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Companies see cost, price increases from global tariffs

Nearly half of 93 companies reviewed in a new analysis have seen operating costs rise or have been forced to pass on price increases to consumers as a result of global trade spats and tariff impositions, according to Panjiva Research, a division of S&P Global Inc.

Panjiva found in a review of earnings transcripts provided by S&P Global Market Intelligence, also owned by S&P Global Inc., that 43% of companies reported increases in costs as a result of various trade spats, while another 44% said they have passed along price increases to consumers as a result of tariffs.

The July 27 Panjiva report analyzed second-quarter earnings comments from 93 companies across 10 sectors, including automobiles, apparel, electronics, food and drink, healthcare, logistics, metals and mining, consumer goods, and conglomerate and specialized capital goods.

Company comments include those made by Whirlpool Corp., Ford Motor Co., V.F. Corp., General Mills Inc. and Tractor Supply Co. in their second-quarter earnings releases, many of whom have raised concerns with the Trump administration's tariffs targeting countries they heavily source from, including China and Mexico.

According to the report, four healthcare companies, or 80% of those reviewed in the sector, have seen cost increases, as have 11 consumer goods companies, or 69% of those analyzed in that sector, including Sherwin-Williams Co. In addition, five auto companies, or 56%, including Fiat Chrysler Automobiles NV and General Motors Co., also reported cost increases.

Several companies reported passing on price increases to consumers. Seven capital goods conglomerates, or 78% of those reviewed in that sector, have passed along price increases to consumers, which Panjiva attributed to higher pricing power, as have six metals and mining companies, or 55%, and eight consumer goods companies, representing half of those analyzed in the sector, including AB Electrolux and Whirlpool.

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Three of the four food and drink companies analyzed, including Altria Group Inc. and General Mills, saw no impact or a minimal or positive impact as a result of the tariffs.

"I'm not so surprised about the results given it's a small sample and that it seems a lot of companies are only talking about the impact of tariffs already in place," Chris Rogers, research director for Panjiva, said in an interview.

The comments are based on the 25% reciprocal tariffs the U.S. and China imposed on one another on July 6 as well as the prospect of 25% duties by the U.S. on imports of automobiles and auto parts following the conclusion of the U.S. Commerce Department's Section 232 investigation into their imports.

The 25% tariff the U.S. imposed on $34 billion worth of Chinese imports targeted imports of cars, automotive products, industrial parts and construction equipment. China's retaliatory 25% measure on $34 billion of American exports, meanwhile, targeted soybeans, automobiles, meat, fish and produce. The U.S. is also weighing an additional 25% tariff on $16 billion of Chinese imports, causing further concern for companies sourcing from the Asian nation.

The analysis also took into account the United States' 25% tariff on steel imports and 10% tariff on aluminum imports, which went into effect March 23.

The U.S. metals tariffs, however, touch on many components of production, shipping and other facets of business across many industries. Making matters worse, shipments of steel aluminum from Canada, Mexico and the European Union were not given permanent exemptions from the tariffs by the U.S. and went into effect June 1.

The EU, Mexico and Canada imposed their own tariffs against the U.S. in retaliation shortly thereafter, targeting a number of U.S. exports, including blue jeans, bourbon, pork, cheese and motorcycles.

Coca-Cola Co., said in a July 25 second-quarter earnings call that it was raising prices on carbonated beverages in North America to offset rising costs attributed to the tariffs on aluminum, which is used for its cans.

One-third, or three automobile companies reviewed in that sector, have also acknowledged lost sales as a result of the tariffs, according to the report.

Meanwhile, 20% of companies have seen a neutral or positive impact, according to Panjiva.

The Trump administration has also proposed an additional 10% tariff on $200 billion of 6,031 imports from China, including handbags, hats, furniture and personal computer products. A public hearing on that proposal is scheduled for late August.

The U.S. has threatened to impose tariffs on an additional $200 billion of Chinese goods should China choose to retaliate against the first tranche.