Corporate Bottom Lines Can’t Escape Trade War Pain
The real problem is not what tariffs will do to sales but to earnings.
Profit margins will be among the early casualties of shrinking globalization.
Photographer: Joel Saget/AFP/Getty Images
Corporate America avoided an earnings recession in the first quarter. But the escalation of the U.S.-China trade war most likely means that it won’t be able to rely on a repeat performance in the second quarter, and the rest of the year could be a struggle as well.
Net income for the S&P 500 rose 0.6% in the first quarter, according to Bloomberg Intelligence, despite predictions from many that they would fall from a year ago. The stock market, however, has slumped lately and was down more than 2.5% on Monday after China said that it planned to retaliate with tariffs of as much as 25% on $60 billion of American imports. The U.S. raised levies on Chinese imports late last week after trade talks collapsed.