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Good morning. As the Q2 2025 earnings season begins, CFOs are navigating a 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. In contrast, 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. For all companies reporting, analysts will be “laser-focused” on how President Donald Trump’s import taxes are affecting corporate profits, according to Morningstar. A key theme is the impact of tariffs and trade policy uncertainty, with analysts closely 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. Morningstar notes that 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, according to Saira Malik, chief investment officer at global investment manager Nuveen. Malik highlighted in a LinkedIn post on Monday two key dynamics: 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) scheduled for release this morning.
Malik adds, “While overall earnings growth is expected to decelerate from last quarter, estimates have stabilized in recent weeks after falling sharply in early April. Still, the Q2 earnings bar is relatively low.”
On the economic front, Josh Hirt, senior U.S. economist at Vanguard, expects core CPI to increase 0.25% month-over-month (2.9% year-over-year) and headline CPI to rise 0.29% month-over-month (2.6% year-over-year), reflecting moderate strength following May’s soft print. “While tariff-related pressures are beginning to show in select goods categories in the PCE, the overall passthrough into CPI remains limited for now as firms hold off on retail price hikes,” he said in an emailed statement.
Regarding CFO sentiment, Deloitte’s Q2 2025 CFO Signals report released last week found that growth expectations declined across every key operational metric, with finance chiefs lowering projections for revenue, earnings, and capital investments.
However, Steve Gallucci, global and U.S. leader of Deloitte’s CFO Program, described the current environment 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.
Sheryl Estrada
sheryl.estrada@fortune.com
This story was originally featured on Fortune.com
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