Earnings for the second quarter will heat up this week, with more at stake than usual as they represent a fuller picture on how tariffs are actually affecting businesses and consumers.<\/p>\n
The top U.S. banks will report, starting with\u00a0JPMorgan Chase<\/a>,\u00a0Citigroup<\/a>\u00a0and\u00a0Wells Fargo<\/a>\u00a0on Tuesday. In the tech sector, streaming leader\u00a0Netflix<\/a>\u00a0and chip giant TSMC report on Thursday. Among industrials, results from\u00a0Alcoa<\/a>, GE Aerospace, and\u00a03M<\/a>\u00a0are also due this week.<\/p>\n The consensus estimate on Wall Street is that earnings from S&P 500 companies grew just 4% in the second quarter from a year ago, the slowest pace since 2023 and down from first-quarter growth of 13%. <\/p>\n That comes as President Donald Trump\u2019s trade war has yet to fuel a big inflation inflation<\/a> spike, though tariffs are expected to show up more in economic data later this year.<\/p>\n The consumer price index will come out on Tuesday, and analysts expect a 0.3% monthly increase for June, up from May\u2019s 0.1% pace. The producer price index is due on Wednesday, and is also expected to show acceleration to 0.2% from 0.1%.<\/p>\n The uptick could be a due to companies running out of inventories that were stockpiled ahead of the tariffs, forcing them to incorporate more of those costs in the price of their goods.<\/p>\n Capital Economics said last week that Wall Street doesn\u2019t see Corporate America shouldering much of the future tariff burden, and exporters don\u2019t appear to be cutting their prices aggressively to offset the tariffs.<\/p>\n A survey published last week by KPMG<\/a> found more than 80% of companies plan to hike prices in the next six months, and 73% said they have already passed on up to half of tariff-related costs to consumers. But that was still not enough to preserve earnings, as 57% of firms said their gross margins are falling.<\/p>\n Meanwhile, economists at Goldman Sachs expect companies\u00a0will pass on 70% of tariff costs to consumers via higher prices, according to a note<\/a> earlier this month.<\/p>\n If that pans out, it would be a heavier blow than some earlier forecasts<\/a>. Chris Harvey, Wells Fargo<\/a> Securities\u2019 head of equity strategy, said if tariffs settle around 10%, then a third of the cost could be eaten by the importer, a third by companies, and a third by consumers.<\/p>\n \u201cThat\u2019s not a big impact,\u201d he told CNBC<\/a> on May 30.<\/p>\n That 10% target looks increasingly optimistic, as Trump has continued to push for aggressive rates. Goldman Sachs expects the effective rate to eventually settle around 17%.<\/p>\n But companies that pass on tariff costs also risk a backlash. The KPMG<\/a> survey said 34% of companies said customer pushback is a challenge, and 45% said sales are already beginning to dip.<\/p>\n And there\u2019s one consumer in particular that companies need to avoid annoying: Trump. In May, he warned Walmart<\/a> not to hike prices after the retail giant said on an earnings call that prices could go up on a wide array of products.<\/p>\n