Tariffs squeeze US company profits. US April PPI "exploded cold"

The price paid to American manufacturers unexpectedly dropped in April, marking the largest decline in five years, largely reflecting a decrease in profit margins and indicating that companies are experiencing some impact from the increase in tariffs. Data released by the US Bureau of Labor Statistics on Thursday showed that the Producer Price Index (PPI) decreased by 0.5%, compared to economists' forecast of a 0.2% increase. Excluding food and energy, the PPI dropped by 0.4%, the largest decline since 2015. Excluding food, energy, and trade, the PPI fell by 0.1%, the first decline in five years. Many economists pay more attention to this less volatile indicator. Compared to the same period last year, the index rose by 2.9%. These data indicate that American manufacturers and service providers have not yet passed on the increased import tariffs to consumers. While producers are feeling the pressure of high tariffs on imported materials and other inputs, the impact on consumers is relatively small. In a situation of frequent policy changes, businesses are seeking the best solutions to mitigate the impact of tariffs. The latest Business Inflation Expectations Survey by the Federal Reserve Bank of Atlanta showed that less than one-fifth of companies believe they can fully offset a 10% cost increase. At the same time, US consumer confidence has declined, and another report released on Thursday shows that retail sales have seen little growth. Following a series of economic reports, US Treasury bonds continued to rise, with traders increasing their bets on a Fed rate cut. The US dollar has continued to decline. It is worth noting that Walmart Inc. warned of potential price increases for some goods starting this month due to tariffs and escalating economic uncertainties, despite reporting solid first-quarter performance. For companies raising prices, the risk lies in potential sales losses. However, not raising prices poses a risk to profit margins. Many companies are also seeking other ways to reduce costs or improve productivity. While tariffs may increase costs, the slump in many commodity prices may help alleviate pressure on producers. The cost of intermediate goods slightly increased after a decrease in March. Meanwhile, prices of unprocessed goods saw a significant drop due to declines in food and energy prices.