Good morning. The on-again, off-again tariff scenario has the attention of corporate leaders.
President Donald Trump imposed 25% fees on all goods imported from Canada and Mexico on Tuesday. But on Thursday, Trump postponed until April 2 tariffs on all products covered under the U.S.-Mexico-Canada (USMC) trade agreement. That is also the date when reciprocal tariffs are expected to go into effect. On Tuesday, tariffs on imports from China increased from 10% to 20%.
Tariffs are certainly a hot topic on earnings calls. John Butters, VP and senior earnings analyst at FactSet shared with me the findings of his analysis. A search of S&P 500 earnings call transcripts from Dec. 15 through March 5 found that the terms “tariff” and “tariffs” were mentioned by 255 companies. The previous high was 185 in Q2 2018, Butters said.
To get a better idea of how the C-suite feels about tariffs, I spoke with Tom Hood, EVP of business growth and engagement at the Association of International Certified Professional Accountants (AICPA). We talked about the findings of the new AICPA & CIMA Economic Outlook Survey.
The survey found that 59% percent of respondents think tariffs would have a negative effect on their businesses, and 85% said uncertainty surrounding the subject had influenced their business planning to some degree—18% described that impact as significant. The data is based on a survey of 305 CPAs and chartered global management accountants of which the majority are CFOs at private and public companies. The survey ended on Feb. 26.
Another key finding is executives' optimism about the U.S. economy has declined from a more than three-year high of 67% seen in last quarter’s survey to 47% in Q1. Hood sees this more as a moderation of sentiment rather than a turn towards pessimism.
Inflation also remained the top concern for executives, followed by issues related to staffing—employee and benefit costs, availability of skilled personnel, and staff turnover.
The CFOs Hood talks with are working with their teams on scenario planning and agile strategic solutions, he said. “And they're not overreacting to the news cycle,” he added.
Hood pointed out that 57% of respondents expect their businesses to expand over the next 12 months, which is the same percentage as last quarter.
“I think everyone is still anticipating tax cuts and regulatory reform,” he said. “Those are the two big pieces we know that CFOs like and have been looking forward to.”
Have a good weekend.
