Wall Street Q2 Earnings Hit by Trade Wars, Tariff Costs

- Major U.S. banks face mounting challenges ahead of Q2 earnings reports. - Key market pressures stem from slowing earnings growth, U.S. geopolitical moves, and a busy economic calendar. Wall Street faces significant pressure as top U.S. banks prepare to release their second-quarter earnings, grappling with rising tariff-related costs and heightened geopolitical uncertainties. Major banks like JPMorgan, Goldman Sachs, Bank of America, Citi, and Morgan Stanley will announce earnings amid widespread concerns over slowing growth and strained global economic relations. According to a Goldman Sachs report on July 14, 2025, the firm adjusted its forecast for the S&P 500's earnings-per-share growth to 4% for the second quarter, a sharp decline from 12% growth in the first quarter. The firm attributed the reduction to companies absorbing increased expenses from new tariffs, which pressures profit margins. As a result, these economic conditions are raising anxieties as banks enter their earnings week, where investors will assess their financial resiliency against a backdrop of trade disputes. On July 14, 2025, Reuters reported that geopolitical tensions intensified after the U.S. Treasury Secretary opted out of the G20 finance ministers and central bank governors meeting in Durban, South Africa, amid rising global friction. The report noted that the U.S. recently imposed a 30% tariff on South African imports, making it the only sub-Saharan African nation affected by this policy. This decision, which followed a contentious meeting in May between U.S. and South African leaders, widens political divides during a critical week for global markets. A dense economic calendar this week will also heighten investor scrutiny, with key reports including the Consumer Price Index (CPI), the Producer Price Index (PPI), retail sales figures, and the University of Michigan's consumer sentiment report. In addition, investors will closely watch speeches from 12 Federal Reserve officials for indications of U.S. monetary policy adjustments in response to escalating market uncertainties. While U.S. banks face mounting challenges, Bloomberg reported in early July 2025 that European banks posted their strongest first-half results since 1997, driven by robust activity in investment banking and mergers and acquisitions. Consequently, investors will focus on the trading revenues and deal pipelines of major U.S. banks for signs of comparable success.