The earnings season tariffs preview and who stands to lose most

Plus, Texas justice comes for Wall Street with energy markets manipulation suit

In today’s edition:

— Earnings season was rife with forecasts for profit hits from tariffs, and what is to come

— Texas moves ahead with lawsuit charging Wall Street giants with energy market manipulation

— The woman working to bring buffalo herds back to the American West

— Fire clouds and fire tornadoes on the rise in the Western states

— Measuring sea level rises over the last 200 years yields some surprises

Photo: Ford.

President Donald Trump’s tariffs warning to U.S. pharmaceutical companies this morning sent a chill through the industry, especially after executives watched their counterparts in other businesses provide a stark preview in second quarter earnings of the billions of dollars in profit hits they expect to come in the next few quarters.

U.S. automakers took the lead in forecasting, with just the Big Three alone predicting up to $7 billion in hits to earnings for the rest of the year. Ford F 0.00%↑ CEO Jim Farley said that long-term tariffs would result in a structural shift in the global auto industry to regional markets in Europe, Asia, South America and the U.S. where manufacturers produce and sell vehicles on a local level to offset trade costs.

Other companies, from Apple AAPL 0.00%↑ to Caterpillar CAT 0.00%↑ forecast hits of more than $1 billion each for the coming year, though Apple benefited somewhat from forward sales of its iPhones before the tariffs were enacted. Renewable energy companies also suffered as prices for minerals and solar panels from Asia — particularly China — rose amid trade tensions.

The second quarter was really just the prediction phase of the impact. Nobody really knows how long or severe the tariffs will actually be, and for the time being investors have been willing to bet that they are still mostly a negotiating tactic by the president. If a China trade deal is as close as some White House leaks suggest, then Wall Street might be able to put the whole tariff issue to rest by football season.

But the big manufacturers are, at least for accounting purposes, expecting the worst, as their second-quarter forecasts preview. While predictions and estimates of profit losses were ubiquitous over the past few weeks, as well as evidence of rising prices, there was one phenomenon that was conspicuously absent.

That would be any mention of investment in more manufacturing, which is supposedly the idea behind tariffs in the first place. Perhaps that is still to come, but so far, the impact of tariffs is looking depressingly predictable.

Don’t forget to contact me directly if you have suggestions or ideas dcallaway@callawayclimateinsights.com.

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Texas justice comes for Wall Street