CFOs Face Margin Pressures as Q2 Earnings Season Begins Amid Tariff Uncertainty

As the Q2 2025 earnings season commences, CFOs are navigating a complex landscape shaped by new tariffs, shifting consumer demand, and heightened market scrutiny. The first quarter benefited from a pull-forward of demand ahead of anticipated tariffs, but the second quarter will test companies’ ability to manage margin pressure, supply chain disruptions, and evolving trade policy risks.

Major U.S. banks are among the first to report results this week. Analysts will be closely focused on how President Donald Trump’s import taxes are affecting corporate profits. Key themes include the impact of tariffs and trade policy uncertainty, with analysts watching for margin pressures, signs of slowing consumer demand, how companies are preparing for new tariffs, and how they are handling levies that have already been implemented.

Markets have remained relatively calm heading into Q2, with major indices like the S&P 500 and Nasdaq recently reaching new highs. Q2 earnings are expected to reveal trends among firms in tariff-affected industries. Companies with higher costs and tighter margins may be forced to absorb more tariff expenses, while those with stronger competitive advantages may be able to pass more costs onto consumers.

The momentum that propelled the S&P 500 to nearly an 11% gain in Q2 and more than 7% year-to-date will be tested this week. Two key dynamics are the unofficial start of earnings season with Q2 reports from the financial sector, and a series of U.S. economic data releases, such as the Consumer Price Index (CPI).

Overall earnings growth is expected to decelerate from last quarter, but estimates have stabilized in recent weeks after falling sharply in early April. The Q2 earnings bar is relatively low. On the economic front, core CPI is expected to increase 0.25% month-over-month and headline CPI to rise 0.29% month-over-month, reflecting moderate strength following May’s soft print. Tariff-related pressures are beginning to show in select goods categories in the PCE, but the overall passthrough into CPI remains limited for now as firms hold off on retail price hikes.

Regarding CFO sentiment, Deloitte’s Q2 2025 CFO Signals report found that growth expectations declined across every key operational metric, with finance chiefs lowering projections for revenue, earnings, and capital investments. However, the current environment is described as a recalibration, not a retreat. Finance leaders are doubling down on fundamentals: sharpening focus on growth drivers, managing controllable risks, and staying active in M&A.

In summary, analysts and investors are keenly interested in how CFOs address the challenges posed by new tariffs, shifting consumer demand, and market scrutiny. The focus will be on margin pressures, consumer demand, and how companies are managing tariff-related costs. The economic data releases, particularly the CPI, will provide additional context for understanding the financial health of companies and the broader economy. CFOs are expected to provide insights into their strategies for navigating these challenges and maintaining growth in a volatile environment.