Analysis

Victoria's Secret & Co. reported that tariffs acted as a headwind on its second quarter 2025 financial performance. The company noted that tariffs, combined with higher air freight rates, collectively exerted approximately 80 basis points of pressure on gross margin during the quarter, with each factor contributing equally. This indicates an estimated 40 basis points of direct pressure from tariffs on gross margin.

The company is implementing several strategies to mitigate the financial impact of these tariffs. Key initiatives include optimizing costs with vendors and further diversifying its global sourcing locations to reduce exposure to highly-tariffed regions. Additionally, Victoria's Secret & Co. is focusing on managing its freight mix, aiming for a more efficient balance between air and ocean transport.

Furthermore, the company is utilizing targeted promotional modifications and selective pricing adjustments as a response to tariffs. This approach is intended to address identified value proposition gaps in the marketplace, suggesting a strategic increase in pricing where feasible to offset rising costs.

Sources

• "Importantly, growth in the second quarter was accompanied by improving gross margins, which were up year over year even with the headwind from the evolving tariffs." (Hilary Stueber, Chief Executive Officer)

• "Meanwhile, as expected, higher air freight rates and tariffs resulted in approximately 80 basis points of pressure in total in the quarter versus last year evenly split between the two." (Scott Bakula, Chief Financial and Operating Officer)

• "Our full year 2025 guidance now reflects tariff levels of 30% for China and 20% for non China imports as compared to our previous guidance which assumed 30% for China and 10% for non China. Our guidance for the full year 2025 now assumes net tariff impact of approximately $100 million which reflects tariff mitigation of approximately $70 million." (Scott Bakula, Chief Financial and Operating Officer)

Analysis

The company acknowledges the impact of tariffs, stating that their effect on second quarter 2025 results was minimal. Management indicated that a small impact from tariffs is anticipated for the second half of fiscal year 2025, which has been factored into the updated full-year guidance.

Despite the presence of tariffs, the company has implemented strategies to manage the situation. These include selective and surgical price adjustments. The company also emphasizes its collaborative efforts with manufacturers and national brand partners to navigate the evolving tariff environment. The company's updated full-year 2025 guidance reflects these tariff impacts, yet still includes an increase in expected comparable sales and adjusted EPS.

Sources

• "As you look to the back half, we just did take up our our top line and bottom line guidance, and that includes all of the impact of tariffs that we see. We did also just come off of a Q2 where our gross margin expanded and we are navigating very well through an uncertain tariff environment." (Lauren Hobart, CEO)

• "Yes. John, minimal impact from, tariffs in q two. There is small impact in the second half that has been contemplated into our outlook that we shared, for the for the margin as well as the full year profitability." (Navdeep Gupta, CFO)

• "Our updated guidance reflects our strong Q2 performance and includes expected impact from all tariffs currently in effect." (Press Release - Outlook)

Analysis

The U.S. government's requirement for licenses to export H20 products into the China market has directly impacted the company's operations. This led to a $4.5 billion charge in Q1 FY2026 for excess inventory and purchase obligations related to H20, as demand for the product in China diminished. Despite licenses being granted in August 2025 for certain China-based customers, no revenue has been generated from these sales to date.

In Q2 FY2026, the company recognized $650 million in H20 revenue from sales to an unrestricted customer outside of China. This transaction resulted in a $180 million release of previously reserved H20 inventory, positively impacting gross margins. However, there were no H20 sales to China-based customers in the second quarter, indicating the ongoing effect of export restrictions on this market segment.

Looking forward, the company's Q3 FY2026 outlook does not include any H20 shipments to China. Management has indicated that if geopolitical issues are resolved, potential H20 revenue could range from $2 billion to $5 billion in Q3. The U.S. government has also expressed an expectation of receiving 15% of revenue from licensed H20 sales, though this requirement is not yet codified.

The company continues to engage with the U.S. government to advocate for the approval of Blackwell products for China. The rapid evolution of global trade policies, including export controls and tariffs, introduces complexity and increased costs throughout the supply chain, a challenge that is expected to persist.

Sources

• "In April 2025, the U.S. government, or USG, informed us that a license is required for exports of our H20 product into the China market. As a result of these new requirements, we incurred a $4.5 billion charge in the first quarter of fiscal year 2026 associated with H20 for excess inventory and purchase obligations, as the demand for H20 diminished." (Filing)

• "In the second quarter, we recognized approximately $650 million of H20 revenue from sales to an unrestricted customer outside of China, resulting in a $180 million release of previously reserved H20 inventory. There were no H20 sales to China-based customers in the second quarter." (Filing)

• "We have not included H20 in our Q3 outlook as we continue to work through geopolitical issues. If geopolitical issues reside, we should ship $2 billion to $5 billion in H20 revenue in Q3." (Colette Kress, context earnings call)

Analysis

HP Inc. encountered increased trade-related costs, which contributed to a year-over-year decline in gross margin during the third quarter of fiscal year 2025. This also influenced a competitive pricing environment, particularly within the Print segment.

The company implemented several mitigation strategies to address these higher costs. These actions included diversifying manufacturing locations, undertaking cost reduction initiatives, and making pricing adjustments. As a result of these efforts, the majority of the tariff costs in the third quarter were mitigated. HP achieved Personal Systems and Print operating margins within their expected ranges, and adjusted EPS was slightly above the midpoint of guidance.

HP has moved nearly all products sold in North America to be built outside of China. This production shift involves ramping up manufacturing in Vietnam, Thailand, Mexico, and the U.S. The company continues to execute plans to fully offset trade-related costs.

Sources

• "At the same time, we are making solid progress on our actions to mitigate higher trade related costs, including manufacturing diversification, cost reduction and pricing adjustments." (Enrique Loris, Company - CEO)

• "This quarter as planned, nearly all products sold in North America are now built outside of China, helping to further reduce trade related costs." (Enrique Loris, Company - CEO)

• "As a result, we were able to mitigate the majority of the tariff costs in Q3, while delivering operating margins within our expected ranges for both businesses and non GAAP EPS slightly above the midpoint of our guidance range." (Karen Parkhill, Analyst, Unknown Affiliation)

Analysis

The company experienced increased tariff expenses in the third quarter of fiscal year 2025. These higher costs were attributed to greater shipment volumes and increased inventory build to support fourth-quarter growth. Gross margins in Q3 2025 were impacted by tariffs, along with currency effects and a planned BioVectra facility shutdown. Tariffs and related logistics costs contributed approximately 200 basis points to the year-over-year decline in operating margins in Q3.

Sources

• "Our Ignite Tariff Task Force has shown the power of the model in action. In a highly dynamic environment, we reorganized supply chains, shifted production across our global footprint and implemented targeted pricing actions. Giving us confidence we can fully mitigate the impact of tariffs in 2026 at current rates." (CEO)

• "Again, the big thing was tariffs and logistics related costs associated with those tariffs. That totaled to be about 200 basis points on a year on year basis. It was pretty significant." (Rodney Gonzalez)

• "Yes. I think the only other point, Porgy, is that yes, we recognized about $35,000,000 We were originally looking about $25,000,000 in tariff costs in the third quarter. That's up about $10,000,000 And we expect the same level in the fourth quarter. So $70,000,000 for the second half." (Rodney Gonzalez)

Analysis

The company experienced an adverse impact from tariffs during the second quarter of fiscal year 2025. This impact primarily affected the cost of sales.

Management has outlined a strategy to mitigate future tariff effects. This strategy includes shifting global production, enhancing supplier contracts and relationships, and managing operating expenses. The company also considers increasing average unit retail (AUR) through reduced promotions and clearance selling. However, broad-based ticket price increases are not anticipated for the current fiscal year.

The majority of these mitigation efforts are expected to materialize in fiscal year 2026 due to the time required for implementing supply chain and contractual changes. The company highlighted its strong brand health, balance sheet, and cash flow as factors enabling it to navigate the current tariff environment.

Sources

• "As expected, we did see around $5,000,000 of adverse impact in Q2 from tariffs, mainly recognized in cost of sales." (Robert Ball)

• "On tariffs, we intend to bring our proven playbook built on years of experience to mitigate as much of the increased cost as possible over time as rates become more certain." (Fran Horowitz)

• "Net of planned actions, the assumed tariffs carry a cost impact of around $90,000,000 for 2025, impacting our full year operating margin outlook by 170 basis points at the midpoint of our sales outlook." (Robert Ball)

Analysis

Tariff-related cost pressures resulted in increased costs for Walmart, particularly as inventory was replenished at post-tariff price levels. These cost increases are expected to continue into the third and fourth quarters.

Sources

• "With regard to our U.S. pricing decisions given tariff related cost pressures, we're doing what we said we would do. We're keeping our prices as low as we can for as long as we can." (Doug McMillon)

• "But as we replenish inventory at post tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters." (Doug McMillon)

• "Based upon our experience in Q2, we believe the impacts on margins and earnings from higher cost of goods and how they flow through our inventory accounting method will be less pronounced than previously anticipated." (John David Rainey)

Analysis

Tariffs resulted in higher costs for the company in the second quarter of fiscal year 2026. Despite these elevated costs, the company implemented mitigation strategies that allowed its merchandise margin to remain flat compared to the previous year.

The company's pretax profit margin in the second quarter of fiscal year 2026 exceeded its plan, partly due to lower-than-expected tariff costs. This indicates that while tariffs were a headwind, their financial impact was less severe than initially anticipated.

Management highlighted that their flexible business model, global buying organization, and ability to diversify sourcing contributed to their capacity to offset tariff pressures. They actively leverage market opportunities to secure better buying terms and adjust pricing selectively to maintain their value proposition, even in a tariff environment.

For the remainder of the fiscal year, including the third and fourth quarters, the company's guidance assumes that it will continue to offset any incremental tariff pressure on its business. This reflects confidence in their ongoing mitigation strategies.

Sources

• "Gross margin increased 30 basis points versus last year, primarily due to favorable hedges. Merchandise margin was flat despite higher tariff costs versus last year. Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter." (John)

• "The Company's second quarter Fiscal 2026 pretax profit margin was above the high-end of its plan by 0.9 percentage points. This was due to a combination of items including lower-than-expected tariff costs, expense leverage on above-plan sales, and the timing of certain expenses, partially offset by higher incentive compensation accruals and contributions to TJX's charitable foundations." (Press Release)

• "As for tariffs, our third quarter, fourth quarter and full year guidance assumes that we'll be able to offset the incremental tariff pressure on our business this year." (John)

Analysis

The company reported that tariffs did not materially impact its profitability or cash flows for fiscal year 2025. However, tariffs are expected to adversely affect profitability in fiscal year 2026. The company is actively monitoring evolving trade policies and enacted tariffs.

To mitigate the expected impacts, the company has implemented several strategies. These include leveraging available trade programs and optimizing its regional manufacturing footprint to bring production closer to the consumer, such as through its facility in Japan. These efforts, combined with increased supply chain agility, are projected to offset more than half of the anticipated tariff-related headwinds.

Additional strategies are under evaluation to further mitigate these impacts. These potential measures include further initiatives from the Profit Recovery and Growth Plan (PRGP) and strategic pricing adjustments.

Sources

• "The impact was not material to fiscal 2025 profitability and cash flows, however, even if we can minimize some of these impacts, we anticipate higher tariff rates to have an adverse effect on fiscal 2026 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material." (Filing)

• "Based on what we know today and net of our planned mitigation strategies, we expect tariff related headwinds to impact profitability by approximately $100,000,000" (Akhil Srivastava, context earnings call)

• "Since then, our teams have acted swiftly to implement mitigation actions, including leveraging available trade programs and further optimizing our regional manufacturing footprint to bring production closer to the consumer, including through a facility in Japan." (Akhil Srivastava, context earnings call)

Analysis

Tariffs have contributed to uncertainty for customers and influenced purchasing behavior. Order acceleration occurred in the automotive segment in China during the third quarter of fiscal year 2025, with these pull-ins linked to tariff announcements. This behavior contributed to the company's revenue exceeding its outlook for the quarter.

Management is adopting a conservative view regarding the automotive segment in the near term. This approach is influenced by the risk that tariffs could lead to reduced production in this sector. The company expects the order acceleration seen in the third quarter to unwind in the fourth quarter, resulting in a sequential decline in automotive revenue.

Despite geopolitical and macro uncertainty, including that related to tariffs and trade fluctuations, the company states that demand for its products remains robust. The company's diversified markets, applications, and products, along with its hybrid manufacturing strategy, are presented as factors that position it to navigate an evolving global operating environment.

