Amid uncertainty surrounding Trump's tariffs, stock buyback plans by U.S. companies have reached a record-breaking $518 billion.

Due to the uncertainty caused by the Trump administration's tariff policies, American companies are accelerating stock buybacks. Reports from Deutsche Bank and S&P Global show that the total amount of stock buybacks announced by S&P 500 companies in the past three months reached $518 billion, setting a new record. Last week, companies announced buyback plans amounting to $192 billion. This is the highest for a single week since 1995. The wave of corporate buybacks reflects hesitation regarding future capital expenditure plans and a preference for using cash to stabilize stock prices and enhance earnings per share.

Tariff Uncertainty Drives Companies to Share Repurchases

In April 2025, U.S. President Trump announced a new round of tariff measures on multiple countries, imposing tariffs as high as 145% on Chinese goods, raising concerns among businesses about future operating costs and supply chain stability. The sudden and frequent adjustments of these policies have made it difficult for companies to plan long-term capital expenditures.

Large companies such as Colgate, General Motors, and Delta Air Lines have successively canceled their full-year financial forecasts, indicating a loss of confidence in the future business environment. A former co-head of capital markets at a major U.S. investment bank noted, "If stock prices have pulled back, management has room to maneuver, allowing them to spend cash on share repurchases and boost earnings per share."

Cash Abundance and Stock Price Pullbacks Provide Momentum for Repurchases

The corporate tax cut policy promoted by the Trump administration in 2017 has allowed U.S. companies to accumulate substantial cash reserves. According to S&P Global data, the total amount of share repurchases executed by S&P 500 companies in 2024 reached $942.5 billion, setting a new annual record. This cash has become a crucial buffer for companies facing policy uncertainty.

Moreover, despite a recent rebound in U.S. stocks, both the S&P 500 Index and the Dow Jones Industrial Average ended a nine-day winning streak in early May, but overall stock prices remain below the beginning of the year, providing companies with relatively cheap repurchase opportunities.

Issuing Debt to Fund Repurchases: Frequent Moves by Apple and AIG

To execute share repurchase plans, some companies have opted to raise funds through corporate bond issuance. On May 5, Apple Inc. and American International Group (AIG) issued new bonds, with Apple's issuance amounting to $4.5 billion, marking its first bond issuance in two years. According to informed sources, Apple's bond issuance was oversubscribed by $10 billion, indicating high market demand for its bonds.

Apple stated that the proceeds from the bond issuance would be used for share repurchases and debt repayment. Market strategist Brian Reynolds pointed out that at least part of these funds "should be used for share repurchases," reflecting a corporate strategy to enhance shareholder value in uncertain environments.

Data Shows Repurchase Scale Reaches a Historic High

According to statistics from Deutsche Bank and Birinyi Associates, the total amount of share repurchases announced by U.S. companies in April 2025 reached $233.8 billion, the second-highest monthly figure since records began in 1984. Among them, the total amount of share repurchases announced by S&P 500 companies in the past three months reached $518 billion, the largest three-month moving total in history.

Deutsche Bank noted that just last week, S&P 500 companies announced $192 billion in share repurchase plans, setting a new weekly high since 1995. This wave of repurchases spans multiple industries, including finance, technology, and industrial sectors, indicating a cautious attitude among companies toward the future business environment.

Market Observation: Repurchases as a Tool to Stabilize Stock Prices

Julian Emanuel, chief equity strategist at Evercore ISI, stated, "Share repurchases are a powerful tool that can provide support at the individual stock level." However, he also noted that if trade and tariff policy uncertainties persist, share repurchases alone may not fully boost overall market performance.

Michael O’Rourke, chief market strategist at Jones Trading, pointed out, "In such an environment, having an approved share repurchase plan is an advantage because companies can flexibly repurchase stocks during market volatility to support stock prices."

Corporate Actions Reflect Policy Risks

In addition to share repurchases, companies are also demonstrating responses to policy risks in other areas. For example, many companies are choosing to delay mergers and capital expenditure plans, opting instead to retain cash to cope with potential impacts. According to Dealogic data, the number of global merger transactions in April 2025 fell to a 20-year low, indicating a tendency for companies to act conservatively in uncertain environments.

Furthermore, some companies like Ford and Netflix have adjusted their financial forecasts or experienced stock price fluctuations due to tariff policies, further highlighting the impact of policy changes on corporate decision-making.

References

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