Delta (DAL) and Walmart (WMT) on Wednesday started what is sure to be a lengthy period of companies cutting or withdrawing their forecasts as a result of tariff uncertainty.
But cutting guidance so an executive team can buy itself time to figure out what constitutes success for its business under this new tariff regime is only one way companies will use these events for cover.
Another way involves finishing off what was started after the pandemic: downsizing.
In 2022, a wave of layoffs blew through the corporate world, most notably the tech industry, as companies realized they’d overhired during the pandemic boom.
And this trend still weighs on decision making today.
At Meta (META), for instance, the company is reportedly continuing to cull staff and push out those it deems underperformers.
AI has also been an accelerant in companies reshaping their workforces. And though predictions about AI coming for everyone’s job are at times hyperbolic, the efficiencies this new tech stack can open up in terms avoiding some hiring in the first place are starting to pop up.
Earlier this week, Shopify CEO Tobi Lutke outlined a new set of principles for how much the company’s staff needs to be incorporating AI into their work. One of Lutke’s key points said teams can’t ask for headcount until they’ve proven AI can’t do the extra work they think they need a human for.
Which gets us back to tariffs.
Every swing in the business cycle — higher rates, a recession, tariffs, etc. — opens two doors for corporate management.
The first requires a business to figure out how to navigate this new variable. This is the stage we’re in today.
The second allows a management team to make decisions they might’ve wanted to make anyway.
Take Mark Zuckerberg’s 2022 memo to Meta staff that announced 11,000 jobs were being cut.
“In this new environment, we need to become more capital efficient,” Zuckerberg wrote.
“We’ve shifted more of our resources onto a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse. We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency.”
Yes, this announcement came with the company’s stock price down about 60% from its record high. Interest rates were rising as inflation surged. The literal cost of doing business had gone up. Capital efficiency became a larger part of running a social network.
But changing org structures to increase efficiency, cutting perks, trimming budgets, shrinking the real estate footprint?
These are plans that any corporate finance team is ready to deliver to an executive at any time. Just say the word.
Over the last two-and-a-half years since Zuckerberg’s memo, Meta’s business has boomed and its stock price has responded in kind.
When the company made the decision to let 11,000 people go in November 2022, it had reported just a few weeks earlier that its headcount totaled 87,314. In January, the company reported its headcount stood at 74,067 at the end of 2024.
Net income in the three month period ending Sept. 30, 2022 was $4.4 billion; in the quarter ended Dec. 31, 2024, net income was $20.8 billion.
That is efficiency.
And while not every company that makes an efficiency drive realizes these kinds of results, no executive is going to let a change agent like tariffs come and go without taking their shot.
Like the pandemic, the AI boom gave some companies cover to go for new growth projects with the promise of leveraging technology to unlock new markets.
And like the inflation regime and downsizing trend that followed, tariffs and their attendant uncertainty will offer plenty of space for companies to take another crack at ramping up efficiencies in the post-pandemic world.