Sources

• "While tariffs and trade fluctuations are creating market uncertainty, the demand for ADI's products remains robust." (Press Release)

• "However, we are mindful of the continued uncertainty facing customers with respect to tariffs and are monitoring the impacts closely." (Richard Puccio, context earnings call)

• "But we do think that given the behavior we've seen from our auto customers, EV credits expiring and the risk that tariffs could curtail production, We are taking a bit of a more conservative view to automotive in the near term." (Richard Puccio, context earnings call)

Analysis

Target Corporation faced significant financial and operational challenges from a volatile and uncertain tariff environment. The company's management initiated a broad cross-functional effort to mitigate these impacts, involving merchandising, supply chain, stores, and finance teams. This coordination led to revisions in product and inventory plans, including assortment, product development, sourcing, receipt timing, supply chain flow, order quantities, and pricing. The company also employed strategies such as diversifying country of production, evolving its assortment, and negotiating with partners to limit the impact on pricing.

The tariff-related pressures contributed to a 100bps reduction in the gross margin rate during Q2-2025. These pressures, along with inventory adjustment costs, were the primary drivers for the decline in adjusted EPS. Despite these headwinds, the company aimed to maintain its value proposition by limiting the direct impact on consumer pricing. Management stated that the majority of the one-time tariff costs were incurred in Q2-2025.

While the direct cost impact of tariffs is expected to persist as long as tariffs remain in effect, the company anticipates ending the year in a healthy position and moving beyond this period of uncertainty in 2026. The ability of the team to navigate the tariff environment was cited as a testament to their coordinated efforts and agility.

Sources

• "While the tariff environment remains challenging and highly uncertain, the team has made significant progress in mitigating their impact on the P&L, while maintaining our focus on value by limiting the impact on our pricing." (Brian Cornell)

• "It's notable that the vast majority of this decline was driven by the combined impact of inventory adjustment costs and tariff related costs." (Jim Lee)

• "The majority of the tariff related costs that we had signaled was related to one-time costs, primarily driven by order cancellation costs. The vast majority of that hit us in Q2." (Jim Lee)

Analysis

The company is actively managing its global sourcing environment in response to trade dynamics. Efforts focus on ensuring product assortment, value, and price competitiveness.

A key strategy involves country of origin diversification to reduce single-country dependency. Currently, approximately 60% of sourced goods originate from the U.S., while China's share has decreased to 20% from a previously higher level.

Dynamic pricing strategies are employed, leveraging internal algorithms and data on elasticity to adjust prices. This approach aims to maintain demand while managing the complexities of the current market.

The company utilizes superior systems and data to manage these market dynamics in real time. This operational efficiency is intended to allow the company to capture market share.

Sources

• "This brings me to our approach to managing the global sourcing environment. I'm pleased that the teams are executing our playbook well and ensuring that we maintain strong assortments and excellent value for our customers with the goal of remaining price competitive. Our merchants are making great progress working closely with our suppliers to help mitigate cost pressures, while ensuring a stable supply for our shared customers and accelerating our country of origin diversification to reduce our single country dependency in any given product category." (Bill Boltz)

• "We have done, in my estimation, an excellent job of of working cross functionally relative to looking for diversification. I mean, right now, roughly 60% of the goods we source are coming out of The US, and it wasn't that way seven years ago. And, you know, and and China's at 20%, but it was a lot higher than that seven years ago. And and Bill's team, they're taking methodical, you know, really, really business savvy steps to just keep us from being so overly dependent on one country of origin." (Marvin Ellison)

• "Having said that, as I said earlier, pricing is incredibly dynamic, and it's driven a lot by a set of business rules that we have internally based on competitive pricing and based on our own internal data on elasticity. And so we understand what our customers want and what they don't want, and we understand the breakpoint on units when you start to price in a way that you see demand go down. And so we're managing this literally real time because this is uncharted waters, but because we dealt with this before years back when we didn't have great data and systems, the team is really efficient at managing it now that we have superior systems." (Marvin Ellison)

Analysis

Medtronic stated that the impact of tariffs on its financial results for the three months ended July 25, 2025, was not material. The company estimates a pre-tax net tariff impact of $185M for fiscal year 2026. The majority of this impact is expected to be recognized in the second half of the fiscal year.

Medtronic is implementing proactive measures to mitigate the effects of these tariffs. However, the changing international trade policies present a continuing risk to the company's cost structure and financial performance. An escalation or expansion of trade barriers could materially affect the company's operating results.

Sources

• "The impact of the tariffs on the financial results for the three months ended July 25, 2025 was not material." (Filing)

• "Based on current rates as of August 19, 2025, we estimate the pre-tax net tariff impact to be $185 million in fiscal year 2026, with the majority recognized in the consolidated statements of income in the second half of the fiscal year." (Filing)

• "While we are taking proactive steps to mitigate the effects of these tariffs, the evolving nature of international trade policy continues to present a risk to our cost structure and financial performance. Further escalation or expansion of trade barriers could have a material adverse effect on our results of operations." (Filing)

Analysis

The Home Depot is affected by tariffs, although over 50% of its products are sourced domestically and are not subject to these tariffs. The company noted that tariff rates on some important goods have increased. This has led to modest price movements in specific categories, but not across the entire product assortment. The company emphasized its focus on protecting the cost of the entire project for its customers, rather than just individual items, by maintaining a portfolio approach and a price leadership position.

In response to tariff pressures, the company reduced promotional activity, particularly in certain lower-ticket garden projects such as mulch and chemicals. This strategic decision was made to mitigate the impact of tariffs on profitability. This reduction in promotional activity contributed to transaction comp noise in the second quarter, specifically impacting lower ticket garden project categories.

The company has incorporated the impact of these increased tariffs into its forward-looking guidance. It aims to continue driving value for customers and maintaining its Every Day Low Price (EDLP) strategy.

Sources

• "First, it's super important to remember that over 50% of our products are sourced domestically and wouldn't be subject to any tariffs." (Billy Bastek, Executive Vice President of Merchandising)

• "Now, some of the important goods, obviously tariff rates are significantly higher today than they were when we spoke in May. So, as you'd expect, there'll be some modest price movement in some categories, but it won't be broad based." (Billy Bastek, Executive Vice President of Merchandising)

• "So that was, if you think about our job, which is to help impact some of the tariff pressure, being a little less promotional in a couple of those garden areas was just the nature of what we did in Q2." (Billy Bastek, Executive Vice President of Merchandising)

Analysis

The company is operating in a macroeconomic and policy environment that includes trade issues and tariffs, which has resulted in increased uncertainty and lower visibility in the near term for its business.

During the third fiscal quarter of 2025, the non-GAAP gross margin was 48.9%. This strong margin was achieved despite tariff-related headwinds, as the company employed strategies such as product and segment mix adjustments and pricing to offset these impacts.

For the fourth fiscal quarter of 2025, the company expects a decrease in its China business. This is due to customers in China moderating spending after periods of increased investment and the company's conservative assumption that no pending export license applications will be approved. China's contribution to total revenue is expected to decrease to approximately 29% in the fourth quarter.

Sources

• "The dynamic macroeconomic and policy environment, including trade and tariffs, has wide ranging implications for the semiconductor industry, increasing uncertainty and lowering visibility in the near term." (Gary Dickerson, context earnings call)

• "The strong margin in Q3 was driven by the combination of product and segment mix and pricing as we work to offset tariff related headwinds." (Bryce Hill, context earnings call)

• "First, our customers in China are moderating spending following several periods of increased investments in equipment, and we expect China as a percentage of our revenue in Q4 to decrease to approximately 29% including display. This assumes that we do not receive any approvals of our pending export license applications." (Bryce Hill, context earnings call)

Analysis

Deere & Company's third quarter performance was impacted by tariffs, contributing to headwinds across its equipment operations. The Small Ag and Turf segment experienced an operating profit decrease attributed to higher tariffs, although this was partially offset by lower warranty expenses and reduced production costs. Similarly, the Construction and Forestry segment's operating profit declined due to unfavorable price realization and increased production costs resulting from higher tariffs. Tariffs also contributed to elevated decremental margins across the company. Despite the tariff impact, the Ag and Turf business maintained favorable production costs due to disciplined management, factory efficiency gains, and favorable material costs. The company is implementing strategies to mitigate tariff effects. These include pursuing USMCA certification, particularly in Mexico, to reduce exposure related to goods and components crossing the border. Deere is also making

Sources

• "Tariff costs in the quarter were approximately $200,000,000 which brings us to roughly $300,000,000 in tariff expense year to date." (Company - CEO)

• "Based on tariff rates in effect as of today, our forecast for the pretax impact of tariffs in fiscal twenty twenty five is now adjusted to nearly $600,000,000." (Company - CEO)

• "The primary drivers for the change from last quarter are increased tariff rates on Europe, India and steel and aluminum." (Company - CEO)

Analysis

Cisco's financial performance in the fourth quarter of fiscal year 2025 and for the full fiscal year 2025 experienced a minor impact from tariffs. This impact on the total gross margin was slightly favorable compared to the company's initial estimates.

For the first quarter of fiscal year 2026 and for the full fiscal year 2026 guidance, Cisco's assumptions include the continuation of current tariff policies and exemptions. These policies encompass a 30% tariff for China, which is partially offset by an exemption for semiconductors and certain electronic components. Mexico's tariffs are assumed at 25%, and Canada's at 35% for products not eligible under USMCA exemptions. Other countries are expected to maintain country-specific reciprocal rates, largely mitigated by exemptions for semiconductors and specific electronic components. Additionally, a minor impact from tariffs on copper, steel, aluminum, and retaliatory tariffs is included in the guidance.

The company plans to mitigate tariff impacts by utilizing its global supply chain team. This involves leveraging the flexibility and scale of its operations to support customers worldwide despite the complex trade environment.

Sources

• "Our total gross margin included a small impact from tariffs which was slightly favorable compared to our estimate that was included in our guidance." (Mark Patterson, CFO)

• "As far as tariffs, they had a really small impact in Q4 as well as for fiscal year 2025." (Mark Patterson, CFO)

• "Our Q1 and fiscal year twenty twenty-six guide assumes current tariffs and exemptions remain in place through the end of fiscal 2026." (Mark Patterson, CFO)

Analysis

The United States initiated trade actions in early 2025, imposing new and increased tariffs on imported goods. This has led to elevated volatility in the global supply chain and is expected to result in increased costs for materials and components for Motorola Solutions.

Motorola Solutions is working with its global supply base to mitigate its exposure to these tariffs and aims to substantially offset the anticipated increased costs. The company began experiencing the impact of tariffs in late Q2 2025. For the Products and Systems Integration segment, additional tariff costs were incurred, but these were offset by lower material costs, resulting in comparable operating earnings for the segment. The overall operating margin expansion for Q2 was not significantly impacted by tariffs.

Motorola Solutions anticipates a total tariff headwind of $80M for the full year 2025. The majority of this expected impact is projected to occur in the second half of the fiscal year.

Sources

• "We are estimating that this year's tariff impact will be about 80,000,000 down from the 100,000,000." (Jason Winkler, context earnings call)

• "I'm pleased with the fact that, you know, mid year here, we're able to to raise top line, bottom line, and overall raising operating cash flow in the face of 80,000,000 of tariffs headwind, the majority of which is in the back half and increased interest expense as well as $75,000,000 of fees associated with the Syllabus acquisition, and expanding gross margins and expanding operating margins." (Greg Brown, context earnings call)

• "As a result of the dynamic environment, the company expects increased costs on materials and components in 2025, which the company currently expects to substantially mitigate." (Press Release)

Analysis

Second quarter 2025 oil demand benefited from delays in the implementation of tariffs. This contributed to stronger oil demand during the period. The company generally notes that factors such as tariffs, trade policies, and trade barriers can influence commodity prices and, consequently, its cash flow and financial results. Additionally, future imposition of tariffs could lead to renewed inflationary pressures on operating costs and capital expenditures, potentially impacting cash flows and results of operations.

Sources

• "While first quarter oil demand was stronger than forecast and second quarter oil demand also benefited from delays in the implementation of tariffs, growth in demand for the 2025 is expected to moderate before beginning to increase throughout 2026." (Ezra Yacob, CEO)

• "The market prices of crude oil and condensate, NGLs and natural gas impact the amount of cash generated from EOG's operating activities, which, in turn, impact EOG's financial position and results of operations. ... and other factors, including tariffs, trade policies and agreements and trade barriers or other restrictions imposed by the U.S. government or other governments and the related impact of such measures on commodity and financial markets." (Filing)

• "EOG plans to continue with these initiatives and actions, though there can be no assurance that such efforts will offset, largely or at all, the impacts of any future inflationary pressures (such as from tariffs, other trade barriers or other economic factors) on EOG's operating costs and capital expenditures, cash flows and results of operations." (Filing)

Analysis

Some selective acceleration of orders from Asia appeared to be tariff-related in the June 2025 quarter. This amounted to mid to high single-digit millions in revenue. No direct customers attributed increased revenue to tariffs. A significant portion of the company's direct customer exposure in China operates in free trade zones, which are not impacted by tariffs.

