S&P Global — 31 January 2025
Daily Update: January 31, 2025
Identifying the Impact of Trump’s Tariffs on Companies
By Nathan Hunt
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Tariffs are a blunt instrument. While they play a role in trade and industrial policy for many countries, their potential impact on individual companies can be hard to ascertain. With the return of President Donald Trump to the Oval Office, the possibility of a tariff war is once again on the minds of policymakers, investors and corporate executives. Researchers in S&P Global Market Intelligence’s Quantitative Research and Solutions group have introduced three new tools to help understand the impact of tariffs on specific companies. The analysis was tested against data from 2017–2019, the period of the previous Trump tariffs, excluding the additional disruptions of the COVID-19 pandemic.
"Combining unique alternative data and AI allows us to quantify and monitor impacts in near real time, down to the company and product level," said Daniel Sandberg, managing director at S&P Global Market Intelligence. "In today's complex and unpredictable landscape, it's crucial for stakeholders to effectively forecast and nowcast the implications of tariffs on their strategies."
The first tool looks at head count analytics and geo-segment revenue. In practical terms, companies with sizable non-US workforces and significant US sales are disproportionately affected by tariffs. The workforce analysis offers insights into over 220 million employees worldwide, with monthly updates since 2010 covering more than 3.8 million entities. The team looked at the geographical distribution of head count and revenue data to build a model. However, not all industries with large non-US workforces are equally impacted by tariffs; so, the team controlled for industries likely to be targeted by tariffs, such as automobiles and technology equipment, and industries less likely to be impacted, such as banking and pharmaceuticals. Overall, the team found that companies with a high percentage of international head count and significant US revenue underperformed their peers by 386 basis points during the previous Trump administration, while firms with an above-median US head count and below-median US revenue outperformed peers by more than 11%.
The second tool looks at company connections from business relationships, specifically in terms of supply chains. The team found that industries affected by tariffs typically experience greater disruptions in their supply chains compared with their counterparts. The company connections dataset analyzed partnerships, supplier relationships and customer connections pulled from regulatory filings. The dataset was enhanced to estimate the economic importance of each relationship, even if it is not disclosed. The team found that tariff-targeted companies exhibited about 17% supply chain disruption from 2017 to 2019, 5 percentage points more than non-target peers.
Finally, the team leveraged ProntoNLP AI to analyze earnings call transcripts to detect sentiment related to mentions of tariffs and supplier diversification. In this case, the team analyzed the net negativity of mentions through 2024. Talk of supplier diversification spiked during and after COVID lockdowns. Net negativity related to tariffs climbed in the second quarter of last year, before easing in the third quarter.
Today is Friday, January 31, 2025, and here is today’s essential intelligence.
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—Read the article from S&P Global Market Intelligence
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—Read the article from S&P Global Ratings
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—Read the article from S&P Global Market Intelligence
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—Read the article from S&P Global Commodity Insights
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—Read the article from S&P Global Commodity Insights
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—Listen and subscribe to the podcast from S&P Global Market Intelligence
In-person: ESG Insider Live: Navigating the Future of Sustainability (Feb. 6, 2025)
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—Register for the webinar from S&P Global Sustainable1