Despite U.S. Tariffs, S&P 500 Companies Reporting Strong Q4 Earnings Growth

Despite widespread concerns that rising U.S. tariffs would slow economic growth and weigh on corporate profits, early results suggest the opposite. As trade tensions have stabilized, S&P 500 companies are reporting stronger-than-expected fourth-quarter earnings growth—highlighting the market’s resilience even in a more protectionist global trade environment.

Have U.S. Tariffs Hurt the Economy?

When U.S. President Donald Trump announced his global tariff policy back in April 2025, stocks tumbled on fears of what a trade war would do to the economy and earnings on Wall Street. Those fears haven’t materialized so far, with stocks trading at record levels and S&P 500 companies reporting strong fourth-quarter earnings growth.

There could be numerous reasons for this. Despite Trump imposing 10%+ tariffs on most of the United States’ global partners, Canada and Mexico were hurt less than others. Both countries benefit from zero tariffs on goods that are compliant with the Canada-United States-Mexico Agreement (CUSMA).

The agreement, which took effect during Trump’s first term, replaces the North America Free Trade Agreement (NAFTA). Still, the president managed a bit of a runaround by hitting certain products (steel, lumber, aluminum, some auto parts) with new tariffs on “national security” grounds.

The Trump administration also announced a large number of exemptions after announcing its “Liberation Day” (April 2, 2025) tariffs.

Moreover, save for China, most countries hit with U.S. tariffs did not retaliate against American imports.

While the U.S. tariffs were significantly higher than previously negotiated terms, they have stabilized. Tariffs are now at a level that has allowed trade to continue, if not flourish.

How Are S&P 500 Companies Doing on the Earnings Front?

We’re well into fourth-quarter earnings season, with approximately 60% of S&P 500 companies reporting actual financial results. Of those, 73% of S&P 500 companies have reported a positive revenue surprise and 76% have reported a positive earnings-per-share (EPS) surprise.

For the S&P 500 companies that have reported fourth-quarter-2025 financial results, the blended earnings growth rate is 13%. “Blended earnings” is a number that combines the results for companies that have reported and the estimated results for S&P 500 companies that have yet to report.

Should 13% be the final EPS growth rate for the fourth quarter, it will be the fifth consecutive quarter that the S&P 500 has reported double-digit, year-over-year earnings growth. The last time the index reported five consecutive quarters of double-digit earnings growth was for the time period from the fourth quarter of 2017 through the fourth quarter of 2018.

Optimism about fourth-quarter EPS growth for the S&P 500 has actually been increasing. On September 30, 2025, the estimated rate was 7.2%. On December 31, the estimated fourth-quarter earnings growth rate for S&P 500 companies increased to 8.3%. Today, the blended EPS growth rate is 13%.

To be fair, tariffs and a weak U.S. dollar are impacting S&P 500 companies. Those with more international exposure are reporting higher earnings and revenue growth in the fourth quarter compared to S&P 500-listed companies with more domestic exposure.

For S&P 500 companies that generate more than 50% of revenue inside the U.S., the blended earnings growth rate is 10%. Those that generate more than 50% of revenue outside the U.S. have reported a fourth-quarter blended earnings growth rate of 17.7%.

How Is the S&P 500 Expected to Do in 2026?

The outlook for the S&P 500 remains robust, too, with moneymakers expecting the index to report double-digit EPS growth over the next four quarters. For the first quarter of 2026 through the fourth quarter, the estimated annual EPS growth rates for the S&P 500 are 11.7%, 14.9%, 15.2%, and 15.4%, respectively.

The positive economic outlook has led Goldmans Sachs Research to predict that the S&P 500 will post a solid 12% return in 2026. That’s lower than the 18% return in 2025 and 25% return in 2024, but it’s still an oversized return, suggests the bull market will continues for the foreseeable future.

Not all S&P 500 stocks are created equal, with some sectors expected to perform much better than others in 2026.

Learn-to-Trade.com, Canada’s Leader in Stock Market Trading Courses

Taken together, resilient earnings growth, improving fourth-quarter blended earnings growth rates, and a strong forward outlook suggest that S&P 500 companies remain well positioned—even amid tariffs and global uncertainty. For investors and traders, understanding how macroeconomic forces like U.S. tariffs interact with earnings trends can be critical to identifying opportunities as the market moves into 2026.

Learn-to-Trade.com is Canada’s oldest and leading provider of stock market trading courses. Over the years, the experts at Learn-to-Trade.com have helped tens of thousands of Canadians, of every skill level, learn how to trade more confident and profit more consistently.

We also provide a unique, Lifetime Membership that allows members to re-attend any part of the program as often as they’d like.

To learn more about Learn-to-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.