By Jennifer Williams, Mark Maurer and Kristin Broughton

A barrage of tariff orders and threats from the Trump administration has left finance chiefs grappling with making projections in their earnings guidance to investors about the potential impact of shifting trade policy.

Many companies at the start of the year or quarter provide investors with guidance on metrics such as sales and profit, based on scenarios that finance executives and their staff spend hours crafting. But many of those scenarios have been upended in recent weeks by U.S. tariff announcements, such as import taxes of 25% on goods from Mexico and Canada that were set to take effect this month before being paused for 30 days.

President Trump has also said he is considering tariffs of 25% or more on automobiles, semiconductors and pharmaceutical products, and has ordered federal agencies to study adjusting U.S. tariffs to match those of other countries.

The whiplash from Mexican and Canadian tariffs, in particular, has made CFOs uncertain about what exactly they should say on the matter. "Where it gets a little bit trickier is trying to decide on the things that may be as much about negotiating leverage, for example, the tariffs on Canada and Mexico," said Greg Husisian, a partner at law firm Foley & Lardner. "That's one that's a bit harder and nebulous to model."

Public companies aren't required to give earnings guidance, but must disclose to investors any impact to their operations that they deem material. Some companies, including networking-equipment company Cisco Systems, fashion company Tapestry and clog and sandal company Crocs, have included the impact of tariffs in their latest guidance. Others, including Mexican-inspired restaurant company Chipotle Mexican Grill, consumer-products maker Clorox and cereal maker WK Kellogg have excluded it.

Adam Rymer, chief financial officer at Chipotle, said he and the company's finance and supply-chain teams spent the first weekend of the month, ahead of the company's Feb. 4 earnings call, analyzing the effect of Trump's tariffs on Mexico and possible retaliatory tariffs. "We were deciding in real-time what to include in our cost-of-sales guidance," he said.

By the Friday before earnings, Rymer was for the most part ready to report on Chipotle's financials. But the whipsaw on tariffs -- Trump announced duties on Canada and Mexico on Feb. 1 only to delay them for a month two days later -- spurred phone calls over the weekend among Chipotle leadership about how to address the evolving situation.

Chipotle sources avocados, peppers and other bowl and burrito ingredients from Mexico, as well as other countries. Armed with estimates of the potential impacts from the supply-chain team as well as the latest out of D.C., Rymer went to work. "I'm making live edits into the script," he said.

Rymer settled on what to say and sent the messaging to Chief Executive Scott Boatwright and other company leaders. With their OK, executives had a plan: They would tell analysts and investors that if the then recently announced tariffs hit imports from Mexico, Canada and China, Chipotle would see a roughly 60-basis-point impact to its costs of sales. This wouldn't be included in Chipotle's guidance, though, given the unknowns and the 30-day pause.

Still, Rymer knew the situation might change before the restaurant chain shared its results. "If we woke [up] Monday morning and tariffs were enacted, it's like, OK, get the eraser out," he said. "We were prepared for that. Luckily it didn't happen."

Many companies have experience with including caveats in their formal guidance, or even ceasing to provide guidance, when fraught with uncertainty. CFOs have become adept at "getting their arms around and articulating risk" after navigating previous periods of uncertainty, including the Covid-19 pandemic and the 2008-09 financial crisis, said Shawn Turner, a partner at law firm Holland & Knight.

"There's a class of CFOs out there who've probably been through more dynamic economic environments in their careers than previous generations, " Turner said.

Finance executives aren't just working to forecast change, they are also taking steps to influence it.

CFOs have been spending more time meeting with lobbyists in Washington to understand the implications of tariffs and other policy scenarios, said Sanjay Sehgal, head of markets for KPMG's U.S. advisory services. "Everybody wants to better understand where the path is forward," he said.

Some finance leaders have opted to give few specifics on potential tariff impacts. Industrial technology company Oshkosh, which reported at the end of January, provided guidance that didn't include the potential impacts from tariffs. Oshkosh assembles certain equipment, such as mobile scaffold platforms called scissor lifts, in Mexico.

"We felt providing guidance was important for us," said CFO Matt Field. "But we did want to caveat it saying, 'There are a lot of moving pieces here,' and we did provide qualitative color around the fact that much of our products are built in the U.S., sourced in the U.S.," he said, noting that a task force is working to mitigate any effects from the potential tariffs. Oshkosh hasn't disclosed specifics on the possible impacts.

Tapestry, meanwhile, factored a 10% additional tariff on goods from China into its guidance after the U.S. boosted tariffs on imports of all Chinese-made goods by that amount this month. The impact on Tapestry, the owner of Coach and Kate Spade, is expected to be insignificant, Chief Financial and Operating Officer Scott Roe said this month. Less than 10% of the company's wares comes from China, Roe said.

At Deckers Outdoor, the company behind the Ugg and Hoka brands, executives left tariffs out of the company's Jan. 30 earnings communications. Most of Deckers's footwear production is done in Vietnam, with "a very small percentage" coming from China, said CFO Steve Fasching. Executives in late January felt it was too early to provide specifics, given the uncertainty, he said.

Deckers typically reports on its fourth quarter and provides guidance for the year ahead in May. Fasching is hoping to have more certainty before then to determine what the company will say. Clarity will also help as the CFO works to do the math on the effects.

"We're doing exercises to calculate potential impacts," the finance chief said. But there are a number of unknowns hampering the company's ability to put a number on any jolt. Suppliers may offer discounts to offset any higher costs. Deckers could also absorb some of the costs or consumer price tags may rise. "Before all of that can be decided, we need to see a little bit more certainty in how this begins to play out," he said.

Write to Jennifer Williams at jennifer.williams@wsj.com, Mark Maurer at mark.maurer@wsj.com and Kristin Broughton at Kristin.Broughton@wsj.com

(END) Dow Jones Newswires

February 21, 2025 05:30 ET (10:30 GMT)

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