A widening divide is emerging in the U.S. economy as America’s largest tech companies and Wall Street banks post strong earnings, even as the rest of corporate America struggles under the weight of Donald Trump’s escalating tariff war.

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Recent earnings reports from giants like Apple, Meta, Microsoft, JPMorgan, and Goldman Sachs have propelled S&P 500 profits, with tech and financial firms reporting quarterly earnings growth of 41% and 12.8%, respectively. Together, the top 10 companies on the S&P 500 now account for nearly a third of the index’s total profits, reflecting a growing concentration of earnings among a few dominant players.

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Beneath the surface, however, a very different picture is unfolding for the broader economy. Companies across sectors such as consumer staples, materials, and manufacturing are reporting declining profits and shrinking margins. Data compiled by FactSet shows that earnings in consumer-focused sectors are flat or down year-on-year, while more than half of S&P 500 companies have reported a drop in profit margins.

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Much of this pressure stems from rising costs, with businesses reluctant—or unable—to pass these increases on to consumers. Sectors with direct exposure to global trade, including carmakers, airlines, and durable goods manufacturers, are facing the brunt of the impact as Trump’s tariffs disrupt supply chains and raise input costs.

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The administration’s trade war intensified further this week when Trump raised tariffs on a number of U.S. allies, including Taiwan, Canada, Switzerland, and India. The new levies have pushed America’s effective tariff rate to its highest level in decades.

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Despite the strength in Big Tech and banking, economic data released this week points to a slowdown in U.S. growth. The Bureau of Labor Statistics reported a sharp slowdown in job creation, with just 106,000 jobs added between May and July, down from 380,000 in the previous quarter. GDP data also showed annualised growth of just 1.1% in the first half of the year, a steep decline from the 2.9% rate recorded in late 2024.

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While tech giants are benefitting from heavy investment in artificial intelligence and robust global demand, the broader economy is grappling with the uneven fallout from the tariff war, exposing a deepening rift between Wall Street’s leaders and the rest of corporate America.

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