While tariffs on China have declined from 145% to 30%, the headwind to corporate earnings from tariffs remains significant because of the overall jump in the average tariff rate from 3% in January to 18% today, see the first and second chart below. We are already beginning to see weakness in the economic data with a significant decline in the earnings revisions ratio since Liberation Day, see the third chart.
Sources: White House, China Ministry of Finance, Macrobond, Apollo Chief EconomistNote: Includes IEEPA tariffs on Canada, Mexico, and China (with USMCA exemptions); April 2 “reciprocal” tariffs; and steel, aluminum, auto, and auto parts tariffs. Tariff revenue estimate uses an elasticity of -0.997 and a noncompliance rate of 8 percent. Sources: US Census Bureau; Historical Statistics of the United States: Colonial Times to 1970, Part II; US International Trade Commission, “U.S. imports for consumption, duties collected, and ratio of duties to values, 1891-2023, (Table 1)”; Tax Foundation calculations; Apollo Chief EconomistNote: Earnings revisions ratio measures how many upward revisions to earnings estimates analysts are making versus downward revisions over a given period. Above 0.5 more upgrades than downgrades and below 0.5 more downgrades than upgrades. Sources: Bloomberg, Apollo Chief Economist
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