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One of the key themes emerging from the latest round of earnings reports from social media companies has been the projected impact of tariffs, and how the additional fees that the Trump administration is imposing on some regions will affect their bottom line.
Though most are keen to avoid any discussion of tariffs specifically, after Trump reacted angrily to reports that Amazon may look to start displaying the impact of the tariffs on their item prices.
Instead, Meta, LinkedIn and Snap have tried to talk around the specifics, while still warning of how they’ll hit revenue intake.
Meta’s CFO Susan Li, for example, addressed several questions about the Trump tariffs in Meta’s earnings call, and graciously sidestepped them with careful wording.
“We have reflected the change in spend from those Asia-based e-commerce advertisers already into the revenue guidance. Otherwise, there’s just really a lot of puts and takes in the economic environment. So it’s pretty difficult to try to parse out very specific assumptions and how they translate.”
In other words Meta’s bottom line will be hurt by the tariffs, with big Chinese retailers like Temu and Shein already cutting ad spend. Indeed, Temu has been Meta’s single biggest advertiser over the past couple of years, spending billions in 2023 and 2024, so inevitably, reduced market demand in the U.S., due to necessarily higher prices, is going to have an impact. But Li and Meta remain confident that most of the impacts will be offset by alternative opportunities, and other advertisers filling the gaps.
“In terms of impact on the auction, we, of course, lose some revenue if large advertisers reduce spend. And that, of course, puts downward pressure on price, all things equal. But we do have a broad and diverse business. So, if some advertisers reduce their spend and prices fall, it creates an opportunity for other advertisers to step in.”
The benefit for marketers, then, is that your Meta ads are about to come down in price. And with Meta’s ad prices steadily creeping up, that’ll be a net positive for the majority of U.S. brands.
Snapchat, meanwhile, is being more cautious with its guidance, after noting that a range of advertisers have reduced their ad spend due to the Trump administration’s decision to end the "de minimis" exemption, which enabled Chinese providers to proliferate, either via the big corporations or drop-shippers.