The company believes the observed sequential sales growth is primarily driven by inventory digestion across its distribution network and direct customers, rather than tariff-related pull-ins. The overall business impact from tariffs is not considered material at present.

The company interprets recent statements regarding potential tariff exemptions for U.S.-based manufacturing investments to mean it may qualify for such exemptions. This is due to its substantial manufacturing presence in the U.S. This could potentially position the company more favorably than some competitors, though the rules and their clarity remain uncertain.

Sources

• "While we have not seen any material tariff related pull ins in April and May, we saw some selective acceleration of orders from Asia which appear to be tariff related. We believe that such pull ins amounted to only mid to high single digit millions." (Steve Sanghi)

• "We have done substantial analysis on the tariff question. Part of our normal process each quarter is to ask our distributors to explain any significant fluctuations in their customers quarterly sales. This is done at a very forensic level, so covering a large percentage of our customer base. We did this and we identified a small number of customers that identified tariffs as a reason for the sequential change in their revenue. When we extrapolated this data, we believe the impact came out to be only mid to high single digit, $7.08, $9,000,000 range. We have no direct customers that indicated that tariffs were the reason for their increase in revenue." (Steve Sanghi)

• "Everybody is talking and concerned about what's gonna happen with tariffs, and I think that's dominating the agenda, but on a business level, it's not really having impact today." (Steve Sanghi)

Analysis

Parker Hannifin acknowledges tariffs as a potential source of supply chain disruption. However, the company states its teams are effectively managing these challenges.

The company has implemented various mitigating strategies to offset the impact of tariffs. These strategies include leveraging pricing as a tool, utilizing its global footprint and local-for-local manufacturing model, and employing creative supply chain tactics such as dual sourcing and shipping from multiple regions.

Management indicates that these efforts have prevented tariffs from impacting earnings per share in the current period and are expected to continue to do so in the future. The company asserts that despite the evolving nature of tariffs, it possesses the processes and analytics to navigate their effects.

Sources

• "supply chain and labor disruptions, including as a result of tariffs and labor shortages" (Form 10-K)

• "our teams are doing a fantastic job managing tariffs and making sure that there's no impact to earnings per share." (Jenny Parmentier, Company - CEO)

• "Pricing is one of the levers we're able to flex, but it's also our global footprint. It's our local for local model that we've had for years. It's really our supply chain team being pretty creative with dual sourcing and the ability to ship from multiple regions." (Todd Liambruno, Analyst, Unknown Affiliation)

Analysis

Currently announced tariffs are expected to have a modest impact on the company's 2025 financial results. This expectation has been incorporated into the company's updated full-year guidance for 2025. While pharmaceuticals are currently exempt from certain tariffs, these exemptions are subject to change.

The U.S. government has initiated an investigation into the importation of pharmaceuticals, pharmaceutical ingredients, and derivative products. This investigation could lead to the imposition of sector-specific tariffs on these products. Should additional restrictions be enacted, they could result in supply disruptions, delays, or increased costs for the company's business. Due to the nature of pharmaceutical regulation, the company anticipates it may not be able to significantly offset increased costs from tariffs.

Sources

• "The potential effect of tariffs remains dynamic, and we will continue to update our estimate as the situation changes. We expect the 2025 impact of currently announced tariffs to be modest, and this has been factored into our 2025 guidance range." (Lucas Mondarce, Earnings Call)

• "This guidance is based on the existing tariffs as of August 7, 2025, and does not reflect any policy shifts, including pharmaceutical sector tariffs, that could impact business." (Press Release)

• "The precise impact of tariffs, trade protection measures, and other restrictions depend on their ultimate scope, timing, and other factors. If enacted, additional restrictions could result in supply disruptions or delays, further increase costs, or otherwise have a negative impact on our business. Given the nature of pharmaceutical regulation and commercialization, we may not be able to share the burden of increased costs from tariffs and related impacts to any meaningful degree." (Form 10-Q)

Analysis

BD expects tariffs to impact its fiscal year 2025 operating expense by $90M. This impact is predominantly weighted to the fourth quarter of fiscal year 2025. For fiscal year 2026, the company anticipates a tariff impact of approximately $275M. This revised outlook for fiscal year 2026 represents an improvement compared to prior expectations, resulting from the company's ongoing mitigation efforts and a moderation in net tariff rates.

To mitigate the impact of tariffs, BD employs several strategies. These include sourcing optimization and seeking tariff exemptions for qualifying products. Specific actions involve changing sourcing flows for products like vacutainer and flush to markets outside the United States for China, and modifying components and kits to incorporate more US-made parts to comply with USMCA and qualify for tariff exemptions. The company also collaborates with suppliers to optimize sourcing locations.

Sources

• "Our EPS guidance continues to include an estimated tariff impact of about $90,000,000 or 2% to EPS growth for the full year, which as a reminder is predominantly weighted to Q4." (Chris Dvorafis, CFO)

• "As you think about the full year impact of tariffs in fiscal twenty twenty six, the landscape remains fluid, but based on policies in place today, we currently anticipate a full year 2026 tariff impact of around $275,000,000 This is a notable improvement compared to initial expectations and reflects the results of our team's ongoing active mitigation efforts and tariff rates that moderated on a net basis since our last update." (Chris Dvorafis, CFO)

• "We've talked about changing sourcing flows, things like vacutainer and flush, sourcing those for China out of markets other than The U. S. We've talked about changing components and kits to get more U. S.-made components in certain kits to allow them to comply with USMCA and tariff exemptions. And of course, we're working with suppliers to optimize our sourcing locations as well, too, as part of that matrix." (Tom Polin, CEO)

Analysis

The company stated that geopolitical tensions, high volatility in the tariff environment, and sudden changes in trade restrictions have become a recurring challenge. This environment contributes to a cautious investment sentiment within key customer industries, such as automotive and machine building.

This volatility has slowed the recovery of orders, as business confidence is weighed down, resulting in extended sales cycles and longer decision-making processes for investments. Temporary trade restrictions on the EDA business in China specifically impacted revenue and profit in the current period.

To mitigate the risks associated with tariffs and enhance resilience, the company is actively expanding its supplier network and continuing efforts to localize value chains. This strategy aims to strengthen the company's operational stability against external trade-related pressures.

The company is monitoring developments regarding trade and investment agreements between the EU and the United States, as details remain in flux.

Sources

• "Geopolitical tensions, high volatility in the tariff environment as well as sudden changes in trade restrictions seem to have become the new normal." (Company - CEO)

• "The recovery of orders was less dynamic than anticipated due to a high continuing uncertainty about the future tariff environment and ongoing trade disputes. This climate of volatility is weighing on business confidence in several of our core industries such as automotive and machine building, where sales cycles are extended and investment decisions are taking longer." (Company - CEO)

• "temporary trade restrictions on EDA with regard to China impacted revenue and profit in this business." (Company - CFO)

Analysis

Corteva has indicated that tariffs have had a minimal impact on its operations. The company attributes this to proactive supply chain management and ongoing efforts to increase multisourcing of materials. This strategic approach has allowed Corteva to navigate potential challenges arising from tariff issues.

The company does not anticipate a material net financial impact from ongoing tariff negotiations on its full-year 2025 results. This assessment considers current policies and the company's ability to manage its supply chain effectively.

Sources

• "from a tariff standpoint, we've been able to navigate in the water so far. And, you know, the the impact is is, I'm gonna call it, minimal, from a overall standpoint." (Robert King, context earnings call)

• "As it pertains to ongoing tariff negotiations around the world, we are not expecting a material net impact on our full-year 2025 results given policies in place today." (Press Release)

Analysis

The company recognizes tariffs as a factor impacting certain industries, specifically identifying furnishing, apparel, and electronics as most susceptible. However, the company states it has minimal to no exposure to these particular industries within its U.S. portfolio.

Potential outcomes related to tariffs are factored into the company's existing credit watch list. This list, representing 4.6% of annualized base rent, comprises 114 clients. The average exposure per client on this watch list is 4 basis points, indicating a diversified risk profile that contributes to management's confidence in addressing potential challenges.

Management cited At Home as an example of a tenant whose prior struggles were partly attributed to an overreliance on imported products from China. However, this situation is presented as having already concluded, and the company anticipates constructive resolutions from this past event. The company believes it has adequately anticipated and accounted for potential outcomes related to tariffs across its client base and industries.

Sources

• "I would say, the 4.6% watch list that we've shared with the market has basically taken into account all of the various outcomes that could come out of these tariffs that are being discussed in the market today." (Sumit Roy, Company - CEO)

• "And thankfully, we have very little to zero exposure to these types of industries in our U. S. Portfolio." (Sumit Roy, Company - CEO)

• "And some of the names that we've already discussed, names like At Home, which we believe is at least one of the contributing factors to why they are struggling was their overreliance, 70% of their product came from were imported products and a lot of it was from China. That was one of the contributing factors to their performance along with obviously the leverage levels that they were running the business at etcetera. But that's already played out." (Sumit Roy, Company - CEO)

Analysis

Emerson's third quarter 2025 results reflected a dynamic tariff environment. The company noted that its exposure to tariffs in the quarter was less than initially expected, leading to decisions to ease surcharges. This easing of surcharges, while beneficial for customer relations, resulted in sales falling short of guidance for the quarter.

The tariffs negatively impacted adjusted segment EBITDA margin by 40 basis points, primarily affecting profitability within the Intelligent Devices segment. Despite this, the company maintained strong profitability, with adjusted EPS meeting the top end of its guidance.

Looking forward, the company expects a significantly reduced gross tariff impact for fiscal year 2025. This reduction is attributed to an improved tariff environment, including paused tariffs and trade deals with partners. In response to this favorable shift, Emerson has also reduced its planned price actions (surcharges). The company has implemented price actions and supply chain mitigations designed to completely offset the gross tariff exposure for the fiscal year.

Sources

• "The dynamic tariff environment persisted and our exposure was less than expected in the quarter. As the quarter progressed, we decided to ease the scope of surcharges, which meaningfully impacted our third quarter sales growth." (Company - CEO)

• "Adjusted segment EBITDA margin of 27.1% met expectations and was negatively impacted by 40 basis points due to tariffs, which primarily affected profitability in Intelligent Devices." (Analyst, Unknown Affiliation)

• "In the fiscal year, we are now expecting our gross tariff impact to be $130,000,000 versus our prior estimate of $245,000,000 After our May earnings call, the tariff environment improved as announced tariffs were paused and deals were reached with a number of trade partners. Subsequently, due to the improved tariff environment and in consideration of our customers, we decided to ease a number of the surcharges we had in place. We now expect approximately $115,000,000 of price actions for the fiscal year, which equates to 50 basis points of incremental price. This is a half point reduction versus our prior guide. We have implemented all the price actions and supply chain mitigations to completely offset the impact of this exposure." (Company - CEO)

Analysis

Tariffs contributed to economic uncertainty and market volatility in the first half of the year. This environment impacted the marketing business, making it challenging to capitalize on certain arbitrage opportunities.

Glencore's strategy regarding tariffs involves positioning its operations to maintain profitability regardless of tariff outcomes. The company does not base its strategy on predicting changes in tariff policies.

Increased certainty regarding the stability of current tariff policies is now observed. This stability is expected to allow for the realignment of trade flows and the emergence of new arbitrage opportunities, which Glencore's marketing business intends to leverage.

Sources

• "Of course, there was a little bit around some sort of U.S. Noise, but that was by no means a material contributor during that particular period." (Company - CEO)

• "Along those lines, even The US tariffs across the commodities can create these dislocations. We now have a bit more certainty around the tariffs or they're certain for today, we don't know what happens tomorrow, but there does seem to be a little bit more certainty in terms of some of the tariffs and therefore assessing the trade flows and routing of various commodities and what makes the most logical sense that often presents opportunities for us and we will capitalize on that through our world class marketing business." (Company - CEO)

• "We've seen the first half of the year where you had tariffs that were not really set for a long period of time, but it does seem that the current administration or the current approach towards tariffs is that now that they're in place, there may be some changes here and there, but it does seem to be in place across the board." (Gary Nagel, CEO)

Analysis

The U.S. government export controls on AMD Instinct MI308 Data Center GPU products for shipment to China significantly impacted the company's financial performance in the second quarter of 2025. These restrictions resulted in approximately $800M in inventory and related charges. This charge was a primary contributor to the decrease in gross margin and the Data Center segment's operating loss for the period. The export controls effectively halted MI308 sales to China during the quarter.

