Corporate America faces a growing uncertainty as President-elect Donald Trump’s proposed tariff policies loom on the horizon. Many companies may soon abandon the practice of providing earnings guidance to investors – a quarterly ritual that helps shape market expectations.
The sweeping tariffs Trump has promised could upend traditional business forecasting models. His proposals include a 10% universal tariff on all imports and potentially steeper 60% duties on Chinese goods. These measures would fundamentally alter the cost structures for thousands of businesses operating in the United States.
“Companies hate uncertainty, and these tariff proposals create exactly that,” explains Marcus Thompson, chief economist at Davidson Financial Group. “When businesses can’t reliably predict their input costs, they become much more hesitant to share forward-looking statements with investors.”
The ripple effects would touch virtually every sector of the economy. Retailers, manufacturers, and technology companies would face higher costs for imported components and finished goods. Many would struggle to determine how much of these expenses they could pass along to consumers without crushing demand.
Walmart, America’s largest retailer, sources approximately 70% of its merchandise from foreign suppliers. The company’s executives have previously acknowledged that tariffs function essentially as a tax on their customers. Similar challenges would face other major retailers like Target, Best Buy, and Home Depot.
Recent analysis from the Peterson Institute for International Economics suggests Trump’s tariff package could increase consumer costs by roughly $2,600 annually for the average American household. This financial pressure on consumers creates another layer of unpredictability for companies trying to forecast revenue and profits.
Technology firms face particularly difficult forecasting challenges. Apple, which assembles most iPhones in China, might see production costs rise significantly. Microsoft, Intel, and other hardware manufacturers rely heavily on global supply chains that would become more expensive and potentially less reliable under new tariff regimes.
The automotive industry stands at a similar crossroads. Ford and General Motors import numerous components from Mexico and other countries. These parts cross borders multiple times during manufacturing, potentially incurring tariffs at each crossing under new rules.
Financial markets have already begun preparing for this new reality. Goldman Sachs analysts recently advised clients to expect “increased volatility” as earnings forecasts become less reliable. They suggest investors focus more on companies with primarily domestic supply chains and strong pricing power.
Some economists point out potential unintended consequences of the tariff proposals. “When companies have less visibility into their financial future, they typically become more conservative with investments,” notes Dr. Lisa Chen of the Economic Policy Research Center. “This could lead to delayed expansion plans, hiring freezes, or even preemptive layoffs as businesses build financial buffers against uncertainty.”
The Federal Reserve Bank of New York estimates that previous tariff increases during Trump’s first term added approximately 0.3 percentage points to inflation. The current proposals would likely have a more substantial impact, potentially complicating the Federal Reserve’s efforts to maintain price stability.
Corporate executives have begun acknowledging these challenges in recent earnings calls. “We’re developing multiple scenario plans to prepare for various tariff outcomes,” stated Michael Reynolds, CFO of NorthStar Manufacturing, during an investor conference last week. “But honestly, providing specific earnings guidance in this environment feels like throwing darts blindfolded.”
Small and medium-sized businesses may face even steeper challenges than their larger counterparts. While giant corporations often have sophisticated hedging strategies and diverse supplier networks, smaller firms typically lack these resources. Many might find themselves caught between absorbing higher costs or risking customer relationships by raising prices.
Historical precedent offers limited guidance for navigating these waters. The tariff levels being discussed exceed anything seen in modern American trade policy. Some economists have drawn parallels to the Smoot-Hawley Tariff Act of 1930, which raised import duties to record levels during the Great Depression and is widely believed to have worsened economic conditions.
Investors should prepare
