Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe Federal Communications Commission is investigating several Chinese telecom companies, including Huawei and China Telecom, over concerns that some of them are ignoring restrictions on their operations in the US.The regulator said it had opened a “sweeping investigation” into Chinese groups that also include ZTE, a big telecoms equipment provider, and Hikvision, the world’s largest maker of surveillance cameras. It is also targeting China Mobile International USA, and the US subsidiaries of China Telecom, and China Unicom.FCC chair Brendan Carr said the agency believed some groups were ignoring previous US efforts to address security threats from China. The FCC has previously revoked some authorisations to operate in the US, and placed some companies on the “covered list” of groups from which the government cannot buy products because they are thought to pose a security threat.“We have reason to believe that, despite those actions, some or all of these covered list entities are trying to make an end run around those FCC prohibitions by continuing to do business in America on a private or ‘unregulated’ basis,” Carr said. “We are not going to just look the other way.” The probe comes as US-China tensions remain high over a range of security and foreign policy issues. The two countries are also engaged in a new trade war after President Donald Trump imposed two rounds of 10 per cent tariffs on imports from China, sparking retaliatory action from Beijing against US agriculture produce and other goods.In recent years, US concerns about the potential for Chinese telecom groups, such as Huawei, to help Beijing engage in espionage have soared. China insists that Huawei and other companies are not engaging in spying.Carr, who was recently appointed chair by Trump, said the FCC would determine the scope of the targeted companies’ ongoing activities in the US and would “move quickly to close any loopholes that have permitted untrustworthy, foreign adversary state-backed actors to skirt our rules”. The FCC has sent letters to the companies seeking information about their operations, and has sent a subpoena to one of the firms.Carr said the move was the first big action being taken by a new council on national security that he recently set up to increase the agency’s focus on telecom and cyber-related threats from adversaries, but particularly China.The FCC said it was seeking detailed information about ongoing operations in the US by the companies it was targeting and was trying to determine if the targets of the probe were receiving help from any other companies.“I’m pleased to see Chairman Carr and the Trump administration taking the fight to Chinese Communist controlled telecoms companies,” Tom Cotton, the Republican head of the Senate intelligence committee, wrote on X. “These firms are little more than fronts for the repressive and corrupt Chinese intelligence apparatus.”The other targets are two-way radio maker Hytera Communications, Dahua Technology, which makes surveillance cameras, and Pacifica Networks Corp, a telecoms provider and its subsidiary ComNet.The Chinese embassy in Washington said Beijing “opposes overstretching the concept of national security, using national apparatus to bring down Chinese companies”. Spokesperson Liu Pengyu added: “We oppose turning trade and technological issues into political weapons.”  More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldFor a country that has been the target of US President Donald Trump’s ire over trade, drugs and migrants, Mexico is proving surprisingly resilient. The country’s benchmark IPC stock index is up 7 per cent this year, compared with the S&P 500’s 4 per cent drop and Canada’s TSX index’s 1.8 per cent gain. The peso has also held up well, rallying 2.5 per cent against the dollar since January. This is a testament to Mexico’s newly elected President Claudia Sheinbaum’s ability to navigate tensions and negotiate a delay on tariffs for the country’s exports. If this continues, Mexico’s assets could end up being among 2025’s unexpected winners. Betting on Mexico’s equity market is not as counterintuitive as it sounds. True, the two countries’ economic ties run deep: 82 per cent of Mexico’s exports went to the US last year. However, its publicly listed companies are largely domestically focused, leaving them relatively sheltered from direct tariff risk. Mexican stocks have also become cheap. The country’s stock market fell 13 per cent last year. Sheinbaum’s landslide victory last summer had spooked investors, who worried that her promise to expand the welfare policies would widen the country’s budget deficit and weigh down on economic growth. Trump’s return to the White House added to concerns. The IPC index is trading at a price-to-earnings ratio of just 11 times, below its historical average of about 14-15 times.This leaves room for upside — provided Sheinbaum can continue to carve out reprieves from US tariffs. Unlike Canada’s Justin Trudeau, who stepped down as prime minister this month, Sheinbaum has been deft at reading and handling her US counterpart. Rather than trading barbs and retaliatory threats, she has emphasised co-operation and Mexico’s efforts to secure the border and fight fentanyl trafficking. That was enough to earn Trump’s respect: he has called her “tough.” Longer term, the risk for Mexican equities is that the effects of the trade war could start trickling through the real economy into domestic consumption. Analysts at Capital Economics reckon a 25 per cent tariff on all US imports from Mexico could result in a 1 per cent contraction of the economy. But for now at least, investors seem to trust that Sheinbaum’s approach to Trump is the right [email protected] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Howay the mangoes. After years, possibly decades, of injustice, the most popular fruit among Britons that is not already in the Office for National Statistics’ inflation basket finally will be. And it’s not a victory for the mango alone. As a result of this tweak by Newport’s stat-wranglers, the overall “representation of stone fruit” has been positively addressed, bringing peace to millions.Cooing over updates to the ONS’s inflation basket — the items whose prices it observes to track inflation — has become something of an annual tradition in the UK. This year, virtual reality headsets and exercise mats got the nod, while DVD rentals and local newspaper adverts found themselves chopped.Such shifts are inevitably characterised as capturing the consumer zeitgeist, reflecting the latest trends in fashion, food and other frivolities. Which, really, they don’t. The ONS’s technical manual on the compilation of the consumer prices index warns that items in the basket (which, with more than 750 items, is really more of a trolley) “should not be afforded significance beyond their purpose as representative items”.“Indeed, within each product grouping there is usually a point at which the number, choice of items and the precise weights attached to them become a matter of judgement,” it continues.Whose judgment? It’s never been entirely clear what heuristic the ONS deploys when reviewing the basket’s contents, turning the whole exercise into something of a casual vibe check (and a nice opportunity for some easy publicity).Justifying the inclusion of VR headsets, the stats body claimed such products had “seen rapidly increasing expenditure in recent years”, pointing to “around £347mn” of sales. I asked the ONS where it got that very high number from and it turned out to be an estimate from a free market research report by Statista.It’s not the only area of inflation collection where questionable judgment exercises are taking place. Obviously, corralling the hundreds who observe prices each month is an enormously complicated task. To address this, the ONS produces often highly detailed guidance on what exactly the price-hunters should be looking for.I recently acquired this guidance using freedom of information laws. It makes for interesting reading, driving home just how strange an exercise price-gathering is.Take for example a “child’s soft toy/teddy bear”. Agents are told these can be of any type or size, and are asked to record whether the toy is sitting or standing. But importantly — in a piece of writing that evokes some unforgivable past error — the guidance states: “No hand puppets”.An “individual meat pie” must be sold cold, but can be eaten heated. Slices and pasties are acceptable for this category, but a pork pie is not. Quiches, by contrast, are positively laissez faire — any mix of ingredients is allowed, as long as the quiche itself stays in the 340g-450g weight category.Other items are less clear. A “wall hanging mirror” may be any shape as long as it doesn’t exceed 1.5 square metres in size. Last March, agents observed one mirror in this category that cost £1.99, and another that cost £3,695. Both prices were deemed acceptable — thankfully, they use a median average rather than a mean.The ONS is trying to improve how it gathers prices. A potentially significant change — recently postponed — is to use scanner data from supermarkets to capture prices on a previously impossible scale.Zoom in and the basket approach will probably always appear absurd. The hope is that by stepping back, the bigger picture will make more [email protected] More

Chicago Federal Reserve President Austan Goolsbee said Friday he still sees interest rate cuts in the cards though risks are rising to that outlook.
The central banker told CNBC that he’s been hearing more concerns from businesses in his region about the impact of tariffs.
“If we can continue to make progress on inflation over the long run, I believe that rates 12 to 18 months from now will be lower than where they are today,” he said.

