When uncertainty hits the markets, some people see an opportunity to start trading. Take the latest Wall Street phenomenon, the so-called “TACO trade,” for example.

Coined by Financial Times reporter Robert Armstrong, the term is short for “Trump Always Chickens Out,” and it’s a trade to buy stocks that fall when Trump announces punitive tariffs of one kind or another, and then sell them when, a few days later, Trump inevitably backs off on his tariff threat. Volatility, meet trading opportunity.

But. To make a speculative trade successfully, you still have to be able to time the market, something many professional investors tell you is very difficult indeed because to do it successfully you need to be able to predict the future. Trump’s chickening-out might be almost predictable at this point, but he was ever a mercurial fellow. Can you be sure it’ll happen next time? And with a ruling Wednesday that most of Trump’s tariffs are illegal, the only certainty in the economy right now is continued uncertainty.

Still, whatever you believe is going to happen in these uncertain times, speculative traders do need to buy and sell stocks somewhere to, er…taco-chance on the markets’ volatility. They might feel that this trade is, er…nacho average opportunity. You know?

There are a variety of platforms to trade on, but here’s one company that proves the old adage that in a gold rush, the people who really get rich are those selling the shovels: CME.

CME is the world’s largest derivatives marketplace, formerly known as the Chicago Mercantile Exchange. It has nearly cornered the derivatives and commodities markets, gobbling up a host of exchanges over the past decade or so. When volatility rises, so does the number of trades that take place, and CME makes its money on the trade volumes. That’s right: CME gets paid for every trade made on its exchange, no matter who wins or loses.

It makes for a lucrative business. For 2024, CME had revenue of $6.1 billion and a net profit of $3.5 billion, up from $5.6 billion in revenue and $3.2 billion in profit in 2023. In April, CME hit an all-time high monthly average daily volume (ADV) record of 35.9 million contracts, an increase of 36% year-over-year. All of that has analysts looking at CME to keep growing. Earlier this month, Argus Research analyst Stephen Biggar raised his price target on CME to $308 from $285, with a “buy” rating. He noted the company has kept a tight lid on costs, even as volumes rise.

(Full disclosure: I do hold some shares of CME in a diversified equity portfolio managed by an outside advisor.)