Despite the adverse effects of these export controls, the company's overall revenue increased. This growth was primarily driven by strong demand for other product lines, including EPYC and Ryzen processors, which offset the impact from the MI308 restrictions. The company is engaged with the U.S. Department of Commerce to secure licenses for future MI308 shipments to China. However, the majority of the affected inventory is in work-in-process, indicating that it will require several quarters to ramp up shipments once licenses are approved. The third-quarter guidance does not include any revenue from MI308 shipments to China, reflecting the ongoing review status of these licenses.

Sources

• "As previously announced, our second quarter results were impacted by the U.S. Government's export control on our AMD Instinct™ MI308 data center GPU products. For the quarter, these restrictions led to approximately $800 million in inventory and related charges." (Press Release)

• "The decrease in gross margin was primarily due to approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products." (Form 10-Q)

• "Our current outlook does not include any revenue from AMD Instinct MI308 shipments to China as our license applications are currently under review by the U.S. Government." (Press Release)

Analysis

Tariffs are a recognized focus within the biopharmaceutical industry. Amgen is actively engaged in discussions with government officials regarding pricing and tariffs. The company's 2025 guidance accounts for the estimated impact of implemented tariffs. However, the specific financial quantification of this impact is not separately detailed by the company.

Sources

• "As you're all aware, there's a focus on pricing and tariffs in our industry and I would just say that we are actively engaged in discussions with our government officials and share the objectives of improving patient access, affordability and expanding biopharma manufacturing in The U. S." (Bob Bradway, Earnings Call)

• "This guidance includes the estimated impact of implemented tariffs. It does not account for tariffs or pricing actions announced or described but not implemented." (Peter Griffith, Earnings Call)

Analysis

Pfizer operates within a complex global trade environment influenced by evolving trade and tariff policies. The company has implemented strategies to mitigate the potential short-term effects of these policies and is actively developing plans to address potential long-term impacts on its operations and business. This includes navigating new or changing laws and regulations concerning tariffs.

Sources

• "The pharmaceutical industry continues to navigate a complex global landscape influenced by rapidly changing proposed trade and tariff policies. Strategies to help mitigate the potential impact on our business in the short term have been implemented." (Dave Denton, Earnings Call)

• "That said, the company's guidance absorbs the impact of the currently imposed tariffs from China, Canada and Mexico, as well as potential price changes this year based on the letter received on July 31 from President Trump." (Dave Denton, Earnings Call)

• "On the tariffs, also, I don't have much news to add. We are waiting for the two thirty two report. And once we have that, we will see how this discussion again, on the tariffs, I had good discussions with Secretary Latnick, with the US Trade Representative, with Secretary Besson, and of course, with the President, but we have a special relation through the times of COVID." (Company - CEO, Earnings Call)

Analysis

Tariffs and trade policy uncertainty impacted Archer-Daniels-Midland Company's Ag Services and Oilseeds segment. This environment led to compressed margins and limited forward commitments from customers. Lower trading volumes in Global Trade were partially attributed to trade policy uncertainty.

The Crushing subsegment experienced lower operating profit due to reduced margins, influenced by lower vegetable oil demand stemming from biofuel and trade policy uncertainty. North American canola crush margins were specifically affected, decreasing by approximately $50 per metric ton due to these trade policy headwinds.

In the Refined Products and Other subsegment, biofuel and trade policy uncertainty negatively impacted biodiesel margins in Europe and North America. In response, the company has implemented mitigating strategies such as targeted organizational realignment and network consolidations to offset these market dynamics. The company also focuses on self-help initiatives to navigate the external environment.

Looking ahead, the company anticipates an improved environment with increasing clarity in biofuel and trade policies. Recent proposals for Renewable Volume Obligations and the extension of the 45Z biofuel producer tax credit are expected to incentivize higher biofuel and renewable diesel production. This policy clarity is projected to lead to improved Ag Services and Oilseeds margins, primarily benefiting results in the fourth quarter of 2025.

Sources

• "Ag Services and Oilseeds segment, segment operating profit decreased 17%, driven by increased global supplies of grains and oilseeds, higher projected ending stocks-to-use ratios, and biofuel and trade policy uncertainty." (Filing)

• "North America canola crush margins were approximately $50 per ton lower due to headwinds from trade policy and lower canola oil demand for biofuel production." (Manish Padalawala, EVP & CFO, Earnings Call)

• "Tax and biofuel policy proposals introduced towards the end of the second quarter and beyond have now created market insight to incentivize higher biofuel and renewable diesel production levels." (Manish Padalawala, EVP & CFO, Earnings Call)

Analysis

Zoetis is subject to risks from tariffs and other trade protection measures imposed by the United States and other countries. These measures may negatively affect product demand and increase product costs. The United States government announced additional tariffs on certain goods imported from numerous countries starting in early 2025, which led to reciprocal tariffs from multiple nations.

To mitigate these impacts, Zoetis actively monitors the situation and evaluates potential actions to moderate or minimize effects. The company benefits from a diversified supply chain and significant U.S. manufacturing capabilities; approximately 75% of products sold in the U.S. are manufactured domestically. Zoetis has also engaged in advocacy efforts in Washington D.C., arguing that animal health products should not be classified under national security concerns in tariff discussions.

Despite the dynamic tariff environment and an increased impact of tariffs compared to prior estimates, Zoetis believes it can absorb the incremental costs. The company's disciplined execution and cost management contribute to its ability to manage these financial pressures.

Sources

• "The impact of currently enacted and assumptions on announced tariffs on our business is slightly higher than our estimate as of our May guidance update. However, we feel we can absorb the incremental impact." (Wetteny Joseph, CFO)

• "While the final tariffs and other measures to be imposed, and their applicability to our business, remain uncertain, such actions may negatively impact demand and result in an increase in some product costs." (Filing)

• "We've been investing in US manufacturing for years. And if you think about what we sell in The US, 75% of what we sell in The US, we make in The US." (Kristen Peck, CEO)

Analysis

The company's financial results for the second quarter of 2025 were affected by tariffs. Specifically, the Electrical Americas segment experienced a 40 basis point dilution in its operating margin, which was attributed to the costs associated with offsetting tariffs on a dollar basis.

Beyond the current period, tariffs are identified as a factor contributing to a drag on the company's free cash flow. This drag is a result of the payment terms connected with tariff obligations. Tariffs and governmental regulations are also cited as general risk factors that could lead to material differences between actual financial results and forward-looking statements.

Sources

• "Operating margin of 29.5% was down 40 basis points versus prior year due to dilution from offsetting tariffs cost on a dollar basis and higher cost to support growth initiatives." (Olivier Nunezhi, Company - CFO)

• "...also the impact of tariff, which is a drag on free cash flow because of the way we the payment terms associated with tariff." (Olivier Nunezhi, Company - CFO)

• "The following factors could cause actual results to differ materially from those in the forward-looking statements: global pandemics; ... tariffs and governmental regulations;..." (Filing)

Analysis

Uncertainty surrounding tariffs is identified as a general macroeconomic condition influencing investor behavior. This uncertainty causes owners to pause new construction projects, impacting the company's development prospects. The company notes that a clearer outlook on tariffs would contribute to the transaction market opening up. No specific financial impact on revenue, net income, or costs directly attributable to tariffs is quantified.

Sources

• "...uncertainty resulting from economic, political or other global, national, and regional conditions and events, including related to tariffs, trade, travel and other policies..." (Filing)

• "...to the extent that there remains uncertainty around tariffs, that will give them some measure of pause." (Tony Capuano, context earnings call)

• "...the bill passing and hopefully a more concrete view about where tariffs are going to end up, that we've got the possibility of the transaction market starts to open up some more..." (Leeny Oberg, context earnings call)

Analysis

Public policy outcomes, including the imposition of new or escalating tariffs, represent a potential risk factor for Duke Energy. The company monitors these developments and their potential to disrupt its supply chain, affect future financial results, or impede capital plan execution and the ability to pursue its strategic objectives.

Tariffs, alongside other economic uncertainties, have contributed to a cautious approach among some of Duke Energy's larger customers. This caution has led these customers to limit production, focusing only on firm orders rather than overproducing. The company maintains close contact with these customers and anticipates that a resolution of these uncertainties, including progress on the tariff front, could lead to increased customer confidence regarding their supply chain and costs.

Sources

• "Public policy outcomes, including potential impacts from new or escalating tariffs or other actions from federal executive orders, federal legislation or other rulemakings, could disrupt or impact Duke Energy's supply chain, future financial results, capital plan execution or the ability to execute on the Company's vision for a smarter energy future." (Filing)

• "The swirl of uncertainties that arrange from tariffs as tax policy has been being worked real time in the quarter and the like. Those customers are are, you know, not not overproducing, if you will. They're they're just being very cautious when when they have firm orders, they're running to those firm orders." (Brian Savoy, Earnings Call)

• "And we expect as some of these uncertainties get get settled, I mean, there's a lot of progress on the tariff front that's happened in recent weeks. As that gets more firmed up, these customers will have more confidence in their supply chain and what the cost might be on their side." (Brian Savoy, Earnings Call)

Analysis

During the second quarter of 2025, the company experienced a negative impact from higher tariffs, which largely contributed to unfavorable manufacturing costs. This effect was observed across all three primary segments: Construction Industries, Resource Industries, and Energy & Transportation. The net incremental tariff impact for the second quarter was around the top end of the estimated range of $250 million to $350 million. The company noted that despite a decrease in some tariff rates during the quarter, high inbound shipment volumes contributed to the overall impact. This tariff-related headwind resulted in a decrease in consolidated operating profit for the period.

Looking forward, incremental tariffs announced in 2025, effective August 7, are expected to be a headwind to profitability for the remainder of the year. The company projects a total incremental tariff impact for the full year 2025 ranging from $1.3 billion to $1.5 billion, net of some initial mitigating actions. This headwind is anticipated to be more significant in the third and fourth quarters, with the fourth quarter expected to see a larger impact than the third due to the timing of recent rate changes. For the third quarter of 2025, a net incremental tariff impact of $400 million to $500 million is expected.

The company is implementing mitigating actions to reduce the impact of these tariffs. These include short-term,

Sources

• "As Joe mentioned, the net incremental impact from tariffs was around the top end of our estimated $250,000,000 to $350,000,000 range for the quarter." (Andrew Bonfield, Earnings Call)

• "Based on the incremental tariffs announced in 2025 and expected to be placed on August 7, we expect the net impact from incremental tariffs for 2025 will be around $1,300,000,000 to $1,500,000,000 net of some mitigating actions and cost controls." (Andrew Bonfield, Earnings Call)

• "As Andrew mentioned, we're taking no regrets actions. We're trimming costs on discretionary spending, things that can be done quickly, easily reversed. Where we have limited dual sourcing and it's beneficial to us, we're making those moves. We're working on certification of USMCA compliant products." (Joe Creed, Earnings Call)

Analysis

Diageo estimates the unmitigated annualized impact of tariffs, assuming current rates of 10% on UK imports and 15% on European imports into the US, to be approximately $200M. This projection excludes Mexican and Canadian spirits imports into the US, which are expected to remain exempt under the USMCA agreement. The company expects to mitigate around half of this unmitigated impact, resulting in an estimated $100M impact on operating profit on an ongoing basis for fiscal year 2026.

To address the potential effects of these tariffs, Diageo has implemented various mitigation strategies. These include inventory management, optimizing the supply chain, and reallocating investments. The company also noted its broad and advantageous portfolio and extensive supply chain as factors contributing to its ability to manage these impacts.

Diageo expresses confidence in its capability to navigate the tariff environment. This confidence stems from its historical experience in managing international tariffs and the agility of its supply chain operations. The expected fiscal 2026 impact of these tariffs is incorporated into the company's guidance.