Chicago Federal Reserve President Austan Goolsbee said Friday he still sees interest rate cuts in the cards though risks are rising to that outlook.
Speaking two days after he and his colleagues again voted to keep short-term rates steady, Goolsbee told CNBC that he’s been hearing more concerns from businesses in his region about the impact of tariffs and their potential to raise prices and slow growth.

“When you got a lot of uncertainty, I do think you need to wait to see some of these things get cleared up on the policy side,” the central banker said during a “Squawk Box” interview. “I’m out talking to business people and civic leaders throughout this region, and there’s been a decided turn in these conversations over the last six weeks, of anxiety, of pausing, waiting on capital projects, capex, etc., until they figure out tariffs, other fiscal policy.”
Nevertheless, Goolsbee said he still expects future rate cuts even if the Fed is taking a wait-and-see approach for now as issues play out over President Donald Trump’s tariff plans as well as deregulation and tax cuts.
“If we can continue to make progress on inflation over the long run, I believe that rates 12 to 18 months from now will be lower than where they are today,” he said.
Speaking separately Friday morning, New York Fed President John Williams also noted the high level of uncertainty around decision-making and economic trends, particularly inflation.
“Recent data — both hard and soft — are sending mixed signals. Measures of policy uncertainty have increased sharply in recent months,” Williams said during a speech in Nassau, the Bahamas.

Both policymakers voted with the rest of the Federal Open Market Committee to hold the short-term fed funds rate in a range between 4.25%-4.5%. In its post-meeting statement, the FOMC noted that “uncertainty around the economic outlook has increased” and Chair Jerome Powell used the term “uncertainty” 10 times in his post-meeting news conference.
One question that has come up in recent days has been whether the U.S. economy is headed toward stagflation, or slow growth and rising inflation.
“Tariffs, raise prices and reduce output. So that’s a stagflationary impulse, which is different from saying this is stagflation,” Goolsbee said. “The unemployment rate is barely 4% and inflation is in the 2s. So the hard data that we start from is not the stagflation of the 1970s. It’s just the … the uncomfortable environment is when it’s moving directionally the wrong way.”
FOMC meeting participants kept their projections for two rate cuts through 2025. Markets, though, think the Fed will be more aggressive, pricing in the equivalent of three quarter percentage point reductions, according to CME Group data.

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Flick through sell-side research notes from the end of last year and you’ll find plenty of analysts crowing about “US exceptionalism”, China’s “uninvestability” and Europe’s dull stock markets. In the two months since President Donald Trump’s inauguration, that’s all changed. A Bank of America survey of fund managers this week revealed that equity allocations to the US had fallen by the most on record in March. Money has been flowing rapidly west to east. The valuations of European and Chinese companies finally have uplift.The White House’s tariff-raising agenda, America-first foreign policy and all-round unpredictability has dramatically altered the economic assumptions underpinning long-held market narratives. At home, Trump’s determination to raise import duties, despite concerns over higher prices and supply chain disruption, is sapping business confidence. That’s despite multibillion-dollar commitments by Nvidia and TSMC to invest in chip manufacturing in the US. Indeed, consumers — the basis of America’s recent economic outperformance — are now making cutbacks.Understandably, then, investors are looking for somewhere else to put their cash. In Europe, the president’s threats to Nato have jolted Germany and the EU more broadly to promise more defence spending. This has sparked demand for Europe’s industrial stocks. Some analysts now even speak of “europhoria.”Not all market shifts emanate from Trump. Expensive US stocks were long due a correction. In China, technological advances have rebuilt faith in its private sector. DeepSeek has surprised tech analysts with its advanced artificial intelligence model using cheap chips. On Monday, electric vehicle maker BYD unveiled a battery that can charge in five minutes. Beijing has played a role too. It has stepped up stimulus support for the deflating economy. It has announced a plan to “vigorously boost” weak consumption, but investors want more details.Policymakers are also trying to keep up with the shifting economic and geopolitical sands. Central bankers are flustered. The Bank of Japan, US Federal Reserve and Bank of England