• Southwest’s baggage: Bags fly free? Southwest $LUV says “Fuggedaboutit.” Now Southwest passengers will have to pay $35 for a first checked bag and $45 for a second one. That’s on par with what competitors charge, as the airline’s CFO said Southwest needs to become more like its competitors. That comes as its gross profit for the first quarter rose 22.27% over a year earlier to $1.26 billion. But the airline is concerned that its new fees may prompt more passengers to lug carry-ons, which can slow boarding and threaten Southwest’s legendary on-time performance, which is over 80%.
• Boeing cuts a deal: Remember those back-to-back Boeing 737 Max crashes in 2017 and 2018? When Boeing’s $BA automated flight systems malfunctioned (or pilots failed to understand them, depending on who you ask) and a pair of planes crashed, killing 346 people? Well, Boeing had agreed to plead guilty to a felony charge of conspiring to defraud the FAA, and to pay further compensation to the families of victims. That’s now been reversed, and Boeing won’t have to plead guilty to a crime. It’s still in the hole for a further $1.4 billion in fines, safety improvements, and payments to the victims’ families.
• Walt Disney and the Ukulele-playing Hawaiian Turtle: Nope, it’s not the latest Disney $DIS animated feature, it’s the abrupt end to a lawsuit from a Hawaiian artist who said Disney copied his blue-eyed tortoise, Honu, and used the image to promote its Hawaiian resort. Artist Johnson Enos created a turtle in 2006, and claimed he pitched the blue-eyed testudine to Disney in 2008, but U.S. District Judge Dale Fischer dismissed the case, noting that Disney created ‘Olu Mel before Enos began depicting Honu with a ukulele, and that the characters were not similar enough to show copyright infringement otherwise.
• Nvidia’s no longer feeling Nvincible: Jensen Huang, the leather-jacket-wearing founder of chipmaker Nvidia $NVDA , says rules meant to maintain America’s lead in the AI race by curbing China’s access to his company’s advanced AI chips have had the opposite effect. Now Chinese tech firms like Huawei have filled the gap with their own chips. The export controls gave Chinese companies “the spirit, the energy and the government support to accelerate their development,” Huang said at a Taipei conference this week. “All in all, the export control was a failure.”
• Car talk: Can Stellantis $STLA shine? The U.S./French/Italian carmaker which owns Chrysler, Peugeot and Fiat (as well as Dodge, Ram, Maserati, Jeep, Lancia, Alpha Romeo and Opel) has a new boss with a tough task: turn around a company whose U.S. market share has slipped to 8% from 12.5% in 2021, when FIAT/Peugeot bought Chrysler, and came up with the name. Antonio Filosa, 51, was most recently COO for the Americas. Supply chain woes, tariffs, high inventories and the headwinds slowing EVs are big problems, but a turnaround could come with a hefty rise in share prices: On an enterprise value to earnings before interest and tax, Stellantis has a multiple of 3.46, versus GM $GM at 2.71, Ford $F at 39.37 and Tesla $TSLA LA at 177.15. General Motors is also throwing in the towel on its $300 million plan to build EV’s in upstate New York, and instead will plow $888 million into making the latest V-8 engine in the same factory. Meanwhile, Stellantis is winding down its joint project with Amazon $AMZN to create in-car software that would automatically adapt key settings to each driver, and even let the driver turn on the lights in their home as they hit their driveway.
• Ground Control to Mickey D: McDonald’s $MCD is closing the remaining five outlets of its experimental eatery, CosMc’s, a vaguely space-themed restaurant that served mostly syrupy caffeinated drinks and punches and a pair of reworked Egg McMuffins. Apparently, no one was buying, and the original king of burgers says it may add the space drinks to the menu at its existing locations.
• Silver screen success: Hollywood is making better movies, and Americans are flocking to the theaters to see them. Last weekend, the top six new releases collected a record $326 million over the Memorial Day weekend. Disney’s live-action “Lilo & Stitch” ($183 million) and Paramount’s “Mission Impossible — The Final Reckoning” ($77 million), alongside holdovers Disney and Marvel’s “Thunderbolts*,” ($11.8 million), $WBD, “Sinners” ($11 million) and “Final Destination Bloodlines”($23.9 million ). Audiences (and theater owners) are juiced by the steady stream of new films, after years of studios focusing on series for their streaming services. Movie theater shares soared: AMC $AMC was up more than 23%, Marcus Theatres’ parent $MCS rose 10%, and Cinemark $CNK was up 4%.

• Rocket go BOOM! A third SpaceX Starship, the largest rocket ever launched, and the key to Musk’s dream of landing on the moon and colonizing Mars, went down in flames on Tuesday, reaching space, but spinning out of control and breaking up as it re-entered the Earth’s atmosphere. “Big improvement over last flight!” Musk tweeted, promising at least a launch a month to fix the problems.
• No DOGE-dodging: Elon Musk may have announced that his scheduled time at DOGE is over, but a federal judge ruled that a lawsuit by 14 states can go ahead against Musk for illegally acting as a duly appointed federal employee and accessing government data systems, terminating federal employees, and canceling contracts at federal agencies. Musk said he quit DOGE several weeks ago to go back to running his companies, but on his way out the door, he took a swipe at Trump’s “Big Beautiful” budget bill: “I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing,” he told CBS News. Trump’s budget, which cuts both spending and taxes, mainly for higher-income individuals and for companies, will increase the national debt by $3.8 trillion by 2034, the Congressional Budget Office notes.
• Starlink goes South (Africa): South Africa’s government says it has begun approval for Elon Musk’s Starlink satellite, but it appears Musk, who was born in the country, won’t have to sell 30% of the equity in Starlink’s local subsidiary to a Black-owned company, one way the country has sought to reverse decades of economic segregation that favored the white minority.
• Setback: Tesla sales plummeted in Europe for a fourth straight month in April, with new-car registrations for Teslas down 53% over the previous year to 5,475 vehicles across the EU, according to the European Automobile Manufacturers’ Association. That comes as overall EV sales were up 26% in the first four months of the year over 2024. Cheaper Chinese rivals and Musk’s unpopularity are driving the decline.