Sources

• "Assuming the current 10% tariff remains on UK and 15% European imports into the US, that Mexican and Canadian spirits imports into the US remain exempt under the United States - Mexico - Canada Agreement (USMCA), and that there are no other changes to tariffs, the unmitigated impact of these tariffs is estimated to be c.$200 million on an annualised basis." (Preliminary Results)

• "Given the actions to date and before any pricing, we expect to be able to mitigate around half of this impact on operating profit on an ongoing basis." (Preliminary Results)

• "Our long track record of managing international tariffs gives us confidence in our ability to navigate this successfully." (Preliminary Results)

Analysis

The company expects an immaterial cost impact from tariffs in 2025. This assessment is based on current tariff rates and regulations. The company's significant U.S. presence and geographically diverse supply chain contribute to mitigating potential effects from tariffs.

Sources

• "We expect an immaterial cost impact from tariffs in 2025 based on what we know today due to our significant US presence and our geographically diverse supply chain." (Charlie Wagner)

• "This financial guidance also includes an immaterial cost impact from tariffs in 2025 based on currently known tariff rates and regulations." (Press Release)

• "Our foreign third-party manufacturers and suppliers may be subject to U.S. legislation, including the BIOSECURE Act, tariffs, sanctions, trade restrictions and other foreign regulatory requirements which could increase costs or reduce the supply of material available to us, or delay the procurement or supply of such material." (Filing)

Analysis

Colgate-Palmolive's gross margin was negatively affected by tariffs in the second quarter of 2025. Tariffs contributed to a year-over-year decline in gross profit margin, alongside higher raw material inflation. The company indicated that the cost environment remains difficult due to these factors.

The company's full-year 2025 guidance incorporates an updated and lower estimate for tariff impact compared to previous expectations. This revised outlook, which accounts for $75M in tariff costs, helps to mitigate other cost pressures such as increased raw material prices and lower organic sales.

Management employs revenue growth management strategies to address the elevated cost environment, including tariffs. These strategies aim to generate additional pricing and improve product mix, allowing the company to adapt to changes in consumer preferences, such as demand for different package sizes or multipacks.

Newly announced tariffs by the United States are not expected to have a material impact on the company's financial performance, based on preliminary analysis.

Sources

• "The cost environment is difficult as we're dealing with tariff increases, higher raw and packaging material costs and less underlying category inflation." (Company - CEO)

• "For gross profit, so the gross margin was down year over year in the quarter, driven by a combination of greater than anticipated raw material inflation and tariffs." (Stan Sotulla)

• "Our guidance includes the impact of tariffs that have been announced and finalized as of 07/31/2025." (John Fauci)

Analysis

The company identified tariffs as a factor impacting the estimated total project cost of the Coastal Virginia Offshore Wind (CVOW) Commercial Project. The project's current estimated cost of $10.9B incorporates the estimated impact of certain tariffs that became effective between March and July 2025.

During the second quarter of 2025, the company recorded an after-tax charge of $20M. This charge represents costs not expected to be recovered from customers, consistent with the cost-sharing settlement with Virginia regulators and the 50% cost-sharing partnership agreement with Stonepeak. This specific impact is directly related to tariff costs on the CVOW Commercial Project. The total project budget for CVOW increased by approximately $70M quarter-over-quarter due to actual incurred tariff costs and projected costs through the third quarter of 2025.

The company implemented strategies to mitigate tariff effects, including collaborating with vendors to identify cost mitigation measures and conducting further analysis of trade regulations. However, uncertainties remain regarding future tariff requirements and rates, particularly concerning those that may be in effect at the time of component delivery.

Potential future tariff impacts include an increase of up to approximately $0.3B in project costs for offshore wind and onshore electrical interconnection equipment if current tariffs remain in effect through the end of 2026. An additional increase of approximately $0.1B is possible if tariff requirements and rates related to the European Union are enacted consistent with the framework trade agreement announced in July 2025. Furthermore, an incremental impact of $134M to the overall project is expected if EU and Mexico country tariffs increase by 5% each, though this estimate is illustrative and subject to final details of any trade framework.

Sources

• "The expected total project cost increase of $0.1 billion relative to Virginia Power's May 2025 construction update filing with the Virginia Commission reflects current projections of tariffs on equipment expected to be delivered from March 2025 through the end of the third quarter of 2025 that either contains steel and/or originates from Mexico, Canada, a European Union member or other applicable countries." (MD&A)

• "As a result, we recorded a modest charge this quarter, about $20,000,000 after tax included on Schedule two, for costs not expected to be recovered from customers in accordance with the cost sharing settlement with Virginia regulators and our 50% cost sharing partnership agreement with Stone Peak." (Stephen Ridge, context earnings call)

• "If the current tariffs were to remain in effect through the end of 2026, the expected project costs for offshore wind and onshore electrical interconnection equipment could increase by up to approximately $0.3 billion. If the tariff requirements and rates related to the European Union are enacted consistent with the framework trade agreement announced in July 2025, such amount could increase by approximately $0.1 billion." (MD&A)

Analysis

Newly introduced tariffs are not expected to materially affect the company's cost of sales. The company continues to monitor changes to global tariffs.

Sources

• "Newly introduced tariffs are not expected to have a material impact on our cost of sales. We continue to monitor changes to global tariffs." (Jamie Mock, Earnings Call)

Analysis

The company does not anticipate a material financial impact from tariffs on its financial results for 2025. This assessment specifically addresses a potential 15% tariff on non-generic pharmaceutical products.

The financial implications of tariffs for 2026 and subsequent periods remain subject to further evaluation. The company expects to gain more clarity on these details as information emerges from trade agreements and other potential tariff-related developments.

Tariffs and other trade restrictions are noted as potential risks to the company's ability to manage its supply chains. The company's leadership has also commented on the broader international trade landscape, specifically regarding the perceived underpayment for innovation by European markets, and the limited control the company has over product pricing in these regions, as partners often manage such aspects.

Sources

• "While many details from The US EU trade agreement have yet to emerge, including when a tariff may go into effect, we do not currently expect a 15% tariff on non generic pharmaceutical products to have a material impact on our financial results in 2025. As we gain clarity on important details from the trade agreement and other potential tariffs, we will be in a better position to evaluate the financial impact of tariffs in 2026 and over the longer term." (Chris Fenimore)

• "I have been and the company has been outspoken that we agree with the president that the Europeans are not paying their fair share of innovation. And some way that needs to change, it's complicated and it does have to be done at a trade and policy level because it can't be done at an individual company level." (Company - CEO)

Analysis

Changes in U.S. trade policy, specifically increasing tariffs on imports, have introduced volatility and uncertainty in global markets. The company estimates the incremental costs from new tariffs currently in effect in the U.S. and other operating markets to be approximately $170M for the full year 2025. Most of this impact is expected within the North America segment. This guidance represents a $130M reduction from the previously estimated $300M impact.

For the three and six months ended June 30, 2025, recent tariff impacts contributed to unfavorable pricing net of cost inflation, which negatively affected adjusted gross margin and operating profit. In the North America segment, operating profit decreased, partly due to these tariff impacts.

To mitigate the financial effects of tariffs, the company is evaluating strategies to offset a portion of these costs. Management expects to offset approximately $50M, or one-third, of the estimated $170M gross tariff impact in 2025.

Sources

• "We estimate that the incremental costs of the new tariffs that are currently in effect in the U.S., as well as in other markets in which we operate, to be approximately $170 in 2025, most of which will be incurred by the North America segment." (Press Release)

• "Adjusted gross margin decreased 180 basis points to 36.9% primarily due to unfavorable pricing net of cost inflation, including recent tariff impacts, partially offset by gross productivity savings from integrated margin management of approximately $110." (Press Release)

• "The change in our operating profit growth rate from flat to positive to low to mid single digit is reflecting a combination of the lower expected net tariff impact as I laid out in the prepared remarks, right now we expect a gross tariff impact of around $170,000,000 which is $130,000,000 lower than the $300,000,000 that we had estimated back in April. And we expect to offset around a third or $50,000,000 of that $170,000,000" (Nelson, Earnings Call)

Analysis

The company addressed the impact of tariffs imposed by the U.S. in 2025 on imports from its trade partners. The estimated impact for 2025 is considered minor, calculated at less than one percent of the company's third-party spend, and is not expected to materially affect its financial results. The company has implemented mitigating strategies to reduce the effects of these tariffs. These strategies include collaborating with partners across its supply chain to identify alternative sourcing options.

Despite the current non-material impact, the company acknowledges significant uncertainty regarding the future duration and magnitude of these and any potential new tariffs. This uncertainty also extends to the resulting effects these tariffs could have on the company, its suppliers, and its future operational financial performance.

Sources

• "In 2025, the U.S. announced the imposition of various changing tariffs on imports from our trade partners." (Filing)

• "The tariff impact in 2025 is currently estimated at less than one percent of the company's third party spend and is not expected to be material to the company's financial results." (Filing)

• "The company continues to work with partners across its supply chain to identify alternative sourcing options and mitigate the impact of the tariffs." (Filing)

• "However, there is significant uncertainty as to the duration and magnitude of these and any future tariffs that may be imposed and, accordingly, as to the resultant impacts these tariffs could have on the company and its suppliers and the company's future results of operations." (Filing)

Analysis

Tariffs had a direct impact on the company's financial results for the third quarter of fiscal year 2025 and are expected to continue affecting performance in the fourth quarter. In the third quarter, the company incurred approximately $800M in tariff-related costs, which contributed to a decrease in Products gross margin percentage. The Products gross margin percentage decreased primarily due to tariffs and a different mix of products, partially offset by favorable costs.

The company has observed some pull-ahead of demand, estimated to be about one percentage point of the total company's 10% growth in the third quarter. This pull-ahead was principally on iPhone and Mac products, occurring largely in April, primarily in the United States, due to discussions about tariffs. The company also implemented some build-ahead inventory in the previous quarter, which influenced the tariff costs for the current period.

To mitigate the impact of tariffs, the company is optimizing its supply chain. It has committed $500B in investments in the United States over the next four years, including building chips in Arizona and semiconductors across 12 states and 24 factories. The company also recently invested in MP Materials, a supplier of vital recycled rare earth materials. Furthermore, the company is diversifying its country of origin for products sold in the U.S., with the majority of iPhones sold in the U.S. having India as their country of origin, and most Mac, iPad, and Apple Watch products sold in the U.S. sourced from Vietnam.

Sources

• "For the June, we incurred approximately $800 million of tariff related costs." (Tim Cook, CEO)

• "For the September, assuming the current global tariff rates policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add about $1.1 billion to our costs." (Tim Cook, CEO)

• "I would estimate the pull forward of demand into April specifically to be about one point of the ten points in terms of people buying because of discussions about tariffs." (Tim Cook, CEO)

Analysis

Floor & Decor faces tariffs as a significant operational challenge. The company addresses this through a dedicated Tariff Steering Committee, which guides priorities and maintains agility in planning. This committee leverages the company's past experience, scale, and operational flexibility to manage current market complexities. The company believes its approach positions it more favorably than many competitors in navigating these challenges.

Floor & Decor employs several strategies to mitigate tariff impacts. It actively negotiates with vendors to reduce the burden of higher incremental tariffs. The company also diversifies its product sourcing, utilizing a global network of over 240 vendors across 26 countries to ensure competitive pricing and product quality. This includes onboarding new suppliers and factories to enhance supply chain resilience.

In terms of pricing, the company applies a balanced portfolio approach to manage gross margin and overall profitability. While it adjusts retail prices as needed, it aims to maintain its pricing gaps and reinforce its everyday low price message. This strategy contrasts with some independent retailers and distributors, who have implemented higher price increases in response to tariffs. This dynamic may allow Floor & Decor to gain market share.

Additionally, Floor & Decor has increased its focus on domestic sourcing. The United States now represents its largest country of manufacture, accounting for approximately 27% of products sold in fiscal year 2024, an increase from 20% in fiscal year 2018. The company's competitive advantages, including broad assortments, in-stock job lot quantities, new products, service offerings, and knowledgeable associates, are reinforced by its price leadership.

Sources

• "As you are aware, one of the most consequential challenges we and others across our industry continue to face is mitigating the impact of tariffs on our products." (Tom Taylor, CEO)

• "While we continue to mitigate the overall effect of increased tariffs, these tariffs have increased and will continue to increase our inventory costs and associated cost of sales, which may result in increased retail prices and may adversely impact sales. Furthermore, the broader impact of increased tariffs on the economy may negatively impact consumer demand, which may also have an adverse impact on sales." (Filing)

• "As we said on the last call, if it was just universal tariffs in the 10%, we felt very confident in maintaining the rate. We knew reciprocal tariffs have been put into place and put a little bit of pressure, but because of the job that Brad and Tom have talked about from our merchandising team, we've been able to mitigate a lot of that exposure. And so there may be slight pressure, but it's going to be very minimal pressure on gross margin rate from tariffs." (Brian Langley, CFO)

Analysis

Tariffs and trade policies are recognized by Amazon as factors that could materially affect their financial results. For the first half of the current year, the company has not observed a decrease in demand or a meaningful increase in prices directly attributable to tariffs.

