U.S. companies are starting to put hard-dollar figures to the damage President Donald Trump’s tariffs will do to their bottom lines as trade policy evolves and the economy shows signs of weakening heading into the summer.
Ford Motor (F) pulled its full-year profit guidance late Monday, after its solid first-quarter earnings were likely flattered as customers bought ahead of the expected tariffs. Ford said the administration’s levies would likely add around $2.5 billion to its overall cost base.
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The hit to earnings, Ford said, would likely be around $1.5 billion, as some of the parts and semiconductors it needs for its vehicles are difficult to source from U.S.-based suppliers.
Last week General Motors (GM) slashed its 2025 profit forecast by around $3.7 billion and pegged its overall tariff exposure at between $4 billion and $5 billion.
Mattel Hot Wheels toy cars are among the enormous numbers of products subject to the Trump administration’s tariff proposals.
Anderson Economic Group, the East Lansing, Mich., consultancy, estimated in a study last month that the current tariff regime could add as much as $12,000 to the cost of a U.S. vehicle, even with the exemptions and elongated time frames the White House unveiled last week.
The adjustments provide significant and beneficial softening of the cost impact of these tariffs, at least for U.S.-assembled vehicles,” the study’s lead author, Patrick Anderson, said.
“However, the cost is still substantial for most American cars and trucks. We do not expect consumers to absorb tariff costs that are still above $4,000 for many models, and above $10,000 for luxury vehicles imported from Europe and Asia.”
Related: Key driver of U.S. stocks powers through tariff uncertainty
From real cars to toy cars, the tariffs will bite
Hot Wheels maker Mattel (MAT) , meanwhile, also scrapped its full-year profit guidance and said it was likely to pass on some of the expected $270 million in added costs to its customers.
Mattel, which imports around 20% of its toy products from China, said it would tame promotions and accelerate cost cuts companywide to absorb some of the added tariff burden and mitigate the expected spending uncertainty.
“Given the volatile macroeconomic environment and evolving U.S. tariff landscape, it is difficult to predict consumer spending and Mattel’s U.S. sales in the remainder of the year and holiday season,” the company said in a late Monday statement.
In an open letter to the White House last month, the Toy Association, a New York industry lobbying group, called for a “zero for zero” policy on tariffs, citing “the essential role toys play in child development, learning, and creative play.”
Related: April jobs report shows modest hiring slowdown but still solid labor market
However, while lobby groups and company bosses have been keen to articulate their tariff concerns, last week’s back-and-forth between Amazon (AMZN) and the White House underscored the challenge in domestic trade diplomacy.
A Washington Post report suggested that Amazon was considering a move to display both its base selling prices and the tariff-adjusted prices of items on its website. White House Press Secretary Karoline Leavitt called the plan “a hostile political act.”
Administration officials said Trump contacted Amazon Founder Jeff Bezos, who stepped down as group CEO in 2021, to complain about the report. Amazon quickly scrambled to distance itself from the plan, saying it was “never approved and (is) not going to happen.”
P&G: Pampers, Crest prices likely to rise
In the consumer-goods space, Procter & Gamble (PG) warned last week that prices on products such as Pampers diapers and Crest toothpaste would likely increase in coming months as it looks to absorb as much as $1.5 billion in additional tariff costs, even though China-based imports account for only 10% of its overall exposure.
“We will have to pull every lever we have in our arsenal to mitigate the impact of tariffs within our cost structure,” finance chief Andre Schulten said.
Some of those increases are already working their way into the broader economy and are stoking concern about renewed inflation pressures as growth slows into the summer months.
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The Institute for Supply Management’s bellwether survey of economic activity in the services sector showed a modest expansion last month but noted that overall price pressures surged 4.2% from March levels.
ISM Chairman Steve Miller said survey respondents cited the “actual pricing impacts” from tariffs, “more so than uncertainty and future pressures.”
That’s left investors to wonder how, or when, the Federal Reserve will react to an expected uptick in inflation as the economy flirts with recession when it meets later this week in Washington.
“Inflation, especially within the services sectors, will put Fed policy makers in a tight spot for the coming meetings,” said Jeffery Roach, chief economist at LPL Financial.
“Stagflation – a period of low or no growth coupled with sticky inflation – will keep the Fed from cutting rates this week,” he added. “However, a slowing job market could ease demand-induced inflation throughout the balance of this year.”