Consumer companies are bracing for lower profits as tariffs force shoppers to rethink spending

Core Viewpoint - Consumer companies are reducing their forecasts due to the impact of tariffs on profits and a decline in consumer spending, with at least a dozen companies adjusting their full-year outlooks during the current earnings season [1][2][12]. Impact of Tariffs - Tariffs are leading to increased prices on essential commodities, which negatively affects earnings, and the uncertainty from the trade war is causing consumers to reduce spending [2][11]. - Current tariffs include a 10% duty on most imports, with Chinese goods facing a 145% duty, impacting various sectors including aviation and consumer goods [3][5]. Company Responses - Companies like Procter & Gamble, Keurig Dr Pepper, and Hasbro are considering price increases to offset higher costs due to tariffs [7][14]. - American Airlines has pulled its financial guidance for 2025, citing the unpredictable U.S. economy and the negative impact of tariffs on demand [6][17]. Consumer Sentiment - U.S. consumer sentiment has dropped to its second-lowest level since 1952, leading to reduced spending as consumers fear inflation and potential recession [10][11]. - Chipotle has reported a slowdown in customer traffic, attributing it to financial concerns among diners, which has led to a reduction in their sales growth outlook [14]. Sector-Specific Insights - The airline industry is experiencing weaker demand, particularly in economy cabins, with executives expressing concerns over the tariff policies affecting travel [16][17]. - Hasbro has reiterated its forecast, anticipating a significant headwind from tariffs, while also warning of potential job losses due to increased costs [15].