Among the companies set to release first quarter earnings results, Baidu Inc (ADR) (NASDAQ:BIDU) is one of the most contested. Since the start of the year, BIDU stock is down more than 2%. That by itself isn’t a big deal. What is concerning is that this underperformance erases Chinese companies’ incredible gains in the markets.

Of course, the number one factor contributing to the declines is the so-called Trump tariffs. Last month, President Trump signed an executive order that imposed $60 billion worth of punitive tariffs on Chinese imports. With no choice unless to voluntarily lose face, China responded with their own tariffs. More critically, the issue sees no imminent solution, and the North Korea crisis could worsen matters.

However, the Financial Times, which has adopted a liberal perspective on the Trump administration, surprisingly sides with the President. In their view, “China does not play by the same trade and investment rules as the west.”

Such sentiment adds credibility to the White House’s position, which puts companies like BIDU, and by logical extension, Baidu stock, in an awkward position. InvestorPlace writer Tom Taulli states:

“But this could only be the early innings. Keep in mind that one of Trump’s biggest concerns is the alleged theft of the intellectual property of the U.S. In other words, it looks like the mega tech operators like BIDU, Alibaba Group Holding Ltd (NYSE:BABA) and Tencent Holdings Ltd (OTCMKTS:TCEHY) will probably be targets of new trade actions.”

We’re not entirely sure how geopolitical events will impact BIDU stock. But it’s worth noting that Baidu’s management considers itself first and foremost an artificial intelligence company. Thus, it’s not entirely unreasonable to assume significant risks given Trump’s hardball posturing.

BIDU has Reasonable Q1 Targets, but Geopolitical clouds Loom

On the earnings front, it’s pretty standard fare. For Q1 2018, consensus estimates peg earnings per share at $10.54. This is slightly towards the bullish end of the estimate spectrum, which ranges from $9.36 to $11.71.

Should BIDU stock hit its target, this would be a 54% year-over-year EPS increase. In Q1 2017, Baidu delivered $6.85 against a $6.07 consensus estimate. The company tends to perform well during Q1, although it did miss slightly for fiscal 2016.

Covering analysts are almost equally optimistic for revenue growth, who expect $3.3 billion. Estimates range from $3.2 billion-$3.5 billion. In the prior-year quarter, Baidu stock delivered $2.4 billion. Should the company hit on top-line sales, we would see nearly 38% YOY growth.

It’s an aggressive target, but I concede it’s within reason. Since 2014, annual revenue growth averages 18.4%. However, Baidu experienced an off-year for fiscal 2016. In the following year, the annual growth rate jumped up to 26%.

In any other circumstance, you have to like Baidu’s chances. Unfortunately, these are strange circumstances. We’ve never had such a shoot first, ask questions later Presidency, so the dynamic is unpredictable. Perhaps we’ll see BIDU stock overcome the political headwinds, but it’s a steep challenge.

Longer-term Risks for Baidu stock Remain

Irrespective of the company’s Q1 earnings result, I’m still cautious on BIDU stock. Wall Street has consistently loved the China growth story, but every bull needs a break. We only need to look at our benchmark domestic indices to recognize this point.

But for Chinese investments, the broader pressures seem especially risky. Last year, Baidu stock returned an impressive 41% in the markets. Right now, it’s having difficult just staying perfectly horizontal. To be fair, BIDU didn’t jump up last year until the second half of 2017. But with the considerable vitriol involved geopolitically, it’s hard to imagine Baidu having a great year moving forward.

Tidbits of positive rumors and developments may temporarily spike up BIDU stock. However, taking President Trump’s words and actions into context, I’m going to maintain a cautious profile.

Here’s the deal: when Trump earlier this year issued a steel and aluminum tariff, the initiative obviously targeted China. However, the White House included staunch-U.S. ally Japan in the tariffs. During a recent meeting between Japan’s Prime Minister Shinzo Abe and President Trump, the two surprisingly failed to come to an agreement.

Despite the “bromance” between Trump and Abe, Trump was willing to alienate a key ally due to unfavorable trade deficits. If I may speak frankly, it appears the President doesn’t have as much regard for Asian foreign policy. In either case, the political dynamic must worry BIDU management.

Let me just speak frankly again: Japan is virtually an American colony. So if Trump shows no mercy to the Japanese, all bets are off. Not only am I cautious on Baidu stock, I may be cautious until this administration ends.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.