• Tariff tricks: As the tariff turmoil continues, evasion is on the rise. As the New York Times reports, many U.S. importers are getting offers from Chinese firms offering to massage product descriptions (or…outright lie) to bring goods into the U.S. under preferential tariffs, or even “transship” them through a lower-tariff country. Apparel manufacturer Leslie Jordan told the Times that the tariffs are making businesses like here far less profitable, and that they put “many honest companies at a competitive disadvantage.”
• Golden Shares: For all its insistence on the free market, the Trump administration is taking a leaf from Europe’s book of government-heavy business management, with the approval of the purchase of U.S. Steel by Japan’s Nippon Steel. Among the deal’s terms, ostensibly to ensure the U.S. can still make the steel it needs at home in case of a war or embargo, the CEO must be American, and the board must have a majority of U.S. directors. The government also gets a “Golden Share” to vote against board appointments or deals that could be perceived as being against the U.S. national interest. China, France, and Brazil all have these arrangements with strategically important firms. Could this be a test case for the control of TikTok?
• Cashing in. Again: Trump’s social media platform, Truth Social, and its parent company Trump Media & Technology Group, says it plans to raise $2.5 billion from institutional investors and a convertible bond sale to buy Bitcoin. It’s not clear how the company would make money, unless Bitcoin continues to rise in value, which it could if the U.S. Treasury follows through on Trump‘s plan for the government to buy Bitcoin and other cryptocurrencies. Last month, Trump Media said it would launch a set of exchange-traded crypto funds, and this week’s move looks like the company is no longer betting on the Truth Social platform for its future. Last quarter, Trump Media lost $32 million on $820,000 in revenue from advertising and other sources. Shares in Trump Media are down 37% this year. But the crypto strategy has not always been a winner: On Wednesday, GameStop $GME said it had bought half a billion dollars worth of Bitcoin, only to see its shares drop a whopping 10.9% on the news.
• That battle with Big Law isn’t going so well. This week, law firm Wilmer Hale had a court dismiss Trump’s efforts to cancel all government contracts with the firm and block its attorneys from federal buildings. The order would have massively undercut the firm’s Washington business, which involves negotiating with government regulators on behalf of its clients and being the government’s lawyer in other cases. Wilmer Hale got special attention for having employed former F.B.I. chief Robert Mueller. It’s the third Trump order against law firms that federal judges have overturned. But at least nine major law firms have agreed to donate hundreds of millions of dollars of free legal services to the Trump Adminsitration and its preferred causes. One of those firms, Paul, Weiss, Rifkind, Wharton & Garrison, saw backlash this week when four of its top lawyers left to form their own firm.

• Only Private Fans: OnlyFans, America’s favorite online peepshow, is in talks to sell to a private equity group led by Los Angeles-based Forest Road Company, at a valuation of about $8 billion. The channel, famed for letting almost anyone star in their own porn show—and make money at it—saw revenue jump from $375 million in 2020 to $6.6 billion in 2023, thanks largely to the pandemic. The closely held pornsite appears to be owned by Leonid Radvinsky, a Ukrainian-American who bought the site in 2018. Big banks and investors won’t go near OnlyFans, Reuters reported, over concerns that due diligence might find child sexual abuse material, trafficking victims and nonconsensual porn.
• No more hook-ups? That’s the plan for Tinder, under new CEO Spencer Rascoff, who says in a memo seen by the Wall Street Journal: “Users don’t want more matches, they want better ones.” Rascoff, who is also CEO of Tinder parent Match $MTCH told the Journal users should see Tinder as “a bar where people come together to meet new people.” Cheers to that!
• Salesforce’s $8 billion leap into AI. The customer relationship software giant $CRM will buy Informatica $INFA, a data management and analytics company that caters to Fortune 500 companies. Salesforce is hoping Informatica will help improve its ability to link its data and services to AI agents for its customers.
• Die, DEI, die! Trump’s FCC chairman, Brendan Carr, approved Verizon’s $VZ’s $10 billion buyout of Frontier Communications $FYBR , after Verizon pledged to roll back its DEI initiatives, and also promised to invest in more fiber optic lines and pay more to cell tower maintenance firms. T-Mobile $TMUS already promised to roll back DEI efforts as it seeks FCC approval for a $4.4 billion deal to buy some assets from U.S. Cellular $USM.