all met this week, held interest rates and raised concerns over the uncertain outlook. On Wednesday, reflecting the stagflationary effects of Trump’s on-and-off tariffs, the Fed slashed its growth forecasts and raised its inflation projections. The foggy trade-off between weaker economic activity and higher inflation expectations complicates its decision on interest rates, and raises the risk of a policy error. In Europe, governments are also fretting over how to finance higher defence spending. With Covid-19 debt piles still a drag, further borrowing risks pushing up the cost of credit even further. Though Germany has fiscal room, its spending plans have already pushed up European bond yields. In China, the need to bolster consumer demand may be affected by a desire to hold back fiscal firepower to support exporters, depending on how the trade war with America advances. The prospect of retaliatory tariff measures also somewhat damps the growth outlook in the EU and China.In uncertain times, it may be tempting to lean on the optimistic market themes that have developed in Europe and China. But it will still be some time before either can exert the level of influence America has across the global economy and financial markets. A weaker economic outlook in America tends to dent global prospects at large. Investors burnt by the recent plunge in the peerless S&P 500 face an uphill battle to recoup losses by investing abroad. Many will hope the US regains its poise. Even then, the danger is that the recent loss of confidence in America’s exceptionalism leaves a lasting mark. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT. A fire near Heathrow in west London has shut the airport, causing travel chaos around the world. We will bring you the latest and this is what else we are covering: Plans to transfer defence powers from USDisney’s controversial Snow White remakeTrump’s assault on the US’s liberal eliteAnd can Ozempic become a weapon of war?Hundreds of thousands of airline passengers face delays and cancellations today after a fire near London’s Heathrow forced the airport to close.More than 1,300 flights have been cancelled following the fire at an electrical substation near the airport which blazed throughout the night. The West London fire brigade said it brought the fire “under control” early this morning but that the cause of the blaze was not yet known.A total of 679 flights were scheduled to land and 678 flights were scheduled to take off from Heathrow today, according to data from Flightradar24, an aviation tracking service. Planes arriving from North America and Asia earlier this morning were redirected to other airports in the UK and across Europe, including Shannon in Ireland, Frankfurt in Germany and Paris Charles de Gaulle after the unprecedented outage.Heathrow, which last year handled nearly 84mn passengers, is now facing questions over how a fire at one electrical substation could knock out its entire operations for 24 hours. An executive said that while the airport did have backup power options for its key systems, these did not all necessarily kick in immediately. Our live blog is following developments and will be updated throughout the day.And here’s what else we’re keeping tabs on today and over the weekend:Germany: The country’s upper house of parliament is expected to pass a historic constitutional reform to borrowing rules, including a €500bn fund for infrastructure and de facto unlimited spending for defence and security.Monetary policy: Federal Reserve Bank of New York president John Williams gives a speech in Nassau, Bahamas. Chile‘s central bank is expected to hold its benchmark interest rate at 5 per cent.China Development Forum: Global business leaders gather in Beijing for the annual conference, which begins on Sunday.How well did you keep up with the news this week? Take our quiz.Five more top stories1. Europe’s biggest military powers are drawing up plans to take on greater responsibilities for the continent’s defence from the US, including a pitch to the Trump administration for a managed transfer over the next five to 10 years. The discussions are an attempt to avoid the chaos of a unilateral US withdrawal from Nato.2. Israel’s cabinet has voted unanimously to sack the head of the Shin Bet internal security agency, Ronen Bar, after Prime Minister Benjamin Netanyahu said he had lost confidence in his domestic spy chief. Tensions between Netanyahu and Bar have simmered since Hamas’s devastating October 7 2023 attack on Israel.3. Global companies have started to drop climate goals from executive pay plans as the corporate world retreats from ESG initiatives in the face of fierce US opposition and mounting costs. Here are the groups that have changed sustainability targets.4. The live-action remake of Snow White and the Seven Dwarfs has dragged Disney back into the culture wars despite chief