The impact of tariffs on financial markets has been evident, with stocks wiping out nearly a year’s worth of gains due to concerns over economic growth and recession. Companies are now issuing more concrete warnings about the potential effects on their bottom lines and consumers.
Executives at PepsiCo and Procter & Gamble have expressed supply chain disruptions and increased costs, which have led them to lower forecasts for core earnings per share. The CEOs of both companies attributed the concerns to global trade developments and the impact of tariffs on consumer demand.
Consumers are increasingly relying on credit to stretch their cash flow, with record highs in credit card debt and late payments. The use of buy now, pay later loans for essential goods has skyrocketed, with 41% of respondents saying they paid late on at least one loan in the past year.
Homebuilders are also feeling the effects, with a Pulte executive estimating tariffs could add as much as $5,000 to the sale price of new homes. Analysts predict that around 75% of S&P 500 companies have mentioned some impact from tariffs in their recent earnings reports.
The uncertainty surrounding tariffs is causing companies to be cautious, with many warning investors to expect lower returns. Executives are also exploring alternative sourcing options and pricing strategies, such as adding surcharges for raising prices outright.
While the Federal Reserve has not yet seen significant job losses, employment plans have continued to deteriorate. Experts warn that it may take some time for tariffs to start being fully felt by consumers, but firms will likely begin cutting head counts if they continue to be squeezed by higher costs.
As global trade tensions continue to escalate, companies are bracing themselves for the potential consequences of empty shelves. With ocean container bookings from China to the US already declining by over 60%, industry players are preparing for a significant disruption in logistics and supply chains.
Source: https://www.nbcnews.com/business/consumer/trump-tariffs-stores-companies-economists-warning-for-consumers-rcna202779