Trump Tariff Chaos Means Earnings Forecasts Are Already Wrong
Some companies are scrapping guidance, while others say they can offset tariff costs. There’s a good chance everyone will have to go back to the drawing board.
Manufacturers including GE Aerospace are trying to formulate a plan to deal with Trump’s tariffs, but no one knows where the levies will ultimately end up or how much economic damage they might cause.
Photographer: Paul Yeung/Bloomberg“We do not know the scope and breadth of the tariffs issue at the moment and will not for a while” so to pretend otherwise is “sheer speculation,” Phebe Novakovic, chief executive officer of General Dynamics Corp., the company behind Gulfstream private jets and military tanks, said this week. “Anything I say on that subject, given our lack of firm knowledge, will almost certainly be wrong.”
It was one of the more accurate comments anyone has made about tariffs so far this earnings season, if not the most helpful for investors.
The tariff elephant in the room has made vibes more important than numbers — past, present and future. Companies are handling President Donald Trump’s amorphous and ever-changing plans to blow up the global economic order in different ways. Some, including Delta Air Lines Inc. and American Airlines Group Inc., have decided it’s not worth trying to guess where levies will end up and what the economic cost of a global trade war might be so they’ve scrapped their financial guidance altogether. Others, such as Post-it maker 3M Co. and missile and jet engine manufacturer RTX Corp., have offered two versions of their outlooks: one with tariffs and one without. A few select companies — including Pentair Plc, General Electric Co. and GE Vernova Inc. — have already come up with specific plans to fully counteract the added cost of Trump’s import taxes and keep doing business mostly as usual.