Delta Air Lines planes park at the Fort Lauderdale-Hollywood International Airport on April 9. Delta Air Lines pulled back its full-year financial guidance and warned that 'growth has largely stalled' given the uncertainty over how developments on global trade will affect the economy.Joe Raedle/Getty Images
Delta Air Lines Inc. DAL-N and Walmart Inc. WMT-N were among the companies who this week said they couldn’t offer financial forecasts as they navigate through the fog of a trade war.
Since coming into office in January, U.S. President Donald Trump has introduced, paused and reintroduced tariffs across a number of industries and countries. On Wednesday, he said high tariffs that went into effect that day would be pulled back for many countries and replaced by an across-the-board 10 per cent import levy, while raising the tariff on Chinese goods to 125 per cent.
That chaotic policy environment, and its effects on the broader economy, have made it hard to predict how consumer spending will look this year, according to some U.S. companies.
“Given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook,” Delta chief executive officer Ed Bastian said in a news release that accompanied first-quarter earnings Wednesday.
In a call with analysts, Mr. Bastian said tariffs could hit its capital expenditures as it is expecting to receive new equipment from Airbus later this year. The manufacturer is based in the European Union, which Mr. Trump said last week would be subject to 20-per-cent tariffs.
“These times are pretty uncertain,” Mr. Bastian said on the call. “And if you start to put a 20-per-cent incremental cost on top of an aircraft, it gets very difficult to make that math work.”
Walmart said Wednesday it expected its first-quarter sales growth would be 3 to 4 per cent, but it could not provide guidance on operating income for the quarter because of factors that included tariffs.
At an investor presentation, CEO Doug McMillon described the situation as “fluid” but said the company had experience navigating new tariffs starting in 2017. Mr. Trump introduced some tariffs in his first term, including on washing machines.
Mr. McMillon said that two-thirds of what Walmart sells is made, grown or assembled in the United States, and that the company would manage the mix of where it imports its other products as needed.
“We’ll take it a day at a time,” he said.
Uncertainty was also a keyword in the minutes of a U.S. Federal Reserve Board meeting released Wednesday. Tariffs were discussed as a factor driving higher costs for businesses, as well as leading to delays in hiring decisions.
“Participants judged that inflation was likely to be boosted this year by the effects of higher tariffs, although significant uncertainty surrounded the magnitude and persistence of such effects,” said the minutes of the federal open market committee meeting held on March 18 and 19.
The volatility even played out in Goldman Sachs’ prediction of whether or not the United States would fall into a recession this year. In the morning the firm said in a note that it estimated there was a 65-per-cent chance that tariffs would drive the U.S. economy into negative territory.
Just hours later, after Mr. Trump announced a change in the tariff rates, Goldman lowered its estimate to 45 per cent.