Contrary to conventional wisdom at the time, the stock market's sharp sell-off after President Donald Trump unveiled his "liberation day" tariffs on April 2 was relatively brief, and Wall Street recovered to a series of new highs over the six months that followed. But one segment that didn't benefit much from that tailwind was the typically defensive consumer staples sector. The Consumer Staples Select Sector SPDR Trust (XLP +0.79%) -- a benchmark for the sector -- has underperformed the large-cap S&P 500 index by more than 30 percentage points since early April, putting it dead last among the 11 major economic sectors. As of the close of trading on Oct. 3, the consumer staples sector was up by around 0.1% year to date, compared to a 33.7% gain for the S&P 500.
NYSEMKT: XLP
Key Data Points
The six-month washout in the staples sector has been sweeping. Only two of the trust's 37 components have outperformed the S&P 500 since the tariff announcements -- Estée Lauder Companies, with its eye-popping 67% rebound, and Archer-Daniels-Midland, which jumped 44%. Otherwise, the slump within the sector has been brutal, with 16 of the trust's 37 stocks down by 10% or more since the tariff period began. The Motley Fool has continued to track what size tariffs Trump is imposing on each U.S. trading partner, but how those import taxes will affect specific American businesses has not yet become fully clear.
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Food and beverage fallout
If you take a quick look through the 10 hardest-hit consumer staples stocks since April, you'll notice that nine of them are in either the food, beverage, or household products industries, with the lone exception being Tylenol maker Kenvue -- a personal-care stock which, of course, suffered its own Trump-related crisis last month.
If you remove Kenvue, the top five tariff tumblers remaining are all in the food and beverage groups, and all down at least 19% in the past six months.
1. Constellation Brands (STZ +0.66%): down 19%
The importer and U.S. distributor of the popular Corona and Modelo beer brands -- and owner of a host of wine and spirits brands -- just reported results for its fiscal 2026 second quarter, which ended Aug. 31; operating income and net sales were down 13% and 15%, respectively, year over year.
In their commentary on the beverage giant's quarter, Constellation's CEO and CFO mentioned the word "tariff" 13 times, including a reference to "unfavorable fixed cost absorption from lower volumes, increased COGS [cost of goods sold] (inclusive of aluminum tariffs), as well as marketing investments to support the health and equity of our brands."
2. Hormel Foods (HRL +0.96%): down 20%
During its earnings report for its fiscal 2025 third quarter (which ended July 27), the Minnesota-based food company expressed disappointment that its top-line results did not translate into bottom-line growth due to the "unanticipated surges in commodity input costs." While management said it expects continued sales growth this quarter, due in part to price increases, "we expect profit recovery to lag into next year, with the near-term pressures we experienced in the third quarter persisting through the fourth quarter."
3. Molson Coors Beverage (TAP +3.55%): down 25%
The multinational brewing giant's Q3 earnings report will arrive on Nov. 4, and investors are eager for updates on sales and pricing, as well as earnings and margins, in light of the increased packaging costs it faces from Trump's 50% tariff on aluminum.
During the company's Q2 earnings call on Aug. 5, management referred to the "challenging and volatile macro environment," saying: "As a result of the uncertainty around the effects of geopolitical events and global trade and immigration policies, consumer sentiment in the U.S. has remained at relatively low historical levels. This has continued to pressure consumption trends."
4. Keurig Dr. Pepper (KDP +0.84%): down 25%
The company's second-quarter conference call on July 24 included 10 different references to tariffs. Management cautioned that "the balance of 2025 will present challenges in the form of rising cost pressures, including from tariffs, that remain highly fluid, as well as continued consumer caution."
More specifically, the company warned that its U.S. coffee segment would face some challenges in the second half of the year. "Commodity inflation will build as we roll into the back half and we roll into our higher cost hedges on green coffee. The tariff impacts will become prominent ... and put some additional pressure."
5. Conagra Brands (CAG +2.73%): down 30%
In its recently reported results for its fiscal Q1 2026, which ended Aug. 24, the packaged-food giant reported a 5.8% year-over-year drop in revenue and a 26% decline in adjusted earnings per share, but kept its full-year guidance in place. In its presentation to investors, the company noted that inflation and weak consumer sentiment remained headwinds, saying that it continues to "navigate a challenging environment," and that it's "still dealing with persistent inflation and tariffs, both of which have drifted higher than our original expectations."
Conagra also clarified that while it still expected its gross tariff exposure to be about 3% of its cost of goods sold, it was nudging its total expected inflation rate -- core inflation plus the impact of tariffs -- from "about 7%" previously to a figure in the low 7% range, noting additional drag from weak consumer sentiment and value-seeking behavior.
A trio of headwinds
For now, as earnings season reports begin to roll in, investors will be highly tuned in to any updates from the front lines concerning a trio of interrelated challenges. These will be the costs of tariffs to businesses after whatever easy adjustments that are possible have been made, the effects of rising inflation on materials and supplies, and the impacts of an increasingly cautious consumer environment during the critical holiday quarter.
