What Trump should do instead of canceling quarterly reporting
Trump says he wants to help businesses save money. So cancel the tariffs!
President Trump wants to give American businesses a break. His latest deregulatory push would change the reporting requirement for public companies from quarterly to semiannual, reducing the effort needed to comply with public reporting laws. “This will save money, and allow managers to focus on properly running their companies,” Trump declared in a Sept. 15 social media post.
It's an open question whether less frequent reporting would help companies perform better. But if Trump really wanted to help companies save money and focus on properly running their companies, he could make an immediate impact by canceling thousands of new tariffs that impose billions of dollars of direct costs on companies and make strategic planning a nightmare.
Trump’s tariffs, which are import taxes imposed on goods from almost every country in the world, have raised taxes on businesses by about $19 billion per month so far this year. On an annualized basis that’s a $158 billion tax hike. Importers pay the tax first, then they try to pass on as much of it as they can to their own customers, all the way to shoppers buying everyday products. Just about everybody pays more.
Trump has arbitrarily pushed the tariffs up and down, with the import taxes, for now, ranging from 10% to 40% depending on the country and the type of product. Trump promises trade deals that could lower tariffs in the future, while also threatening higher tariffs if countries such as India and Brazil don’t comply with various demands. Overall, the tax on imports has soared from 2.5% before Trump took office to about 17%.
Many companies bearing the cost of tariffs are rejiggering supply chains to minimize the impact. That alone raises costs and inefficiencies. Trump says more tariffs are coming, and nobody knows what the end-state will be. It’s a truism that businesses hate uncertainty, and when they can’t accurately forecast return on investment, they tend to curtail or stop investing.
That’s probably a main reason many companies seem to have frozen hiring. Job growth has plunged from 168,000 new jobs per month, on average, in 2024 to just 27,000 new jobs per month since May. Forecasters expect the tariffs to reduce GDP growth, cut incomes, raise prices and leave most Americans worse off, overall.
Trump isn’t going to cancel any tariffs just to help businesses. The courts could cancel some of them, but if the Supreme Court goes that route, Trump will almost certainly resort to other types of tariffs that are harder to overturn. Trump has discovered that tariffs give him the unique ability to punish or reward countries, companies and even individuals for almost any reason. They’re the perfect tool for a president who’d rather be a monarch.
So instead, Trump is looking for ways to offset the depressing effect of tariffs and burnish his deregulatory credentials. Getting rid of quarterly reporting is a golden oldie. Trump proposed the same thing in 2018, saying business leaders told him this might help boost hiring. He asked the Securities and Exchange Commission to “study” the idea, but nothing ever happened. In December of 2018, the SEC reported that “a change is not necessary at this time for mid-cap and large-cap companies.”
There are pros and cons of quarterly reporting, compared with something less frequent. On the plus side, quarterly reporting provides analysts and investors with gobs of data they use to evaluate companies and buy or sell the stock. Investors generally want as much of this data as they can get and might punish some companies if they were less forthcoming than others. In his TKer newsletter, Sam Ro points out that less transparency could mean lower stock prices.
Europe changed its reporting requirement in 2014 from quarterly to semiannual, so there’s a case study in whether this helps. Many European companies continue to issue quarterly reports voluntarily, because that’s what investors want. And since the European change, the return on US stocks has been nearly 6 times that of European shares.
Some people think less frequent reporting would free companies from a treadmill that forces CEOs and their execs to focus on the short-term appeasement of Wall Street analysts at the expense of long-term strategizing. In 2018, Berkshire Hathaway CEO Warren Buffett and JP Morgan Chase CEO Jamie Dimon wrote a piece in the Wall Street Journal arguing that “short-termism is harming the economy.” They called for public companies to scale back or abandon the practice of forecasting quarterly earnings. But they didn’t argue against quarterly reporting, just against the gotcha game of companies trying to make financial forecasts that will appease analysts, then smoothing the numbers to make it happen.
The SEC can change reporting rules on its own, and chairman Paul Atkins is a Trump appointee who might do as the boss wishes—if the boss presses hard enough. But Trump will probably let the idea lapse, as he did in 2018.
There’s no obvious gain to Trump, or to anybody, from changing the quarterly reporting rule. Stocks wouldn’t surge and no particular company or sector would gain an edge over anybody else. There would be liability, however, if shadier operators took advantage of a change to cut corners, hide losses or disguise insider trading, and some kind of scandal eventually erupted.
Most of all, a change in reporting timelines won’t do anything to offset the damage from the Trump tariffs. This is a weak card that will give Trump nothing if he plays it, and probably not much more if he holds it, either.