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NEW YORK (AP) — The typical compensation package for chief executives who run companies in the S&P 500 jumped nearly 10% in 2024 as the stock market enjoyed another banner year and corporate profits rose sharply.

Many companies have heeded calls from shareholders to tie CEO compensation more closely to performance. As a result, a large proportion of pay packages consist of stock awards, which the CEO often can’t cash in for years, if at all, unless the company meets certain targets, typically a higher stock price or market value or improved operating profits.

The Associated Press’ CEO compensation survey, which uses data analyzed for The AP by Equilar, included pay data for 344 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between Jan. 1 and April 30.

Here are the key takeaways from the survey:

The median pay package for CEOs rose to $17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned $85,419, reflecting a 1.7% increase year over year.

CEOs had to navigate sticky inflation and relatively high interest rates last year, as well as declining consumer confidence. But the economy also provided some tail winds: Consumers kept spending despite their misgivings about the economy; inflation did subside somewhat; the Fed lowered interest rates; and the job market stayed strong.

The stock market’s main benchmark, the S&P 500, rose more than 23% last year. Profits for companies in the index rose more than 9%.

“2024 was expected to be a strong year, so the (nearly) 10% increases are commensurate with the timing of the pay decisions,” said Dan Laddin, a partner at Compensation Advisory Partners.

Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, said there have been some recent “long-overdue” increases in worker pay, especially for those at the bottom of the wage scale. But she said too many workers in the world’s richest countries still struggle to pay their bills.

Rick Smith, the founder and CEO of Axon Enterprises, topped the survey with a pay package valued at $164.5 million. Axon, which makes Taser stun guns and body cameras, saw revenue grow more than 30% for three straight years and posted record annual net income of $377 million in 2024. Axon’s shares more than doubled last year after rising more than 50% in 2023.

Almost all of Smith’s pay package consists of stock awards, which he can only receive if the company meets targets tied to its stock price and operations for the period from 2024 to 2030. Companies are required to assign a value to the stock awards when they are granted.

Other top earners in the survey include Lawrence Culp, CEO of what is now GE Aerospace ($87.4 million), Tim Cook at Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million) and Ted Sarandos at Netflix ($61.9 million). The bulk of those pay packages consisted of stock or options awards.

The median stock award rose almost 15% last year compared to a 4% increase in base salaries, according to Equilar.

“For CEOs, target long-term incentives consistently increase more each year than salaries or bonuses,” said Melissa Burek, also a partner at Compensation Advisory Partners. ”Given the significant role that long-term incentives play in executive pay, this trend makes sense.”

Jackie Cook at Morningstar Sustainalytics said the benefit of tying CEO pay to performance is “that share-based pay appears to provide a clear market signal that most shareholders care about.” But she notes that the greater use of share-based pay has led to a “phenomenal rise” in CEO compensation “tracking recent years’ market performance,” which has “widened the pay gap within workplaces.”

Some well-known billionaire CEOs are low in the AP survey. Warren Buffett’s compensation was valued at $405,000, about five times what a worker at Berkshire Hathaway makes. According to Tesla’s proxy, Elon Musk received no compensation for 2024, but in 2018 he was awarded a multiyear package that has been valued at $56 billion and is the subject of a court battle.

Other notable CEOs didn’t meet the criteria for inclusion the survey. Starbucks’ Brian Niccol received a pay package valued at $95.8 million, but he only took over as CEO on Sept. 9. Nvidia’s Jensen Huang saw his compensation grow to $49.9 million, but the company filed its proxy after April 30.

At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale 192 years to make what the CEO did in one. Companies have been required to disclose this so-called pay ratio since 2018.

The pay ratio tends to be highest at companies in industries where wages are typically low. For instance, at cruise line company Carnival Corp., its CEO earned nearly 1,300 times the median pay of $16,900 for its workers. McDonald’s CEO makes about 1,000 times what a worker making the company’s median pay does. Both companies have operations that span numerous countries.

