Big Corporations Are Breezing Through Tariffs While Mom-And-Pops Buckle Under the Weight

The tariff apocalypse everyone feared never quite materialized — at least not for corporate America. While headlines screamed of triple-digit duties and trade war chaos, a WSJ analysis of 5K earnings calls shows CEOs have stopped sounding the alarm. In October, companies paid tariffs equal to about 12% of import value — roughly 10 points higher than in January, but well below the dramatic rates President Trump threatened all year.

Consumers hate this one trick: Many corporations have walked back earlier earnings hit estimates from — either because duties were lifted on goods like coffee and beef, or, in many cases, by simply passing the costs to consumers. Companies have transferred roughly two-thirds of tariff expenses to consumers so far, excluding food and energy, according to Oxford Economics. Ford MotorF

initially warned that tariffs could slash earnings by $2B before interest and taxes, but after securing favorable exemptions on auto parts, the automaker cut that projection in half to $1B.

• HersheyHSY
  saw tariff exposure improve dramatically after the White House exempted cocoa and dozens of other foods in mid-November, with cocoa representing over half its total exposure.
• Rio TintoRIO
  is now adding surcharges on top of the already-elevated Midwest premium for aluminum shipments to the US, bringing total premiums to over 70% above benchmark prices.

The Little Guy Gets Crushed

Small businesses don’t have the cushion big companies do. Large conglomerates have broad supply chains and healthy margins to help absorb the hit, but mom-and-pop shops can’t negotiate better terms or raise prices without scaring customers off. The Atlanta Fed expects small-firm sales to drop nearly 9% from normal levels, compared with a 3.5% dip for larger firms. And on a Nov. 25 call hosted by “We Pay the Tariffs,” business owners described financial catastrophe in real time.

• Joann Cartiglia of The Queen’s Treasures says a 30% tariff hit is “really an impossibility,” leaving her site full of sold-out items and November sales down 50% year-over-year.
• The strain appears in markets too, with the Russell 2000 up 10% this year versus the S&P 500’s 15%, and short interest running at twice the level of larger-cap stocks.

What could’ve been: Tax Foundation analysis shows actual implemented IEEPA tariffs at 10.8% — less than half the 23.2% threatened in April. As a result, US GDP is expected to fall by 0.4%, down from the 0.7% estimate from April’s numbers. But whether the pain is mostly behind us depends on who you ask. Tariffs on lumber and wood products took effect on Oct. 14 and are expected to drive up prices in the homebuilding and furniture industry. And despite a pending Supreme Court decision on challenges to Trump’s tariffs, Commerce Secretary Howard Lutnick said on Nov. 25 that “tariffs are going to be part of this administration going forward,” signaling no relief ahead either way.