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Illustration: Sarah Grillo/Axios

Corporate earnings have been strong so far, with 84% of companies reporting better earnings than analysts expected — higher than the 64% average at this point in earnings season, per Refinitiv. But the companies that have disappointed are blaming tensions around the world for the less than stellar results.

Why it matters: The trade war with China will probably get worse — with a tariff escalation looming in January — and Brexit negotiations have reached a standstill. Yet companies aren't saying how they are planning for a more permanent tense global environment.

What's happening: Industrials are leading the global blame game. Executives at Fastenal — which makes and sells fasteners and screws — said they faced higher costs in part because of tariffs on its China-sourced materials.

  • The company did not quantify how much of its business is impacted by the tariffs, nor did it give a definitive answer about whether it's planning to get materials for its products from other countries. On a call with analysts, Fastenal CEO Dan Florness admitted the trade war is hurting its supply chain, but had a seemingly optimistic tone:
It wasn't too long ago, it looked like NAFTA could easily fall apart into sort of a trilateral relationship ... but calmer heads prevailed ... and time will tell if the two sides of the Pacific Ocean will have a similar [meeting] of the minds.
— Fastenal CEO Dan Florness to analysts

Its rival, W.W. Grainger, didn't fare much better. On a call with analysts, Grainger CEO Donald Macpherson blamed "uncertainty around Brexit" for a non-cash charge related to its slower-than-expected growth of its U.K.-based Cromwell business, which it bought in 2015.

  • On tariffs, Macpherson said the company has a team figuring out what the best decisions are to lessen the impact, but wouldn't go into specifics.

Scott Donnelly, the CEO of industrial conglomerate Textron, told analysts the company is seeing some impact from "uncertainty around the tariffs and around the Brexits of the world."

  • One outlier: steel maker Nucor, whose earnings came in short of analysts' expectations, but still saw profits nearly triple from a year earlier thanks to tariffs that made its steel more expensive.

The bottom line: These global conflicts aren't going away anytime soon, so companies will have to come up with a new playbook for trade wars and Brexit.

Go deeper

Capitol review panel recommends more police, mobile fencing

Photo: Olivier Douliery/AFP via Getty Images

A panel appointed by Congress to review security measures at the Capitol is recommending several changes, including mobile fencing and a bigger Capitol police force, to safeguard the area after a riotous mob breached the building on Jan. 6.

Why it matters: Law enforcement officials have warned there could be new plots to attack the area and target lawmakers, including during a speech President Biden is expected to give to a joint session of Congress.

Financial fallout from the Texas deep freeze

Illustration: Annelise Capossela/Axios

Texas has thawed out after an Arctic freeze last month threw the state into a power crisis. But the financial turmoil from power grid shock is just starting to take shape.

Why it matters: In total, electricity companies are billions of dollars short on the post-storm payments they now owe to the state's grid operator. There's no clear path for how they will pay — something being watched closely across the country as extreme weather events become more common.

U.S. Chamber decides against political ban for Capitol insurrection

A pedestrian passes the U.S. Chamber of Commerce headquarters as it undergoes renovation. Photo: Andrew Harrer/Bloomberg via Getty Images

The U.S. Chamber of Commerce revealed Friday it won't withhold political donations from lawmakers who simply voted against certifying the presidential election results and instead decide on a case-by-case basis.

Why it matters: The Chamber is the marquee entity representing businesses and their interests in Washington. Its memo, obtained exclusively by Axios, could set the tone for businesses debating how to handle their candidate and PAC spending following the Jan. 6 Capitol attack.