Overall, wages and benefits netted by private-sector workers in the U.S. rose 3.6% through 2024, according to the Labor Department. The average worker in the U.S. makes $65,460 a year. That figure rises to $92,000 when benefits such as health care and other insurance are included.

“With CEO pay continuing to climb, we still have an enormous problem with excessive pay gaps,” Anderson said. “These huge disparities are not only unfair to lower-level workers who are making significant contributions to company value – they also undercut enterprise effectiveness by lowering employee morale and boosting turnover rates.”

For the 27 women who made the AP survey — the highest number dating back to 2014 — median pay rose 10.7% to $20 million. That compares to a 9.7% increase to $16.8 million for their male counterparts.

The highest earner among female CEOs was Judith Marks of Otis Worldwide, with a pay package valued at $42.1 million. The company, known for its elevators and escalators, has had operating profit above $2 billion for four straight years. About $35 million of Marks’ compensations was in the form of stock awards.

Other top earners among female CEOs were Jane Fraser of Citigroup ($31.1 million), Lisa Su of Advanced Micro Devices ($31 million), Mary Barra at General Motors ($29.5 million) and Laura Alber at Williams-Sonoma ($27.7 million).

Christy Glass, a professor of sociology at Utah State University who studies equity, inclusion and leadership, said while there may be a few more women on the top paid CEO list, overall equity trends are stagnating, particularly as companies cut back on DEI programs.

“There are maybe a couple more names on the list, but we’re really not moving the needle significantly,” she said.

Equilar found that a larger number of companies are offering security perquisites as part of executive compensation packages, possibly in reaction to the December shooting of UnitedHealthCare CEO Brian Thompson.

Equilar said an analysis of 208 companies in the S&P 500 that filed proxy statements by April 2 showed that the median spending on security rose to $94,276 last year from $69,180 in 2023.

Among the companies that increased their security perks were Centene, which provides health care services to Medicare and Medicaid, and the chipmaker Intel.

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Reporters Matt Ott and Chris Rugaber in Washington contributed.

WASHINGTON (AP) — President Donald Trump has audaciously claimed virtually unlimited power to bypass Congress and impose sweeping taxes on foreign products.

Now a federal court has thrown a roadblock in his path.

A three-judge panel of the U.S. Court of International Trade ruled Wednesday that Trump overstepped his authority when he invoked the 1977 International Emergency Economic Powers Act to declare a national emergency and plaster taxes – tariffs – on imports from almost every country in the world.

The ruling was a big setback for Trump, whose erratic trade policies have rocked financial markets, paralyzed businesses with uncertainty and raised fears of higher prices and slower economic growth.

But Trump’s trade wars are far from over. The Court of Appeals for the Federal Circuit on Thursday allowed the president to temporarily continue collecting the tariffs under the emergency powers law while he appeals the trade court’s decision.

The administration also has other ways to pursue the president’s goal of using tariffs to lure factories back to America, raise money for the U.S. Treasury and pressure other countries into bending to his will.

Financial markets, which would welcome an end to Trump’s tariffs, had a muted response to the news Thursday; stocks rose modestly.

“Investors are not getting too carried away, presumably in the expectation that the White House will find a workaround that allows them to continue to pursue their trade agenda,’’ said Matthew Ryan, head of market strategy at the financial services firm Ebury.

Trump’s IEEPA tariffs are being challenged in at least seven lawsuits. In the ruling Wednesday, the trade court combined two of the cases — one brought by five small businesses and another by 12 U.S. states.

The U.S. Court of International Trade has jurisdiction over civil cases involving trade. The legal challenge to Trump’s tariff sis widely expected to end up at the U.S. Supreme Court.

The court’s decision blocks the tariffs Trump slapped last month on almost all U.S. trading partners and levies he imposed before that on China, Mexico and Canada.

Trump on April 2 — Liberation Day, he called it — imposed so-called reciprocal tariffs of up to 50% on countries with which the United States runs a trade deficit and 10% baseline tariffs on almost everybody else. He later suspended the reciprocal tariffs for 90 days to give countries time to negotiate trade agreements with the United States — and reduce their barriers to American exports. But he kept the baseline tariffs in place.

