The profit margin hit from cost inflation and tariffs, exhibit A from Conagra/Helen of Troy raising prices 7%-10%/Gov Waller

It seems to be a settled debate on the part of some that if there is not consumer price inflation from tariffs than there is victory with its use. Unfortunately there is not enough debate on the coming hit to corporate profit margins for those companies that don't have much pricing power. Companies that make less money usually hire less and invest less in their business. See what Conagra, along with Helen of Troy, said below in their earnings call yesterday and how high their input cost inflation is now when including tariffs and the mitigation steps they are each taking.

I must say again, as a fan of low taxes, particularly on the corporate side which allows American companies to be more competitive, I am getting more and more concerned with where this tariff war is going and the economic impact. I will give basic math AGAIN with the latest post raising the possibility of a baseline tariff of 15-20% instead of 10%. With $3.3 Trillion of goods imports, a 15% blanket tariff would equal about $500b of fresh taxes and with 20%, $660 billion. The estimate for this fiscal year on tax receipts from the corporate tax is about $525b. So tariffs are possibly going to double the effective tax rate for corporations and possibly by more than that from the current 21%. Remember 2017 when all we did was seemingly rally every single day on the hopes for the eventual tax cut passage? Where are the concerns right now with this massive tax hike? I feel like I'm the only one that is worried and I'm living in some parallel universe with economic concerns. I hope I'm wrong but I'm getting more and more nervous that I won't be.

From Conagra, the largest frozen food producer in the country, along with a snacks business which includes beef jerky and popcorn:

They talked about “the decline in consumer sentiment during the fourth quarter of fiscal ’25, driven by the cumulative impact of persistent inflation, rising interest rates, and overall economic uncertainty. This decline translated into more cautious spending behaviors. Consumers became increasingly focused on seeking value, prioritizing affordability, and trading down where possible. While our brands are well-positioned to deliver value and meet these shifting needs, the environment created additional pressure on volumes.”

“inflation remains persistent. For fiscal ’26, we expect core cost of goods inflation to be approximately 4%. To put that into context, this level of inflation in fiscal ’26 will bring our five year cumulative, net inflation to approximately 45%, a historic amount of inflation over such a short period of time. On top of that, the current tariff environment is expected to add approximately 3% to our cost of goods sold, or more than $200 million annually. This brings total anticipated inflation for fiscal ’26 to approximately 7%.” I bolded for emphasis.

“Our canned food products make up the largest tariff exposure as steel and aluminum tariffs significantly increase the cost to procure tin plate steel as domestic supply is very limited.”