Tariff turmoil prompts cloudy forecasts from U.S. companies for year ahead

1/5/2025 5:51

Uncertainty continues to hang over the latest round of financial results and forecasts for U.S. companies both big and small as they try to navigate a global trade system severely shaken by a shift in U.S. policy, reported The Associated Press on Wednesday.

Tariffs and the stark shift in policy have also shaken consumer and business confidence. The U.S. economy shrank during the first quarter of the year, its first drop in three years. Consumer spending has ramped up, likely an effort to get ahead of tariffs, and companies are pulling back on hiring.

"Stunted consumer spending and weaker employment could further hurt the U.S. economy," noted the report.

Roughly half of the companies in the S&P 500 have reported their latest quarterly financial results, but the focus has been on how they will adjust to tariffs and any change in consumers' behavior. The focus remains blurry for both companies and investors because of the on-again-off-again nature of President Donald Trump's policy, according to the report.

Trump has implemented a range of tariffs on goods from some of the biggest U.S. trading partners and many of those countries have hit back with retaliatory tariffs. At the same time, Trump has pulled back or postponed some tariffs.

"The situation remains unpredictable and that is problematic for companies trying to plan ahead and investors looking for stability," the report added.