Claiming extraordinary power to act without congressional approval, he justified the taxes under IEEPA by declaring the United States’ longstanding trade deficits “a national emergency.”

“The reason that he chose IEEPA was he thought he could do this unilaterally without much oversight by Congress,” said Jeffrey Schwab, senior counsel and director of litigation at the nonprofit Liberty Justice Center. He represented the five small businesses before the trade court.

In February, he’d invoked the law to impose tariffs on Canada, Mexico and China, saying that the illegal flow of immigrants and drugs across the U.S. border amounted to a national emergency and that the three countries needed to do more to stop it.

The U.S. Constitution gives Congress the power to set taxes, including tariffs. But lawmakers have gradually let presidents assume more power over tariffs — and Trump has made the most of it.

The administration had argued that courts had approved then-President Richard Nixon’s emergency use of tariffs in the economic chaos that followed his decision to end a policy that linked the U.S. dollar to the price of gold. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language later used in IEEPA.

The court rejected the administration’s argument this time, deciding that Trump’s sweeping tariffs exceeded his authority to regulate imports under IEEPA. It also said the tariffs did nothing to deal with problems they were supposed to address. In their case, the states noted that America’s trade deficits hardly amount to a sudden emergency. The United States has racked them up for 49 straight years in good times and bad.

Another federal judge also blocked Trump’s use of an emergency powers law to impose tariffs on Thursday. The ruling from U.S. District Judge Rudolph Contreras came in a lawsuit from two Illinois-based educational toy companies. The ruling only blocks the collection of tariffs from the companies who sued, and was handed down the day after the trade court’s broader finding.

Wendy Cutler, a former U.S. trade official who is now vice president at the Asia Society Policy Institute, says the court’s decision “throws the president’s trade policy into turmoil.”

Other countries may be reluctant to make concessions to Trump during the 90-day pause if there’s a chance the courts will uphold the decision striking down the IEEPA tariffs. “Can those negotiations move forward?’’ said Antonio Rivera, a partner at ArentFox Schiff and a former Customs and Border Protection attorney.

Likewise, companies will have to reassess the way they run their supply chains, perhaps speeding up shipments to the United States to offset the risk that the tariffs will be reinstated on appeal.

Still, the ruling leaves in place other Trump tariffs, including those on foreign steel, aluminum and autos. Those levies were invoked under a different legal authority — Section 232 of the Trade Expansion Act of 1962 — that requires a Commerce Department investigation and cannot simply be imposed at the president’s own discretion.

Trump still has the authority to raise those Section 232 tariffs. He can also pursue new ones. The Commerce Department, for instance, last month launched a Section 232 investigation into the national security implications of pharmaceutical imports.

The court also left in place tariffs Trump imposed on China in his first term— and President Joe Biden kept — in a dispute over Beijing’s use of hard-nose tactics to give Chinese companies an edge in advanced technology. The U.S. alleged that China unfairly subsidized its own firms, forced companies from the U.S. and other foreign countries to hand over trade secrets and even engaged in cybertheft. Trump has leeway to expand those tariffs if he wants to put more pressure on China.

The trade court also noted Wednesday that Trump retains more limited power to impose tariffs to address trade deficits under another statute, the Trade Act of 1974. But that law restricts tariffs to 15% and to just 150 days on countries with which the United States runs big trade deficits.

When the IEEPA tariffs were in place, America’s average tariff rate was 15%, the highest in decades and up from 2.5% before Trump’s tariff onslaught began this year. Without them, the U.S. tariff rate is still a hefty 6.5%, according to economists Stephen Brown and Jennifer McKeown of Capital Economics.

They say the U.S. economy would grow faster in the second half of 2025 — at a 2% annual rate, up from the 1.5% they’d been forecasting — without the weight of the IEEPA tariffs. Prices also wouldn’t rise as fast.

Importers may get relief. Posting on X, formerly known as Twitter, on Thursday, lawyer Peter Harrell, a fellow at the Carnegie Endowment for International Peace, wrote that if the trade court’s decision “is upheld, importers should eventually be able to get a refund of (IEEPA) tariffs paid to date. But the government will probably seek to avoid paying refunds until appeals are exhausted.″

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AP Economics Writer Christopher Rugaber contributed to this story.

