Just as investors have faced heightened volatility, business leaders are navigating a similarly complex environment. According to The New York Times and FactSet, 87% of corporate earnings calls this season referenced the word “uncertainty,” up from 38% in the previous three months—a theme echoed by many of the companies we look at.
Tariffs front and centre
While many businesses had already begun diversifying manufacturing and sourcing in response to US tariffs introduced during the previous Trump administration, renewed uncertainty is accelerating those efforts. Take Floor & Décor, a US hard surface flooring retailer: in 2018, ~50% of its products were sourced from China. By the end of FY25, that figure is expected to fall to the low- to mid-single-digits, though most of its sourcing will remain outside the US. Another example is Yeti, which sells drinkware and coolers. While ~80% of its drinkware was produced in China as at the end of FY24, it is targeting a reduction to ~10% by the end of FY25, with most of that capacity being relocated elsewhere in Asia.
However, for many, shifting production remains impractical, with most companies indicating plans to pass on tariffs through price increases.
Bigger ripple effects?
The larger impacts may be indirect: falling consumer confidence, delayed capital decisions, and a general pause in big-ticket spending were cited across sectors—from global luxury to US industrial spending to housing. Much of this stems from a lack of US policy certainty and high interest rates. As Assa Abloy, a global supplier of locks and doors put it: “The challenge with the tariffs is a little bit that it changes every day…So, the answer I can give you is only the answer as it is today, as the tariffs stand…this morning, because perhaps they change this afternoon”.
Some tailwinds too
Not all companies are struggling. Discount retailer Dollar General is benefitting from trade-down by lower-income consumers. Fixed income trading platform MarketAxess is seeing gains from increased market volatility, with average daily credit trading volumes up >30% in April—an improvement from flat growth in the two quarters to March. And some international companies we’ve spoken with have cited rising anti-American sentiment as a potential commercial tailwind.
