Major U.S. corporations are reeling from real financial hits as pernicious protectionist tariffs on foreign goods kick in. Tesla, Mohawk Industries, Conagra Brands, General Motors, and Whirlpool have each cited very real effects from the tariffs. With such an increase in costs, they anticipate losses in the hundreds of millions of dollars. The White House plans to raise import duties on foreign countries this Friday. This shortsighted move will only exacerbate the financial strains so many are already experiencing.
Meanwhile, Tesla’s new finance chief, Vaibhav Taneja, admitted that the company has been hit with inflationary pressures. Direct costs associated with these tariffs amount to approximately $300 million. In a recent earnings call, Taneja reiterated that the company is committed to finding more efficient ways to absorb these escalating costs.
“While we are doing our best to manage these impacts, we are in an unpredictable environment on the tariff front,” – Vaibhav Taneja, finance chief at Tesla.
In like manner, Mohawk Industries is taking its own protective tariff action by raising prices by an average of 8% on all of its products. Mohawk’s management pointed out that tariffs on steel and aluminum are escalating packaging costs, adding to the pressure on their bottom line. The firm is adding capacity to manufacture engineered stone countertops in its new plant in Columbia, Tenn. This decision will increase the available supply of products not subject to tariffs, thereby reducing the adverse effect of those taxes.
Conagra Brands is feeling the pressure. The agricultural commodities trader and food products firm estimates that the higher tariffs will raise its cost of goods sold by 3%. Together, this change will bring in more than $200 million each year. CEO Sean Connolly didn’t shy away from confirming that the company had indeed anticipated elevated costs from these tariffs.
“We continue to work with customers and suppliers to manage the impact of tariff costs as the situation evolves.” – Paul De Cock, operations chief at Mohawk Industries.
General Motors announced an eye-popping $1.1 billion decline in its EBIT for the most recent quarter. While that may seem relatively innocuous, the company categorically blames this drastic price drop on negative impacts of tariffs. The automotive giant’s struggles are a reminder of how damaging tariff policies are to all manufacturers – even large, successful companies.
The United States’ competitors in East Asia darted in to export products just ahead of higher tariffs coming online. Consequently, Whirlpool’s North American results were not immune. This has negatively impacted both top- and bottom-line results for the appliance manufacturer in Q2.
Even as businesses prepare for the significant tariff hikes expected, forecasters are warning of wider economic effects on Main Street. Nancy Lazar, chief global economist at Piper Sandler, forecasts that the “core” version of the consumer price index could rise at an annual rate of 3.2% in the third quarter due to these tariffs.
While the outlook was dark, Treasury Secretary Scott Bessent provided a hopeful counterpoint. He recommended that snapback tariffs be adopted as a temporary trial to avoid a near-future cataclysm to enterprises.
In light of these challenges, Treasury Secretary Scott Bessent provided a somewhat optimistic perspective, stating that a temporary implementation of snapback tariffs might not signify a major crisis for businesses.
“I would think that it’s not the end of the world if these snapback tariffs are on for anywhere from a few days to a few weeks, as long as the countries are moving forward and trying to negotiate in good faith,” – Treasury Secretary Scott Bessent.