executive Bob Iger’s attempts to lower the political temperature. The controversies appear to have dented box office prospects for the film, which opens in cinemas today.5. Deloitte, PwC and KPMG have launched a scathing attack on the Internal Revenue Service, which they accused of “a pattern of arbitrary, capricious and unreasonable conduct” towards multinational companies that risks eroding confidence in the US tax system. The claims about the US tax authority appeared in a court filing this week involving Coca-Cola. Today’s Big Read© Chip Somodevilla/Getty ImagesColumbia University, USAID, the Department of Education and Voice of America have all been targeted in recent weeks by President Donald Trump and his supporters. It is part of a multipronged assault on America’s elite that includes Ivy League universities, judges and Trump’s favourite punchbag — the liberal media. We’re also reading . . . Chart of the daySome content could not load. Check your internet connection or browser settings.Mark Carney, Canada’s new prime minister, is on Sunday expected to fire the starting gun in his country’s general election. Carney will announce the poll less than a fortnight after replacing Justin Trudeau as head of Canada’s Liberal party, which has seen its popularity soar in response to threats of annexation and punitive tariffs from US President Donald Trump. The election campaign will pit Carney against Conservative party leader Pierre Poilievre. Here’s how they stand in the polls.Take a break from the news . . . The FT’s food and drink experts — Jay Rayner, Marina O’Loughlin, Jancis Robinson and Tim Hayward — have a combined century-plus of experience as professional diners and have strong opinions on how to make the most of eating out in 2025. But when those views were sent to a panel of the world’s most esteemed food connoisseurs they were ripped to shreds.© Tim BouckleyRecommended newsletters for youOne Must-Read — Remarkable journalism you won’t want to miss. Sign up hereNewswrap — Our business and economics round-up. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe US has imposed sanctions on two Chinese petrochemicals groups for allegedly importing Iranian crude oil, in the latest salvo of President Donald Trump’s “maximum pressure” campaign on the Islamic republic.The state department said it had put sanctions on Huaying Huizhou Daya Bay Petrochemical Terminal Storage for violating American sanctions by buying and storing Iranian crude oil shipped to China on a ship already under sanctions.The Treasury department separately put sanctions on Chinese refiner Luqing Petrochemical for buying Iranian crude oil transported on vessels linked to the Houthis and Iranian military.It said the sanctions on Luqing Petrochemical marked the first time Washington had imposed such penalties on a “teapot” refiner — the private Chinese refineries that are the main buyers of Iranian crude oil.“Teapot refinery purchases of Iranian oil provide the primary economic lifeline for the Iranian regime, the world’s leading state sponsor of terror,” said Scott Bessent, US Treasury secretary. “The United States is committed to cutting off the revenue streams that enable Tehran’s continued financing of terrorism and development of its nuclear programme.”Trump this month wrote to Iran’s supreme leader to urge him to reach a deal with the US on Tehran’s nuclear programme. He has threatened “terrible” consequences if Tehran does not agree to a diplomatic effort but Iran has not responded to the overture.Last month, Trump said he was reimposing his “maximum pressure” campaign on Iran, which would include sanctions on entities shipping Iranian oil to China. The goal is to force Iran to the negotiating table under more favourable terms to the US, though it is not clear if Tehran is interested in doing so.Iran’s crude oil exports have more than trebled in the past four years, from a low of 400,000 barrels a day in 2020 to more than 1.5mn b/d in the first three quarters of 2024, with nearly all shipments going to China, according to the most recent information from the US Energy Information Agency.Iran, a member of the Opec oil-exporting cartel, has total production capacity estimated at about 3.8mn b/d. China, the world’s largest buyer of foreign crude oil, imported about 11mn b/d last year. Iran’s hardliners have been working to undermine the country’s reformist President Masoud Pezeshkian and preclude negotiations with the US. Trump has tapped his special envoy Steve Witkoff to oversee the Iran file, and his team has begun some work, but diplomats say Trump has not yet designated a daily point person for the issue.