Opinion Tariff tracker, May 2: How tariffs are ruining US businesses

The GDP contraction has provided a break for all concerned to vociferously outline the costs of Trump’s tariffs.

For instance, General Motors, one of the iconic US automakers, slashed its full-year profit outlook by a whopping $5 billion, thanks to the increase in costs due to tariffs. For perspective, $5 billion is roughly a third of the annual profit. Moreover, this hit on profits is happening even after Trump provided relief to US automakers from the stacking up of tariffs of different kinds (such as tariffs on commodities like steel, and then tariffs on countries and then sectoral tariffs, etc)

Similarly, Harley-Davidson, another iconic US motorcycle brand, withdrew its profit guidance for 2025 owing to a lack of clarity about the US trade policy.

Thanks to the sweeping nature of these tariffs, their debilitating effect is not limited to any one sector.

Hershey, which is synonymous with all things chocolate, stated that it expects tariffs to raise costs by up to $20 million in the second quarter (April, May and June) because it has become costlier to import Cacao. At the going rate, the increase in costs could go up to $100 million in each of the last two quarters of 2025, according to reports.

While big companies can either dial down profit forecasts or withdraw guidance, the worst affected are the small businesses of the US that neither have the financial reserves to survive a prolonged trade war nor the ability to quickly modify their supply chains.

Not surprisingly, then, the US Chamber of Commerce (which is the world’s largest business organisation, and advocates for policies that help businesses create jobs and grow the economy) sent a letter to top Trump cabinet members begging for relief for small businesses.

In the letter, collectively addressed to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer, they ask the administration “to address the impacts of tariffs by granting automatic exclusions for any small business importer, establishing a process for companies to apply for an exclusion if the company can demonstrate that tariffs pose a risk to employment for American workers, and providing exclusions for all products that cannot be produced in the United States or are not readily available”.

All this came on a day when there was more bad news on the macroeconomic front. The Institute of Supply Management’s (ISM) Purchasing Managers’ Index (PMI) for manufacturing — a proxy for manufacturing activity in the US — shrank in April by the most in five months as lean order books prompted the steepest output contraction since 2020, according to a Bloomberg report.

ISM’s survey Chair Timothy Fiore said the readings “are a huge warning” and that “we are heading in the wrong direction”.