Shares of Tyson Fell Over 7% Following Profit Outlook Cut

Tyson shares fell by over 7.5% on Monday to a new low of 52 weeks after the company announced it was cutting its guidance for the full-year on worries over trade tensions related to the tariffs imposed by the White House administration and a commodities market that remains turbulent.

The company is now expecting its fiscal year 2018 adjusted earnings to be between $5.70 and $6.00 per share, which is down from its previous forecast of between $6.55 and $6.70.

President and CEO of Tyson Foods Tom Hayes said through a prepared statement that the combination of worldwide trade policies changing and an uncertainty of a resolution have created a market environment that is challenging due to increased volatility, an oversupply of protein and lower prices.

Tyson, which raises as well as processes beef, chicken, pork, and prepared foods, outlined its reasons for giving an update to investors for its fiscal year via a press release July 30.

The U.S. has become embroiled in a trade war that is growing of recent as the Trump administration is seeking to force its economic partners such as the China, the European Union and Mexico into trade deals that favor the U.S.

Following the decision by the White House to place tariffs on imported aluminum and steel, Mexico imposed a tariff of 10% on chilled or frozen pork muscle cuts that took effect on June 5 and doubled to 20% in early July.

Those types of tariffs have impacted the agricultural sector in the U.S. directly, as foreign governments have taken aim at electoral regions heavy in Republicans in their effort to pressure current lawmakers into opposing actions taken by Trump.

China in the meantime began collecting another 25% duty on $34 billion worth of imports from the U.S. after U.S. President Donald Trump had taken action against China for theft of intellectual property.

Included in the retaliatory measures by China are tariffs on corn, wheat, soybeans, cotton, dairy and whiskey. Close to $20 billion in agricultural exports from the U.S. went to China in 2017, with over 50% of that number coming from the export of soybeans.

Twenty-five percent of the hogs raised in the U.S. are sold overseas, and one of the world’s biggest consumers of pork is the Chinese.

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