tariff blow. The main efforts are tied to shuffling about supply chains, including diversifying countries of origin and sourcing products in the U.S.
Firms are also negotiating with vendors to try to share the burden of higher import costs, and trimming costs across the business to redirect toward the import tax. Hasbro, for instance, said it was accelerating its cost-cutting program and is now aiming to save $175 million to $225 million this year.
If all else fails, most will resort to an age-tested solution: raising prices.
The problem—as Colgate-Palmolive CEO Noel Wallace explained—is that if consumer demand falls, companies will have less wiggle room to hike prices.
'The pricing environment will continue to be challenging, I think, in terms of where things go now," Wallace said. 'As tariffs take hold, I think everyone will be looking for ways to create value in the category that will be principally driven, in my view, through innovation. But there will be some pricing that will have to take place in certain markets around the world."
Business-facing enterprises may have more flexibility to increase prices than consumer-facing ones.
While most companies were bracing investors for the havoc that accompanies higher tariffs, a lucky few indicated they weren't too concerned about the levies.
Telecommunications firms, for instance, felt confident that consumers weren't going to shut down their phone lines, and that they would be able to pass on any phone price increases to the consumer.
'Whenever I get asked about the economy, my first answer is we're not really the people to ask," said Mike Sievert, CEO at T-Mobile. 'I mean, we're probably the least canary in your coal mine because people feel so strongly about this category that we'll find a way to keep paying their bills."
Netflix's executive team struck a confident tone as well, noting that home entertainment becomes 'really important" to households in tougher economies.
Renewable energy provider NextEra Energy estimates that tariffs will affect capital spend for its energy resource segment by less than 0.2%, which could even be negotiated down to zero.
'When I think about where we stand, I feel very good about tariffs. It's just not going to have much of an impact at all on our business," said CEO John Ketchum.
Some companies sought to reassure investors that they were engaging with the administration to eke out the best deal for the industry.
'I don't think a day goes by where we aren't engaged with someone in the administration, including cabinet secretaries and up to POTUS himself," said Boeing CEO Kelly Ortberg.
'So we're spending a lot of time making sure the administration understands the implications of either short-term or long-term tariffs on not just our company, but the overall aviation industry here in the U.S.," he added.
That said, firms are toeing a fine line between advocating for softer tariffs, and staying on the president's good side.
'We have been, I think, full-throated in our support of the administration's efforts to support American competitiveness and revitalize American manufacturing. We're well-aligned in that regard," said GE Aerospace CEO Lawrence Culp. 'But it's easy to overlook the $75 billion trade surplus the sector enjoys largely on the back of this tariff-free regime that we've had since 1979. So, all we have suggested, as the administration works through a myriad of issues, is that they consider the position of strength that the country enjoys as a result of this tariff-free regime and to consider re-establishing the same."
Write to Sabrina Escobar at [e-mail]