Google parent Alphabet (GOOGL.US) executives said on Thursday that U.S. President Donald Trump's trade policies will have a negative impact on the company's core advertising business.

Alphabet's first-quarter revenue was better than expected, but the company's online advertising business faces headwinds as Trump's tariffs could affect the economy and corporate spending. Although Alphabet never mentioned the word "tariff" during its investor conference call on Thursday, investors kept asking company executives about the impact of new trade policies on the future economy, and the word "macro" was mentioned many times during the meeting.

Some strategists raised the possibility of a recession after Trump announced tariffs on imports from dozens of countries on April 2. On April 9, Trump reduced tariffs on many countries to 10% for three months.

Tariffs could affect the cost of Alphabet's technology infrastructure, such as data centers. In addition, the advertising business may also shrink due to budget constraints, which will affect Alphabet.

Alphabet executives said on Thursday's investor call that it was too early to tell how much the company would be affected, but said the company's advertising business could face headwinds, particularly from the Asia-Pacific region.

Here are highlights from the call's Q&A session:

"What are the factors that could be showing signs of weakness in the vertical advertising space, region or category?" asked Morgan Stanley's Brian Nowak.

"We don't want to speculate on the potential impact, but it's important to note that the change in the small tariff exemption policy will clearly provide a slight headwind to our advertising business in 2025, mainly from retailers in the Asia-Pacific region," said Philipp Schindler, Google's chief business officer.

Earlier this month, Trump signed an executive order that will impose tariffs of 30% of the value of goods entering the United States worth less than $800, or $25 per item, starting May 2. The tariffs will increase to $50 per item starting June 1.

Oppenheimer estimates that retailers were one of the biggest contributors to Google's first-quarter advertising revenue growth, accounting for at least 21% of its advertising revenue. Chinese discount e-commerce apps Temu and Shein have been major U.S. advertising customers in recent years, and Temu has already cut back significantly.

Schindler added: “We are obviously not immune to the macro environment.”

Barclays’ Ross Sandler asked of brands that advertise on YouTube: “Are they starting to respond to some of the macroeconomic fluctuations?”

“It’s too early to be more specific about the situation in the second quarter,” Schindler said, adding that Google “has a lot of experience in dealing with uncertain times.”

JPMorgan’s Doug Anmuth asked: “If the macro weakens and we see a further slowdown, do you think you will find more opportunities to cut costs?”

Alphabet CFO Anat Ashkenazi said the company is still looking at $75 billion in capital expenditures through 2025, but “investment levels may fluctuate from quarter to quarter due to the impact of variability in delivery times and construction schedules.”

Executives said in February that the spending will be on technology infrastructure, primarily servers, followed by data centers and networks.

Ashkenazi said on Thursday's call that the company remains focused on "improving efficiency and productivity across the organization," referring to her comments about 2024. She said at the time that the company "can always go a step further" in terms of cost-cutting, which includes reducing headcount and real estate.

Alphabet CEO Sundar Pichai also mentioned "efficiency" as a means of keeping the company lean to weather potential macro storms.

"If the macroeconomic environment changes and becomes more volatile and downside, how should investors think about the investments that must be made this year, which are almost fixed in nature, and those that may be more flexible?" asked Eric Sheridan of Goldman Sachs.

Pichai responded that the company plans to continue to integrate teams and cut costs elsewhere, "which should help us build a more resilient organization regardless of macroeconomic conditions."