There is ongoing uncertainty regarding the future settlement of tariffs, particularly those related to China. The company also notes that the impact after the depletion of pre-bought inventory by both Amazon and its third-party selling partners remains unknown. It is also unclear who would ultimately absorb any potential higher costs.

Amazon's diversified marketplace, comprising over 2 million sellers with varying strategies on passing through costs, is presented as an advantage for customers, as it increases the likelihood of finding lower prices.

Sources

• "Although operating income was $19.2 billion, which is $1.7 billion above the high end of our guidance range." (Brian Olsavsky)

• "There continues to be a lot of noise about the impact that tariffs will have on retail prices and consumption. Much of it thus far has been wrong and misreported. As we said before, it's impossible to know what will happen. Where will tariffs finally settle, especially China? What happens when we deplete the inventory we forward bought or that our selling partners forward deployed in advance of the tariffs going into effect? If costs end up being higher, who will absorb them? But what we can share is what we've seen thus far, which is that through the first half of the year, we haven't yet seen diminishing demand nor prices meaningfully appreciating." (Andy Jassy)

• "We're also closely monitoring the macroeconomic environment, including the impact of tariffs. As Andy mentioned, our Q2 plan factored in a range of assumptions, not all of which materialized. We will continue to consider a range of assumptions going forward." (Brian Olsavsky)

Analysis

Tariffs are expected to increase product costs for the company. These tariffs may also adversely affect product demand and supply chains.

The company estimates a net impact from tariffs of approximately $175M for 2025. This updated estimate reflects a reduction in bilateral United States and China tariffs. This reduction is partially offset by an increase due to a new framework agreement with the European Union that shifts previous tariffs from a 10% model to 15%.

The company's manufacturing footprint, particularly in Europe, and its relatively lower presence in China compared to other companies, influence the overall degree of the tariff impact. To address the estimated tariff impact, the company is implementing strategies. These include leveraging its manufacturing footprint, maintaining disciplined cost management, and benefiting from favorable foreign currency impacts.

While tariffs had some impact in the second quarter of 2025, the majority of the financial effect is anticipated in the second half of the year. This is because tariffs flow through cost of goods sold, first impacting inventory and then the profit and loss statement.

Sources

• "Beginning in 2025, the United States government has announced new tariffs on goods imported into the United States from dozens of countries, including China and the European Union member states... Tariffs are expected to result in an increase in certain product costs or have adverse impacts on, among other things, demand for our products and supply chains." (Filing)

• "We now estimate a net impact from tariffs of approximately $175,000,000 in 2025. This estimate, which is consistent with the amounts we have previously discussed, does reflect the reduction in the bilateral US China tariff rates and the announcement of a new framework agreement with the European Union. We continue to take thoughtful measures to address this estimated impact, which we are offsetting through our continued sales momentum, the leveraging of our manufacturing footprint, disciplined cost management, and better than expected foreign currency impacts." (Preston Wells, context earnings call)

• "So when you think about tariffs, there is some impact of tariffs in the second quarter. But remember, because most of the tariffs are flowing through our COGS number, they're flowing into inventory first and then onto the P and L. So we will see a bigger impact in the second half of the year than certainly what we saw in the second quarter or even first half of the year. So back end loaded because it's going to flow through inventory and then to the P and L." (Preston Wells, context earnings call)

Analysis

The company reported that the imposition of tariffs by the U.S. government and countermeasures by foreign countries had an adverse impact on its results of operations. However, this impact was not material in fiscal year 2025. Despite these headwinds, gross margin and overall financial performance improved in fiscal year 2025, driven by higher revenue volume and cost management efforts. Higher tariff expenses contributed to increased costs in fiscal year 2025.

Uncertainty persists regarding the ultimate duration, size, and substance of tariffs, including potential reciprocal actions. The company is actively assessing mitigation strategies to reduce its exposure to these tariffs. These strategies involve optimizing business processes, such as leveraging free trade zones and refining the movement of parts, to reduce tariff leakage and explore opportunities for tariff reclamation. Any structural cost increases due to tariffs will be managed similarly to other cost increases, and the economic costs of tariffs are prompting a re-prioritization of certain process improvements.

Sources

• "The recent imposition of tariffs by the U.S. government, along with countermeasures taken by foreign countries, have had an adverse impact on our results of operations, though the impact was not material in fiscal year 2025." (Filing)

• "Other service and manufacturing costs included lower inventory obsolescence charges offset by higher tariff and freight expenses in fiscal year 2025 compared to fiscal year 2024." (Filing)

• "Gross margin is forecasted to be 62% plus or minus one percentage point, reflecting a slightly weaker systems revenue expectation and a 50 to 100 basis point impact from announced global tariffs." (Company - CEO, Earnings Call)

Analysis

Sanofi has identified potential U.S. tariffs and EU exports as sources of uncertainty. The company notes that the details surrounding these potential tariffs are limited and not yet fully settled.

Sources

• "Finally, navigating through a dynamic world with a lot of uncertainties from potential U.S. Tariffs and EU exports. However, all the details are still limited and not fully settled yet, we will update you along the way." (Company - Other Officer)

• "And we confirm we did not factor it in our guidance, but it will have a limited impact on 2025 because we already have inventory in the U.S. So I don't think that it will, in fact, with what we know today and what we read in the media, we don't think that it will impact our guidance in any way for 2025." (Company - Other Officer)

• "But we prepared for delivering the guidance this year, that's the minimum. So don't feel casual about it because we're absolutely not." (Company - CEO)

Analysis

During the first half of 2025, the company stated that tariffs were a manageable factor, not material at an aggregate level, and within the scope of general inflation. This assessment was made despite certain packaging materials and critical raw materials being subject to tariffs, largely due to the localized nature of the company's supply chain.

In response to macroeconomic uncertainty arising from tariffs, the company increased stock holdings during the first half. This measure was primarily intended to ensure supply security and resilience, rather than to mitigate direct cost impacts from tariffs. The higher working capital resulting from this strategic stock build contributed to a decrease in free cash flow for the period.

Looking ahead, the company plans to reverse the increased stock holding in the second half of 2025 as tariff uncertainty has decreased. Management reiterated that the overall impact of tariffs is not expected to be material and remains well within the company's margin guidance for the second half.

Sources

• "Free cash flow for the 2025 was Euro 1,100,000,000.0 compared to 2,200,000,000.0 in the prior year due to lower operating profit, ice cream separation costs, and higher working capital to support supply chain resilience during the period of tariffs uncertainty." (Srini Patak)

• "While at an overall aggregate level, tariffs was absolutely a manageable number for us and still is and therefore we don't have to specifically call it out. It's in the realms of what we manage is inflation." (Srini Patak)

• "With more certainty about tariffs, the increases in the stock holding in the first half will be reversed during the second half." (Srini Patak)

Analysis

The company indicated that tariffs contributed to negative net pricing on products in the first half of the year. This factor, combined with raw material inflation and negative mix, drove a 90 basis points organic decline in gross margin for the first half.

Management stated that the gross margin progression for the full year could be somewhat negative due to the timing of price impacts, which are intended to offset raw material inflation and tariffs. Tariff uncertainty also impacted markets in Mexico, contributing to weakness in that region.

To counteract these pressures, the company has implemented pricing actions. Most of these actions have been launched, and management expects to see a stronger translation into margins in the second half. The company also emphasizes its demonstrated pricing power and expects to fully offset the impacts of tariffs and inflation over the coming quarters through these pricing strategies and productivity improvements. The company's multi-year model is utilized to maintain agility and respond to market volatility, including tariff developments.

Sources

• "This was driven primarily by negative net price on products due to timing of a ramp up in prices to offset effects of raw material inflation and tariffs and due to negative mix." (Hilary Maxson, CFO)

• "Net net and depending on timing of various tariff actions in The U.S., we'd now expect our gross margin progression for the full year could be somewhat negative due to the timing of price impacts flowing into the P&L to offset raw material inflation and tariffs." (Hilary Maxson, CFO)

• "And as you know, we're a company with demonstrated pricing power. So, we do expect to fully offset the impacts of tariffs and of inflation over the next quarters." (Hilary Maxson, CFO)

Analysis

The company has identified tariffs as a factor that has negatively impacted and may continue to negatively impact its revenue and operating margin in the short term.

For the September quarter, the company's gross margin guidance incorporates the current assessment of the direct impact of tariffs.

Looking into the December quarter, the company expects tariff headwinds to be higher compared to the September quarter. This increased tariff impact is cited as one element contributing to an anticipated decrease in gross margin to approximately 48%, alongside other factors such as product and customer mix and overall revenue levels.

Sources

• "In the short term, volatility in the semiconductor industry environment from trade restrictions, tariffs, as well as other direct and indirect risks and uncertainties, have had, and in the future may have, a negative impact on our revenue and operating margin." (Lam Research Corporation 2025 10-K)

• "This guidance includes our current assessment of the direct impact of tariffs on our business." (Doug Bittinger, earnings call)

• "Tariffs are a little bit higher in the December quarter than they are in September." (Doug Bittinger, earnings call)

Analysis

Ford Motor Company reported a net tariff impact of $800M on adjusted EBIT for the second quarter of 2025. This headwind also contributed to lower EBIT and margin in the Ford Blue segment.

For the full year 2025, the company expects a net tariff headwind of $2B. This figure incorporates an anticipated $3B in adverse gross adjusted EBIT impact, partially mitigated by $1B in recovery actions, predominantly influenced by market factors.

Ford is engaging with policymakers to mitigate tariff disadvantages for U.S. auto workers and customers. The company's cycle plan is considered appropriate for the current tariff environment, particularly in light of recent trade agreements with Japan and Europe.

The company's strategy involves avoiding high-volume, generic market segments that typically necessitate overseas production for cost competitiveness. Instead, Ford is concentrating on its core strengths: trucks, iconic products, Ford Pro, and developing breakthrough electric vehicle technology for U.S. production. Ford aims to simplify parts tariffs to potentially reduce its $2B tariff liability.

Sources

• "We expect tariffs to be a net headwind of about $2 billion this year, and we'll continue to monitor the developments closely and engage with policymakers to ensure U.S. auto workers and customers are not disadvantaged by policy change." (Jim Farley, earnings call)

• "And we delivered $2.1 billion in adjusted EBIT despite a net tariff impact of about $800 million." (Sherry House, earnings call)

• "Our full-year outlook assumes a net tariff headwind of about $2 billion, reflecting approximately $3 billion of adverse gross adjusted EBIT impact, offset partially by $1 billion of recovery actions, primarily market factors." (Sherry House, earnings call)

Analysis

The company reported that its pricing actions effectively mitigated the financial impact of tariffs during the second quarter. These actions more than covered the tariff costs and contributed positively to adjusted EPS. However, the overall price-cost dynamic was modestly dilutive to the operating margin in the quarter.

Management indicated that the direct impact of tariffs is largely contained due to the company's operational model, which involves producing over 90% of what it sells locally. This strategy helps to minimize direct tariff exposure.

While tariffs were manageable in the past, including a previous round in 2018 and the current period, the company acknowledged a temporary freeze in shipments to China from the U.S. in one segment at the beginning of the second quarter. This was due to customer requests and the imposition of significant China tariffs. However, this situation has since resolved, and the company's

Sources

• "Although our decisive pricing actions more than cover tariff costs and positively impacted EPS in Q2, the overall price cost dynamic was modestly dilutive to our margin." (Michael Larson, CFO)

• "But from our standpoint and particularly relating to the tariffs, we go back to the point that we're over 90% produced what we sell. So the direct impact of tariffs is largely mitigated. And to the extent that we need to get price, we are able to get price due to the high levels of differentiation across the business. Both in 2018 and in this past round, tariffs were manageable for us. And based on what we know today and even if tariffs were increased, we'd expect the tariff cost to be manageable going forward. Certainly, we would hold to our EPS neutral or better, I'd say, no matter what happens from here on out." (Company - CEO)

• "There was a little bit of that in one segment. We have one segment where we have some shipments to China from The U. S. Particularly relating to customer requests for us to do it that way. And certainly with the enormous China tariffs at the beginning of the quarter, there certainly was a freeze and that has no freed up since then. And also we've had several through our read and react capabilities in our businesses, we've been able to read and react very successfully to that. So if it was to happen again, we'd have mitigation plans in place where it wouldn't be as much of an issue." (Company - CEO)

Analysis

Tariffs have affected the company's supply chain, specifically impacting direct materials and packaging components such as metal foil liners and tin cans. These cost impacts are not considered material to the company's overall business. The company has accounted for these tariff impacts within its financial guidance.