“So long as Iran attempts to generate oil revenues to fund its destabilising activities, the United States will hold both Iran and all its sanctions-evading partners accountable,” said Tammy Bruce, state department spokesperson. The US said the sanctions were part of a stepped-up campaign designed to eliminate Iranian oil exports, including to China. The Treasury said it was also putting sanctions on 19 other entities, including the Chinese and Hong Kong owners of ships that are part of a “shadow fleet” of vessels that supply refineries in China.The US remains concerned about co-operation between Tehran and Beijing over everything from oil supplies to Chinese exports that facilitate weapons development in Iran.The Financial Times reported in January that two Iranian vessels carrying a chemical ingredient for missile propellant were preparing to sail from China to Iran in the following weeks. The first vessel, an Iranian-owned ship called the Golbon, later departed China and has since arrived at Bandar Abbas, a port in southern Iran on the Gulf.Chinese foreign ministry spokesperson Mao Ning on Friday slammed the US’s “imposition of illegal unilateral sanctions” and called on Washington to “stop interfering with and undermining normal trade and co-operation” with Iran.“China will take all necessary measures to firmly protect the legitimate rights and interests of Chinese enterprises,” she added.Additional reporting by Wenjie Ding in Beijing More

This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. Tesla announced yesterday that it is recalling most of its Cybertrucks — sending the shares down further, despite Secretary of Commerce Howard Lutnick’s helpful suggestion that investors buy the stock. But another Elon Musk company, X, née Twitter, has shot back up to its original $44bn valuation, after dropping to an estimated less than $10bn sometime last year. Is Musk better at social media than cars? Email us: [email protected] and [email protected]. Scott Bessent’s debt maturity problemTreasury secretary Scott Bessent has a tough choice to make this year. Prior to taking office, he and some of Donald Trump’s other economic advisers criticised his predecessor Janet Yellen’s handling of the Treasury market. Yellen had shifted the mix of Treasury issuance towards short-term bills and away from long-term bonds. It was “quantitative easing by another name”, the critics said. In a widely circulated paper, incoming chair of the Council of Economic Advisers Stephen Miran argued that issuing more short-term Treasuries artificially lowers longer-term yields, allowing the government to run up bigger deficits and stimulate the economy without spooking bondholders.But two months into his term, Bessent is doing exactly what Yellen did. In a recent interview, he said he would keep the bias towards bills in place, and that shifts in the maturity of the debt profile would be “path dependent”. In fact, he’s doubling down. Treasury projections have the department maintaining Yellen’s dollar quantity of long-term debt in the future, rather than just the share of issuance, even though the debt is projected to grow. “Proportionately, he will be issuing even less long-term debt than Yellen,” says Darrell Duffie of the Stanford Graduate School of Business.There are two interpretations of Bessent’s decision. First is that issuing a higher proportion of short-term debt was never a big deal to begin with, as many have argued. The second is that his criticism of Yellen was valid, but Bessent now labours under the same pressures she did. It is likely that the Trump administration will have to expand borrowing this year to pay for tax cuts. Bessent may want to use the Yellen strategy to keep the market calm while that happens.But there is a tension here. Investors are worried by the size of the deficit — which has risen fast while interest payments have ballooned. If the deficit does not come down, or if inflation heats up again for some other reason, a secular trend of rising Treasury yields is possible. Indeed, this is what many analysts expect, not just for the US but in most rich nations. If that’s the case, the Treasury will regret not having issued more long-term debt at today’s rates.And there is a potentially worse scenario. If there is a political deadlock over fiscal policy or bond buyers balk at Trump’s fiscal plans (did someone say vigilante?), there could be a big rise in bond yields. That could happen precisely because the Treasury needs to issue debt quickly to avoid default. If so, they will face even higher borrowing costs.In sum, if you believe that Yellen and Bessent have engaged in “QE by other means”, you believe they have kept yields lower in the short term, at the cost of not locking in stable long-term financing at what might turn out to be attractive rates.It’s possible that Bessent’s hands are already tied. If he were to shift to longer-term issuance, the market might revolt — investors are currently running away from duration.Bessent is working under time pressure, too. The Treasury is quickly burning through its account at the Fed, which could hit empty this summer. But until the debt ceiling is lifted or suspended, no new debt can be issued. That means that once the ceiling is out of the way, a lot of new issuance will have to follow. That would be a good opportunity to extend the maturity profile of the national debt — if the market will tolerate it.