Q2 Earnings Preview: Tariffs Begin to Bite, But Tech May Cushion the Blow

As the second-quarter earnings season begins, analysts at Barclays warn that U.S. companies—especially outside the tech sector—are beginning to feel the pressure of President Trump’s renewed tariff agenda. In a recent client note, Barclays analysts flagged rising trade tensions as a source of earnings deterioration, with clear signs of margin compression and downward revisions across cyclical sectors.

What’s Driving the Shift?

Post-March Revisions: Since Trump intensified his tariff push in March, estimate cuts for S&P 500 firms—excluding tech—have accelerated at a pace notably “worse than average.”

Inflation Creep: Tariff-driven cost pressures are already showing up in consumer inflation data, particularly in categories like apparel, toys, and household goods, which are heavily reliant on imports.

Sector Impact: Discretionary, materials, and industrials stocks are bearing the brunt. Barclays expects contraction in per-share earnings for many companies in these cyclical sectors.

Why Tech May Be the Lifeline Despite the headwinds, mega-cap technology firms are expected to carry much of the earnings growth load. Their global scale, pricing power, and leaner supply chains offer insulation from the tariff ripple effects.

You can explore how these dynamics play out at the stock level using the Ratios (TTM) API. This includes up-to-date profitability ratios such as operating margin, net margin, and return on equity—critical metrics for spotting which firms are navigating the cost pressures most effectively.

For broader sector-level impact, the Sector Historical API offers insight into sector-wise performance across time—ideal for tracking how industries like Industrials and Materials are reacting to policy shifts.

Final Thought Q2 may mark a turning point in how trade policy filters into corporate fundamentals. As tariffs expand in scope, especially into pharma and consumer staples, investors will need to look beyond headline EPS and dig deeper into margins, cost of goods, and pricing resilience. For now, tech remains the earnings anchor—but even that could change if trade tensions escalate further.