Management monitors the potential secondary effects of tariffs, particularly how tariff-related price increases on everyday consumer goods could influence adult tobacco consumer purchasing behavior. To mitigate supply chain risks, the company utilizes flexibility in its supply chain, including relationships with different vendors and managing inventory levels for multi-year crops. These measures are designed to ensure stable supply despite tariff considerations.

Sources

• "So first, what I would tell you is that while tariffs have had an impact on our costs, we don't view them as material to our overall business." (Sal Mancuso, Earnings Call)

• "While we expect higher tariffs to impact our costs in 2025, we do not expect the impact to be material based on presently available information on tariffs." (Filing)

• "Our guidance contemplates the current estimated impact of increased tariffs on our costs, based on presently available information about tariffs." (Press Release)

Analysis

American Electric Power (AEP) has focused on securing specific utility rate tariffs for large electricity consumers, particularly data centers and other industrial customers. These approved data center tariffs and large load tariffs in Ohio, Indiana, West Virginia, and Kentucky establish financial obligations for these high-volume customers. The company uses these tariffs to ensure funding for necessary infrastructure, promote certainty for new construction, and manage risk.

The tariff provisions, which include contractual minimums for large load customers, directly contribute to revenue generation and stability. This approach allows AEP to manage earnings volatility and more than offset any revenue impacts resulting from energy efficiencies in residential customer segments. The company emphasizes that these tariffs provide financial protections for existing customers while accommodating investments required to serve new, large loads.

Sources

• "This approved data center tariff provides assurances that there will be reliable electric grid infrastructure to deliver the power we all count on while keeping costs as low as possible for all customers. This approval joins other large load tariffs previously secured in Indiana, West Virginia and Kentucky. AEP has been at the forefront of securing these tariffs that bring down system average costs as we add data center customers, promote certainty around build out while providing customer protections and are a powerful risk mitigation tool for us." (Bill Furman, CEO)

• "Earlier, you heard Bill mention a few of our regulatory successes and several revolved around strengthening and lengthening those tariff provisions. Just this year, we've had large load tariffs approved in Indiana, Ohio, West Virginia and Kentucky that provide financial protections for our existing customers as we invest to serve those new large loads." (Trevor Mihalik, CFO)

• "Higher peak demand coupled with the contractual minimums built into the latest tariff provisions predominantly in Indiana are driving up revenues. These demand minimums for large load customers are helping to more than fully offset revenue impacts from energy efficiencies among our residential customers." (Trevor Mihalik, CFO)

Analysis

Tariffs enacted thus far and European tariffs indicated recently are included in the company's financial guidance. The company noted that more details are pending regarding these tariffs. There were no tariffs affecting performance in the first half of the current fiscal year. Tariffs are anticipated in the second half, which are expected to slightly lower the gross margin. However, the company still expects gross margin accretion through product mix, even with these anticipated tariffs.

Sources

• "Our guidance is inclusive of tariffs enacted thus far and the European tariffs indicated this week. Obviously more details are set to follow, but as we've said previously, we are positioned to respond with mitigation actions identified and confirm our guidance towards the top end of the range this year." (Julie Brown)

• "Obviously, we haven't had any tariffs in the first half. We are anticipating some coming in the second half, and that will lower the gross margin slightly. But even with the ones that have either been announced or indicated, we still see the opportunity for gross margin accretion coming through mix." (Julie Brown)

• "Now the really good news for GSK, as I said last quarter, is we are well positioned on this. It's you know, since I started in this job, we prioritized together as a leadership team in The US. We've taken the business from being less than 40% to being more than 50% of the company now. And in fact, specialty business, which is where the pipeline is focused and the innovation is focused and the growth focus is two thirds of that so far this year is in The U. S. So we're well positioned for that. We're well positioned manufacturing. We broke ground on another new factory. Some of the supply chain optimizations Julie referred to is also setting up some certain shifts of some of our production. So look, we'll continue to be agile around it, but I'd I'd whilst we'd rather spend any incremental costs more on the pipeline." (Emma Warmsley)

Analysis

The company actively manages and mitigates the impact of enacted tariffs and inflationary pressures. This is achieved through its business operating system, which incorporates advanced mechanisms for pricing, supply chain management, and scenario planning. These measures are designed to offset tariff-related costs and drive market outgrowth.

While global trade policy changes, including tariffs, remain dynamic and can lead to disruptions in operations, supply chains, and commodity cost volatility, the company believes its in-region for-region strategy and execution strength will help navigate these risks. The company aims for margin neutrality on a dollar basis with regard to tariffs, indicating a strategy to recover tariff-related costs through pricing.

In the second quarter of 2025, the impact of tariffs was described as modest, almost immaterial. For the full year 2025, the estimated cost impact from tariffs is approximately $140M, which is roughly half of the estimate provided at the end of the first quarter.

Sources

• "We are effectively managing and mitigating all enacted tariffs and inflationary impacts through our world class business operating system. This system includes advanced mechanisms for pricing, supply chain management and scenario planning, which we leverage to offset tariffs, drive market outgrowth and minimize the impact on our customers." (Company - CEO)

• "On tariffs, look, was pretty modest, almost immaterial impact here in the second quarter." (Chris Kuhn, Earnings Call)

• "Based on tariffs in place as of July 28, we estimate the cost impact in 2025 to be approximately $140,000,000 roughly half of our estimate provided at the end of the first quarter, and our full year organic revenue growth guidance includes an estimated pricing impact from tariffs." (Chris Kuhn, Earnings Call)

Analysis

The company experienced varied impacts from tariffs across its segments. In the Aluminium business, a significant development was the cancellation of the 10% Section 232 tariff exemption for Canada, effective March 2025. This resulted in direct gross costs for the company. Despite this, the Aluminium segment's return on capital doubled, a result attributed to higher volumes, improved market premiums, and the company's ability to adjust its commercial strategy to navigate the changing tariff environment and pass on costs. However, the US Midwest premium, while adapting, did not fully offset the 50% tariff by the end of the second quarter.

Conversely, tariffs in the Copper segment are viewed as an opportunity. The anticipated 50% tariffs in the United States are expected to enhance the profitability of the company's Kennecott smelter, one of two active copper smelters in the U.S. This provides a direct benefit to that operation.

Sources

• "As you will be able to see, despite complex tariff issues in aluminium, the return on capital doubled." (Company - CEO)

• "And today, the Midwest premium is substantially offsetting the tariff. The main impact on our financials is the cancellation of the 10% Section two thirty two exemption Canada previously enjoyed." (Peter Cunningham, CFO)

• "Yeah. So you're right, copper tariffs represent an opportunity for us, because for reasons I don't entirely know from before my time, we have actually had a smelter that we haven't made a lot of money on for a long period of time at Kennicott. It is The U. S. Biggest and only one out of two. And as I said, we barely have made money, but it should become much more profitable from the tariffs immediately." (Company - CEO)

Analysis

Mondelēz International continues to monitor and evaluate the impact of proposed and enacted tariffs, including retaliatory tariffs or other trade restrictions. These developments are expected to adversely impact revenue and cost of goods sold.

If certain proposed tariffs, for which implementation is currently delayed, are ultimately implemented as originally proposed, or if additional tariff actions are implemented, the adverse impacts on business operations and financial performance are expected to be significant. The company generally complies with the U.S.-Mexico-Canada Agreement for products and materials imported from Mexico and Canada, thereby avoiding tariffs, but this exemption is not assured.

Additional protectionist trade measures and retaliatory actions could result in increased costs and pricing pressures. Such measures may also disrupt consumer spending patterns and impact market stability and consumer confidence.

The company observes that consumers in the U.S. may experience the full effect of tariffs in the second half of the year, which could influence consumer confidence and spending. The company's 2025 guidance does not incorporate any potential tariff changes related to the United States-Mexico-Canada Agreement.

Sources

• "As the current geopolitical environment remains unpredictable, we continue to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs or other trade restrictions." (Filing)

• "If the provisions of certain proposed tariffs for which implementation is currently delayed are ultimately implemented as originally proposed, or if additional tariff actions are implemented, we would expect those adverse impacts on our business operations and financial performance to be significant." (Filing)

• "As it relates to The U. S, we really don't see an immediate change. If anything, I think the consumer will see the full effect of the tariffs in the second half." (Dirk Van de Put, CEO)

• "This outlook does not reflect any potential tariff changes to United States-Mexico-Canada Agreement (USMCA) compliant trade." (Press Release)

Analysis

The company operates within a dynamic tariff environment, which contributes to broader macroeconomic challenges. Management is actively working to mitigate expected tariff exposure for products other than green coffee.

Sources

• "Both the tariff environment and coffee prices continue to be dynamic. We continue to mitigate expected tariff exposure outside of green coffee and are pleased to see green coffee prices moderate." (Kathy Smith, Chief Financial Officer)

• "Due to our coffee buying and hedging practices, you should expect to see both moving average coffee costs and coffee tariff impacts lag the market with year over year coffee cost increases expected to peak in 2026." (Kathy Smith, Chief Financial Officer)

• "For the balance of this fiscal year, we expect that the macroeconomic challenges we have been experiencing, including impacts from new tariffs and volatile coffee prices, will continue; however we are encouraged by the results we have seen from our "Back to Starbucks" initiatives and early results from our pilots." (Filing)

Analysis

The company is subject to digital services taxes in various global jurisdictions, particularly within the European Union. These taxes are applied to revenues generated from digital advertisements and the utilization of online platforms.

These digital services taxes are recorded as part of "Sales and other expenses" in the company's consolidated statements of operations. For the three and six months ended June 30, 2025, sales and other expenses as a percentage of total revenues decreased due to a reduction in digital services taxes and similar levies compared to the prior year period. This decrease contributed favorably to the company's operating expenses.

Specifically, the company did not record accruals for Canadian digital services taxes for the years ended December 31, 2022 and 2023 in the second quarter of 2025, unlike in the second quarter of 2024 when a $17M accrual was noted.

The company is evaluating the potential effects of the One Big Beautiful Bill Act (BBB Act), which modified certain international and domestic tax provisions in the United States in July 2025. This act could negatively impact the company's future results of operations and cash flows.

Sources

• "Many jurisdictions, particularly in the EU, have implemented or are considering the adoption of a digital services tax or similar tax that imposes a tax on revenues earned from digital advertisements or the use of online platforms, even when there is no physical presence in the jurisdiction." (Filing)

• "Sales and other expenses as a percentage of total revenues decreased year-over-year for the three and six months ended June 30, 2025 due to lower digital services taxes and other similar taxes..." (Filing)

• "In July 2025, the One Big Beautiful Bill Act (the "BBB Act") made changes to certain international, foreign tax credit, and domestic tax provisions in the United States. We are continuing to evaluate the impact of the BBB Act and it could have a negative impact on our results of operations and cash flows." (Filing)

Analysis

Tariffs contributed to the 10 basis points decline in gross profit margin observed in the first half of 2025, alongside other factors such as adverse currency movements. The company is facing new American tariffs of 15% on beauty imports from the European Union.

The company projects the total impact of these tariffs on its gross margin for the full year 2025 to be less than 40 basis points. This impact is expected to be more pronounced in the second half of the year.

L'Oréal employs several strategies to mitigate the impact of tariffs. Its global network of 36 factories and over 150 distribution centers provides flexibility, as most products are manufactured in the region where they are sold. An exception is Luxury Fragrances, which are primarily produced in Europe. To counter tariff effects, the company has built sufficient inventory and is considering price increases. Long-term operational initiatives are under review, including potential production relocations and utilizing first sales in products exported to France to reduce the tariff base. The company also intends to advocate for tariff exemptions for cosmetics with European authorities.

