Reports have emerged that U.S. corporations are hesitating to even mention the word 'tariff' in official settings in order to avoid offending President Donald Trump. Despite the increased expense burden due to high tariffs on Chinese products, the assessment is that business risks could grow if they fall out of favor with the president. They are also responding by indirectly explaining the impact of tariffs or lowering their expression levels during earnings announcements or interviews.
The New York Times (NYT) reported on the 21st (local time) that President Trump has launched immediate attacks on companies that criticize tariffs through social media (SNS) and analyzed that many publicly traded corporations are now walking a tightrope between the obligation to disclose the financial impact of tariffs and the political risks.
There are also real cases emerging. Doug McMillon, CEO of Walmart, recently hinted at the possibility of price increases during an earnings announcement, stating, "It’s difficult to absorb all the pressure," while the chief financial officer (CFO) also mentioned in a CNBC interview that prices for certain items may rise. In response, President Trump publicly warned on his SNS platform Truth Social, saying, "Do not blame tariffs, Walmart," and "Absorb the tariffs. Both I and the customers are watching."
Another case that faced a presidential backlash after clearly mentioning tariffs is the toy company Mattel. In its earnings announcement earlier this month, Mattel stated that due to the 145% tariff imposed on Chinese parts, it was forced to raise product prices and withdrew its annual earnings guidance, citing uncertainty in trade policy. In response, President Trump declared, "I can impose a 100% tariff on Mattel," and made strong statements, saying, "I will not allow any toys to be sold in the U.S."
Crisis communication experts have noted that many corporations are currently recognizing this situation. Brett Bruen, president of the consulting firm Global Situation Room, said, "It is now essential to consider political risk in CEO training courses," and pointed out that "politics has penetrated nearly every area of business."
There are also movements within corporations to avoid the expression 'tariff' altogether. Dennis Dalhopp, a researcher at the business think tank Conference Board, stated that using more neutral terms like "sourcing expense," "supply chain expense," and "input expense" is the basic strategy of consultants. There are even increasing cases where specific mentions of tariffs are designated to be addressed by CFOs instead of CEOs.
This strategy is also evident in quarterly earnings announcements from retailers. Richard McPhail, CFO of Home Depot, recently remarked, "We will maintain the current price level," thus avoiding comments related to tariffs. Brian Cornell, CEO of Target, also described the issue of tariffs indirectly, stating, "Price increases are a last resort." Compared to Cornell’s clear statement in March that tariffs on imported products from Mexico would lead to increased prices for vegetables and fruits, his position has become much more cautious.
Experts point out that such 'playing it safe' may be effective for short-term defense but ultimately amounts to avoiding the problem in the long run. Stephan Meyer, a department chair at Columbia Business School, criticized, "Corporations have an obligation to explain financial risks to investors, and diluting information for political considerations is neither honest nor transparent."
David Schwartz, a senior equity analyst at Morningstar, said, "It is clear that corporations are afraid of Trump, as evidenced by the fact that even relatively minor comments from companies like Walmart and Mattel can provoke public attacks from President Trump." He pointed out that "corporations are avoiding assessments about the impact of tariffs and are reluctant to take any stance."
Jeffrey Sonnenfeld, a professor at Yale School of Management, said, "While it is understandable that company CEOs individually avoid confrontation, collective action is needed to influence politics." He urged for collective responses, stating, "If trade associations do not confront the facts, both the public and legislators will not understand the realities that corporations face."