(Reiter)Tariffs, corporate guidance and earnings estimatesThe stock market runs on expectations. What do the next quarter’s, the next year’s, the next five years’ of profit look like? The machine that sets the expectations has two parts: what companies say about the future (known in the trade as “guidance”) and the earnings targets that financial analysts, having listened to what the companies say, collectively establish (known as “consensus estimates”). Stocks rise on strong guidance, rising consensus estimates and estimate-beating performance, and fall on their opposites.Guidance is primary. The main input to an analyst’s estimate of what a company is going to earn is what it says it is going to earn, either directly or by insinuation. So while Wall Street number crunchers have tried to model the earnings impact of tariffs — a moving target as policy evolves — they will be mostly guessing until the companies tell them what to think.So, what have companies said, in aggregate? The S&P Global corporate credit research team, led by Gareth Williams, has read through the quarterly comments of 533 global companies trying to figure this out. As it turns out, companies haven’t said much, or at least not much that is useful. He summed up to me as follows: What really leapt out at me after reading 533 earnings calls was, one, tariffs are mostly not in guidance . . . so worst case outcomes will lead to a big wave of earnings revisions. Two, the scale of the adjustment we’ve already seen in terms of localising supply chains and, particularly for US companies, reducing production exposure to China. Three, companies seem pretty optimistic that they can pass tariff increases on via prices, which will mean inflation or — if customers resist — margin pressure.This should not be surprising. The companies are not including tariffs in their guidance for the very good reason that they don’t know what the tariffs are going to be, because the Trump administration keeps changing its mind. Some companies, such as Walmart, have simply ignored the impact of tariffs in setting 2025 targets. Others have done the best they can with the information they have. Here for example is the burrito chain Chipotle, speaking at the beginning of February:Our guidance does not include the impact of the new tariffs on items imported from Mexico, Canada and China. We source about 2 per cent of our sales from Mexico, which includes avocados, tomatoes, limes and peppers. And less than 0.5 per cent of our sales from Canada and China. If the recently announced tariffs go into full effect, it would have an ongoing impact of about 60 basis points [0.6 percentage points] on our cost of sales.Those are useful figures analysts will be glad to have. If you do the arithmetic, you’ll see that this guidance implies 25 per cent tariffs on the three countries mentioned. But will the tariffs end up at that level? Chipotle doesn’t know, you don’t know, and President Trump doesn’t know, either. Why does all this matter? Because sooner or later tariffs will be in guidance, and when that happens, consensus expectations will probably fall and, presumably, stock prices will have to adjust. The current consensus expectation for 2025 earnings growth for the S&P 500 is 11 per cent, according to FactSet. But if that is mostly a pre-tariff number, that has to come down. Here is Citigroup equity strategist Scott Chronert: We expect that many analysts are waiting for management guidance for modelling tariffs . . . individual company complexity makes modelling tariff impacts more difficult than one might expect. In turn, we suspect that the Q1 reporting period will show a negative revision bias such that aggregate consensus estimates will probably move lower for the full year.That has to be bad, right? And indeed, the proportion of estimate revisions that are upward revisions has fallen sharply recently. This chart is from Chronert’s team:It doesn’t have to be all that bad, though. First of all, analysts may be nudging their numbers down even in the absence of help from companies, just to be conservative. Three months ago, the expectation was for 14 per cent growth on the S&P. And of course the US market, which as you may have noticed has been down lately, may be ahead of the analysts on this. Chronert also argues that when the revisions do come, the sheer relief of lower uncertainty may give stocks an upward push. As we have said in this space before, what this market is really desperate for is clarity.One good readNew cosmic mysteries.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More