Corporate America on Edge as Trump's Tariff Threat Looms

Corporate executives are adopting a wait-and-see approach to President-elect Donald Trump's promised heavy tariffs on imports, but many have expressed significant concerns about the inflationary impact of such measures, reports Reuters.

Numerous major US corporations have addressed the tariff issue at recent investor events and conference calls, with many citing ongoing efforts to diversify their supply chains, particularly away from China, a primary target for Trump's proposed tariffs. The number of mentions of tariffs on earnings calls or at investor conferences has nearly doubled since September compared to the same period in the 2020 election cycle, far exceeding the 23 mentions in 2023, according to LSEG data.

Walmart, the nation's largest retailer, warned that higher tariffs could lead to increased costs for consumers. "We're concerned that significantly increased tariffs could lead to increased costs for our customers at a time when they are still feeling the remnants of inflation," a Walmart spokesperson stated.

Lowe's CFO Brandon Sink also expressed concern about the potential impact of tariffs on product costs, noting that "Roughly 40% of our cost of goods sold are sourced outside of the U.S., and that includes both direct imports and national brands through our vendor partners."

Trump has proposed tariffs as high as 60% on goods from China and universal tariffs of 10% or more. Oxford Economics estimates that a 60% tariff on Chinese goods could increase US inflation by 0.7 percentage points, while across-the-board tariffs could boost inflation by 0.3 percentage points.

"Trump 47 won't be a mere replay of Trump 45," said Brian Jacobsen, chief economist at Annex Wealth Management, highlighting that the president-elect's current proposals are "far more expansive."

The sectors most vulnerable to tariff increases include electronics, transportation equipment, chemicals, and minerals, according to the US International Trade Commission. Taiwan, a crucial partner in the US semiconductor industry, is also a potential target for higher tariffs. Any retaliatory measures could significantly affect US tech giants such as Apple, Nvidia, and Qualcomm.

The National Retail Federation has warned that tariffs could lead to higher prices on various consumer goods, particularly those sourced from China. Stanley Black & Decker CFO Patrick Hallinan noted that current tariffs are already costing the company about $100 million annually, a figure that could double under Trump's proposed tariffs. "It is certainly one of the quickest things that could happen, because it could kind of happen with the stroke of a pen," Hallinan said.