NEW YORK (AP) — Macy’s sales and profit slipped in its first quarter and the department store, citing more cautious customers and the impact that a trade war launched by the U.S., trimmed its profit forecast for 2025.

The New York retailer, however, topped most performance expectations for the first three months of the year and maintained its annual sales forecast.

Yet Macy’s CEO Tony Spring said that after seeing almost no price increases linked to tariffs in the first quarter, some “limited” price increases are appearing now, leading to the more cautious annual profit outlook.

“I think it’s important to understand that we are not just broadly increasing price,” Spring said in a conference call Wednesday. “We’re being incredibly surgical about the situation with tariffs.”

The company is diversifying the origin of its products as well, and will pull items when the math doesn’t work, he said.

About 20% of Macy’s products came from China at the end of its last fiscal year. Private brands sourced approximately 27% from China, down from 32% last year.

“With the recent announcement of these tariffs, we’ve renegotiated orders with suppliers,” Spring said. “We’ve canceled or delayed orders where the value proposition is just not where it needs to be.”

Shares rose 1% Wednesday.

Sales at Macy’s, which also owns upscale Bloomingdale’s and the Bluemercury cosmetics chain, dropped to $4.79 billion, from $5 billion a year earlier. That’s better than the $4.42 billion that analysts polled by FactSet expected.

Comparable sales, which include those online, dipped 2%. There was comparable store sales growth at Bloomingdale’s and Bluemercury.

Neil Saunders, managing director of GlobalData, said it wasn’t a bad quarter for Macy’s, particularly as the retailer closes underperforming locations.

Macy’s said previously that it would close 66 stores, mostly in the first quarter.

“The 2.0% dip in comparable sales is below market growth but is not entirely unexpected,” Saunders wrote. “It is also, barring the robust holiday quarter, a somewhat better performance than Macy’s delivered across most of the last fiscal year.”

For the period ended May 3, Macy’s earned $38 million, or 13 cents per share. That compares with $62 million, or 22 cents per share, a year ago.

Stripping out one time charges, earnings were 16 cents per share, which topped Wall Street’s estimate by a penny.

The company stuck by its 2025 sales forecast which ranged from $21 billion to $21.4 billion. But it now expects full-year adjusted earnings between $1.60 and $2 per share. Its prior forecast was for an adjusted profit of $2.05 to $2.25 per share.

Industry analysts had been projecting full-year sales of $21.03 billion and an adjusted per-share profit of $1.91.

Macy’s and other retailers are wrestling with uncertainty about tariffs which are making it difficult to plan. The same goes for many American consumers who have are growing increasingly uncomfortable about the U.S. economy and watching their spending.

American Eagle Outfitters withdrew its annual financial outlook earlier this month citing “macro uncertainty” and said it would write down $75 million in spring and summer merchandise.

Ross Stores withdrew its forecast last week.

Walmart, the nation’s largest retailer, got a public scolding from President Donald Trump this month after it said that it has already raised prices on some items and would have to do so again this summer. Trump told the retail giant that it should “eat” the additional costs.

Target’s sales fell more than expected in the first quarter and it warned they will continue to flag this year.

Home Depot, too, said that it will eat some of the costs but that some goods heavily impacted by the trade war will no longer be on shelves.

Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced May 12, with some of the higher tariffs on pause for 90 days. Trump on Friday threatened a 50% tax on all imports from the European Union as well as a 25% tariff on smartphones unless they’re made in America.

On Sunday, however, Trump said that the U.S. will delay implementation of a 50% tariff on goods from the EU until July 9 to negotiate.

Spring, Macy’s CEO, said there has been some success with vendors on lowering prices, but the department store is absorbing some costs as well.

“We’re making selective price increase in selective brands, selective categories, because we believe the value equation for the customer is still very relevant,” Spring said. “So some of the impact on our gross margin this year is going to be around the tariffs, but we’re also investing in getting market share because we really do believe as we get into the back half of the year, that price value dimension is going to be very critical.”