Following Friday’s news that the US Court of Appeals for the Federal Circuit had ruled against the reciprocal tariffs, we think corporate uncertainty around tariffs will remain elevated, though lower than late spring levels.
One of our biggest takeaways from 2Q25 reporting season was that companies continued to view the tariff backdrop as dynamic, evolving, and uncertain, despite the general dialing down of tariff levels from those announced April 2nd. There are both positives and negatives associated with the continuation of elevated uncertainty.
“During this past reporting season, we noticed in our transcript reading that a few companies referred to the idea of “no regrets” actions in their discussions of tariff mitigation, with one indicating that they had not taken actions that could not be easily undone.”
Lori Calvasina, Head of U.S. Equity Strategy
On the positive side, the potential for a further dialing down of overall tariff levels (beyond the obvious hope that tariff cost pressures could ease and the short-term boost to earnings estimates that would provide) is that it could keep corporates from taking more drastic actions to offset tariff costs. During this past reporting season, we noticed in our transcript reading that a few companies referred to the idea of “no regrets” actions in their discussions of tariff mitigation, with one indicating that they had not taken actions that could not be easily undone. While this was not a level of detail most companies went into or that most companies made, it left us thinking that this was a rational approach that might have been taken on by others as well.
On the negative side, even if it’s due to hope for improvement, continuation of elevated uncertainty could contribute to further caution or delays in corporate customer decision-making that a number of companies continued to refer to during the last reporting season.
We won’t engage in speculation about what the Supreme Court may or may not decide and will leave that to the legal experts. That being said, it has seemed clear to us, since we heard the President outline his vision in a speech to the financial community a year ago, that tariffs are a core belief of the current administration and we think it makes sense to assume that tariffs, one way or another, are likely to remain a part of the US equity market backdrop for the foreseeable future. Sectoral tariffs, tariffs codified into law by Congress, and/or other authorizations are some of the ways that tariffs could persist.
