America’s largest companies are sounding the alarm about the effects of President Donald Trump’s trade policies, signaling that tariffs are hurting consumers, raising costs, and making it difficult to plan for future growth. These concerns were revealed as companies like PepsiCo, American Airlines, Chipotle, IBM, and Procter & Gamble reported quarterly earnings this week, marking the first public acknowledgment of the impact of Trump’s tariffs.
PepsiCo CEO Ramon Laguarta highlighted the rising volatility due to global trade uncertainty, warning that tariffs are expected to drive up supply chain costs. The company revised its profit outlook, reflecting the economic strain. Companies are also grappling with the long-term effects of Trump’s tariffs, particularly the 10% universal tax on most imports and additional levies on certain goods, with a 145% tariff on China. This series of unpredictable tariff changes has sparked concerns across various sectors.
For Chipotle, the effects of the trade war were clearly felt as the company reported its first drop in quarterly sales at stores open for at least a year since the COVID-19 pandemic. CEO Scott Boatwright pointed to economic concerns as the primary factor in consumers reducing their visits to restaurants. Tariffs are also driving up the cost of ingredients like beef from Australia and avocados from Peru, adding to the pressure.
Procter & Gamble, known for household staples like Pampers and Tide, also revised its sales forecasts downward. CEO Jon Moeller explained that tariffs would likely cause prices to rise. Starting in July, the company plans to increase its prices and adjust some product formulas to offset the additional costs. Moeller’s comments reflect the broader concern among companies that tariffs are inherently inflationary.
The airline industry is feeling the effects as well. American Airlines, Delta, Southwest, and Alaska Air all withdrew their financial guidance for the year, citing economic uncertainty. American Airlines revealed it would pass the cost of new planes onto consumers. Vice Chair Steve Johnson noted that lower-income Americans, in particular, are flying less due to higher prices, adding to the industry’s concerns.
Tourism has also taken a hit. A Federal Reserve survey showed a noticeable drop in Canadian visitors to the U.S., partly due to Trump’s policies. Hotel owners in New York City and upstate New York reported declines in international reservations, particularly from Canada. Worries are also mounting that travel from Europe and China could suffer, further harming the tourism industry.
The broader economy is feeling the strain, with stock markets dropping significantly. The Dow Jones Industrial Average saw a 9.1% decline in the first three weeks of April, marking its worst April performance since 1932. The International Monetary Fund has warned that the trade war will slow global economic growth, and economists now predict a heightened risk of a U.S. recession, with chances of a downturn ranging from 50% to 70%.
Citadel CEO Ken Griffin expressed his concerns about the long-term damage the trade war could inflict on America’s global reputation. Speaking at the Semafor World Economy Summit, Griffin likened the U.S. to a brand, once seen as an aspiration for many around the world. He warned that the erosion of that brand could have lasting consequences.
As these major companies continue to navigate the uncertainty brought on by the trade war, they are calling for more stability and clarity in U.S. trade policies to avoid further damage to the economy.
