U.S. corporate profits drop sharply in first quarter due to Trump’s tariffs

Corporate profits in the United States plummeted in the first quarter, and increased tariff costs could further hurt economic growth this year.

Last quarter, current production profits with capital consumption and inventory valuation adjustments dropped $118.1 billion, the most since the fourth quarter of 2020, according to a study released Thursday by the Bureau of Economic Analysis (BEA) of the Commerce Department.

The October-December quarter saw a $204.7 billion increase in profits.

In a decision that held the president overreached his authority, a U.S. trade court on Wednesday blocked the majority of Trump’s import tariffs from going into effect, casting a shadow over the economy and hurting consumer and business confidence while causing unprecedented volatility in financial markets.

Economists said the ruling, while providing some relief, had added another layer of economic uncertainty.