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8h ago

Q2 Earnings Season Opens with Tariff-Driven Margin Squeeze

Companies are passing most tariff costs to consumers, prompting CFOs to scale back growth and investment forecasts under trade-policy uncertainty.

The consumer price index is expected to accelerate to an annual rate of 2.7% in June from 2.4% in May.
Illustration: Maura Losch/Axios
Major U.S. banks are among the first to report results this week.

Overview

  • Wall Street’s S&P 500 consensus expects just 4% year-over-year earnings growth in Q2, the slowest pace since 2023 and down from 13% in Q1.
  • A KPMG survey shows 73% of companies have passed up to half of tariff costs to consumers and Goldman Sachs projects about 70% overall cost pass-through as pre-tariff inventories run down.
  • Morningstar warns that earnings reports from banks such as JPMorgan Chase, Citigroup and Wells Fargo will offer the first clear read on how President Trump’s import taxes are squeezing margins.
  • Economists forecast a 0.3% rise in the June consumer price index and a 0.2% increase in the producer price index, indicating tariff-driven price pressure could sway Federal Reserve rate policy.
  • Deloitte’s Q2 CFO Signals report finds finance chiefs across industries cutting revenue, earnings and capital investment projections in response to ongoing trade-policy uncertainty.