Sources

• "The slight 10 basis points decline versus last year reflected a number of factors including adverse currency movements and tariffs." (Christophe Baboul, CFO)

• "Over the weekend, Europe and the U.S. Reached the tariff agreements, imposing American tariffs of 15% on beauty imports from the EU." (Nicolas Hieronimus, CEO)

• "When Nicolas says the situation is manageable, it means that the impact could be less than 40 basis points as of today." (Christophe Baboul, CFO)

• "Our 36 factories and more than 150 distribution centers around the world give us significant flexibility as most of the units we sell are manufactured where we sell them. The one exception are Luxury Fragrances, which are made in Europe." (Nicolas Hieronimus, CEO)

Analysis

Ecolab's financial performance in the second quarter of 2025 was affected by evolving international trade policies, including tariffs. The company reported that commodity costs, encompassing tariff-related inflation, increased by low single digits during the period. However, internal efficiencies from the supply chain team resulted in a slightly favorable net delivered product cost. This indicates that the company's efforts to manage input costs were effective despite inflationary pressures stemming from trade policies. In response to the dynamic trade environment, Ecolab initiated a trade surcharge for its United States customers during the second quarter. This surcharge, combined with the company's

Sources

• "We expect the macroeconomic environment to remain challenging as a result of evolving international trade policies that could have a significant impact on costs and demand. We believe that the Company is well-prepared to manage through the dynamic international trade environment, given our "local-for-local" production model and our recently implemented trade surcharge." (Filing)

• "During the second quarter, we also began implementing our trade surcharge for all customers in The United States only. Given the dynamic international trade environment, the surcharge coupled with the expertise of our world class supply chain team enables us to reliably supply our customers while delivering value that exceeds the total price increases. With this now in place, we expect our total pricing to strengthen closer to 3% in the third the fourth quarters." (Christophe Beck, CEO)

• "So from Scott, when we look at tariffs, increase of prices by local manufacturing concentration, our optimization in supply chain plus the trade surcharge, it's a clear net positive in practice in Q2." (Christophe Beck, CEO)

Analysis

Automotive volumes increased in the second quarter and first six months of 2025. This increase was partially driven by shippers increasing volume in anticipation of potential changes to tariffs. This indicates that customer behavior in response to expected policy shifts influenced the company's automotive segment.

Intermodal volumes also experienced an impact. Domestic intermodal volume was positively influenced in both the second quarter and first six months of 2025 by shippers increasing volume in anticipation of potential changes to tariffs. Similarly, international intermodal volume rose in both periods, driven by new business and increased volume due to the anticipation of potential tariff changes. These volume increases contributed to overall railway operating revenues.

Sources

• "Automotive volumes increased in both periods, driven by shippers increasing volume in anticipation of potential changes to tariffs and growth with existing customers." (Filing)

• "While domestic volume was positively impacted during both periods by shippers increasing volume in anticipation of potential changes to tariffs, these increases were offset by reduced premium shipments related to economic uncertainties." (Filing)

• "International volume rose in both periods primarily driven by new business with existing customers, including increased volume in anticipation of potential changes to tariffs." (Filing)

Analysis

The company has been affected by tariffs, primarily impacting input costs and the supply chain. These impacts stem from modified U.S. tariffs on aluminum, steel, and goods from China, as well as tariffs on non-compliant imports from Canada and Mexico under the USMCA.

To mitigate these impacts, the company actively monitors the global trade environment and engages in negotiations. Recent bilateral trade agreements, such as those with the EU and the UK, have helped resolve some input tariff issues. The company is pursuing a

Sources

• "Collectively, these tariffs and any retaliatory actions taken by countries in response to the United States tariffs could have a material impact on our financial position, results of operations and/or cash flows. Our second quarter results reflect our best estimate of the impacts of the tariffs enacted as of June 30, 2025, and certain potential mitigating actions." (Filing)

• "On the input cost side, we continue to work closely with our suppliers to promote continuity of supply and pursue options to mitigate tariff cost pressures. And as we said, any financial impact is not significant." (Brian West, context earnings call)

• "As you recall, we outlined a less than $500 million impact on the input tariffs. One of the key areas for us is the equipment we import from Japan. So getting this Japan agreement in place, and we understand that to include a zero for zero, no input tariffs will be helpful for us going forward. So that was one of the big ones. We still need to see what happens with Italy. As you know, we import some fuselage components from Alinea in Italy. So hopefully, that will also result in zero for zero. My understanding is that is the kind of the baseline negotiation strategy as they go through these bilaterals that we will end up in a zero for zero, but still yet work yet to do." (Kelly Orford, context earnings call)

Analysis

Tariffs increased the company's costs in the recent fiscal year. This impact was more pronounced in the fourth quarter of fiscal year 2025, affecting gross margins and core earnings per share. The company anticipates a significant increase in tariff-related costs for fiscal year 2026, which is expected to create a substantial headwind for core EPS growth.

To counter these financial pressures, the company plans to implement several mitigating strategies. These include enhancing sourcing flexibility, driving productivity improvements across its operations, and implementing strategic pricing adjustments on products in affected categories and markets. Pricing on specific stock-keeping units (SKUs) impacted by tariffs is expected to be in the mid-single digits, slightly higher than typical pricing, to partially offset these increased costs.

Sources

• "10 basis points of higher costs from tariffs." (Filing)

• "These results include a $0.03 impact from tariffs." (Andre Schulten, Earnings Call)

• "In addition, our outlook includes $1 billion before tax in higher costs from tariffs in fiscal year 2026. This is based on tariff rates announced since July 9 and assumes USMCA exemptions still apply for imports from Canada and Mexico." (Andre Schulten, Earnings Call)

Analysis

Tariffs have influenced Johnson Controls' operations, prompting strategic responses. The company has largely mitigated the impact of tariffs enacted to date.

Management implemented various strategies to offset the impact of tariffs and other trade restrictions. These actions include strengthening in-region manufacturing, pivoting to local sourcing in the supply chain, accelerating pricing adjustments, and asserting contractual rights.

Despite tariff-related headwinds, Johnson Controls' proactive mitigation efforts contributed to organic revenue growth and segment margin expansion in the current period. The company states these actions have been largely successful in mitigating the current macroeconomic environment's impact.

Looking forward, the company acknowledges that additional tariffs, if implemented, could negatively affect revenue growth and margins in future periods through decreased sales and increased cost of goods sold. The effectiveness of current and contemplated mitigation actions in managing future trade restrictions remains uncertain.

Sources

• "Although the Company has been largely able to mitigate the impact of tariffs that have been enacted to date, if additional tariffs and reciprocal tariffs are implemented (whether as currently proposed or otherwise), such actions could negatively impact the Company's revenue growth and margins in future periods through decreased sales and increased cost of goods sold." (Filing)

• "The Company is taking actions to mitigate the actual and anticipated impact of these events, including strengthening the Company's in region, for region manufacturing strategy, pivoting to local sourcing in its supply chain, accelerating pricing actions and asserting contractual rights through change orders." (Filing)

• "In the quarter, organic revenue grew 6% and segment margin expanded 20 basis points to 17.6% as we proactively mitigated the impact of tariff through strategic sourcing and cost management initiatives." (Mark van Diepenbeck, context earnings call)

Analysis

The company anticipates $200M in additional expenses for 2025 due to tariffs. These expenses are expected to be primarily reflected within Cost of sales. Efforts such as inventory management and moving manufacturing to the U.S. are being implemented to mitigate the financial impact of these tariffs. While a full-year expense of $200M is anticipated, the company has observed a minimal impact for 2025 thus far. The company is monitoring future changes in tariff policies, including potential tariffs on pharmaceutical products, which could result in further adverse effects.

Sources

• "At this time, the Company anticipates that tariffs implemented to date will result in approximately $200 million of additional expenses in 2025 (which will be primarily reflected within Cost of sales)." (Filing)

• "Our guidance of $200,000,000 of costs related to the impact of tariffs is unchanged, pending the outcome of additional potential government actions." (Caroline Litchfield)

• "But for '25 this would be minimal impact based on all the work we've done around inventory management and moving our manufacturing to The U. S." (Rob Davis)

Analysis

Global trade policy changes, including enacted tariffs and de minimis exclusions, impacted the company's financial results during the second quarter of 2025. These changes led to a shift in trade lane volumes.

The International segment experienced pressure on its margins due to reduced volumes on the China to U.S. lane, following U.S. trade policy changes. Revenue in the Supply Chain Solutions segment, specifically Air and Ocean Forwarding, also declined due to demand softness and lower market rates stemming from tariff changes.

The company utilized its global integrated network to mitigate these impacts. This included shifting volumes to other trade lanes, such as China to the rest of the world, and increasing capacity between India and Europe. Investments in brokerage capabilities facilitated digital processing of cross-border transactions.

To help customers navigate tariff uncertainty, the company conducted supply chain mapping assessments, advising on supply chain optimization and nearshoring opportunities.

Looking forward, the company notes that the macro environment remains uncertain due to changing trade policies and unresolved tariff issues. This uncertainty affects customer demand and the overall economy, posing potential risks for small and medium-sized businesses.

Sources

• "Global trade policy changes including pending and enacted tariffs and the de minimis exclusions took effect during the second quarter of 2025 and resulted in shifting trade lane volumes, particularly reducing volumes on our China to U.S. lane, pressuring our International segment margins during the second quarter." (Management's Discussion and Analysis of Financial Condition and Results of Operations)

• "U.S. trade policy changes during the quarter resulted in a 34.8% decline on our China to U.S. Lane in May and June, which was higher than we expected." (Company - CEO)

• "The macro environment is highly uncertain due to changing trade policies and tariff uncertainty. As a global carrier, the eventual outcomes could result in pressure in some parts of our business and create new opportunities in others." (Management's Discussion and Analysis of Financial Condition and Results of Operations)

Analysis

AstraZeneca addressed the potential impact of tariffs, specifically those announced between the US and Europe. The company asserts that it will not be significantly affected by these tariffs.

This resilience is attributed to AstraZeneca's segregated supply chains. For a limited number of products imported from Europe into the US that might be subject to tariffs, the company has initiated technology transfers to establish production capability within the US.

These proactive measures, including the ongoing tech transfer processes, are expected to ensure that any potential impact from tariffs will be very short-lived. The company's confidence in mitigating tariff effects is reflected in its reiterated full-year guidance.

Sources

• "Clearly, the tariffs between the US and Europe have been announced. I think it's still a question of timing and what happens with the administration when they get implemented, etcetera." (Aradhana Sarin, CFO)

• "We had mentioned on our first quarter call that, you know, we have pretty good and segregated supply chains. And therefore, there's only a handful of products where we do import some products from Europe into the US. We do already have capacity for those products in the U.S., and we've already started some of the tech transfers, which obviously will take a little bit of time. But we will not be significantly impacted by tariffs." (Aradhana Sarin, CFO)

• "But any impact, even if there is, is going to be very short lived since we've already started the tech transfer process." (Aradhana Sarin, CFO)

Analysis

Nucor states that tariff policy has been generally positive for the steel industry. The company supports the administration's actions to strengthen the Section 232 program, including increasing tariffs to 50% and expanding the review of steel derivative products. These measures are intended to reduce unfairly traded imports and protect national security. Nucor has also filed trade petitions against corrosion-resistant imports and rebar imports, anticipating affirmative final determinations that would ensure a level playing field for the domestic steel industry.

The company is monitoring country-specific tariff negotiations and their impact on raw material costs, particularly concerning potential 50% tariffs from Brazil on DRI pellets and pig iron. Nucor has mitigation strategies in place to address the expected impact of these tariffs, including changes to supply, global sourcing, and adjustments to the mix of materials fed into its DRI plants. The company emphasizes its broad raw material supply chain capabilities, which provide flexibility to source materials to optimize its cost structure and adapt to dynamic market situations.

While the company expects margin compression in the steel mills segment in the third quarter of 2025, partially due to the anticipated impact of Brazilian tariffs on slabs, Nucor believes its ability to self-supply hot rolled tons and source from other competitive international channels will help manage this impact. The company continues to advocate for vigorous enforcement of trade laws.

Sources

• "Tariff policy continues to evolve, but has been positive for the steel industry overall. We support the administration's recent actions to strengthen the Section two thirty two program by increasing the tariffs to 50%." (Company - CEO)

• "So while we do have some exposure to the Brazilian tariff and you see a little bit of that compression in the in our outlook on third quarter is due to that tariff impact to Brazil. We also have the ability to self supply. We're shipping their internal finished hot rolled tons that CSI is then able to transform at very competitive cost." (Analyst, Unknown Affiliation - Noah Handers)

• "As we think about Brazil, there's really two key inputs that we buy from Brazil. One is DRI pellets and the other is pig iron. And so as we think about DRI pellets, we've already taken the steps needed to mitigate that 50% tariff from Brazil. So we've done that through changes to our supply, our global sourcing for those pellets and through the mix that we feed those DRI plants. So the DRI issue is largely taken care of." (Analyst, Unknown Affiliation - Al Baer)

Analysis

Cadence experienced financial impacts related to past and present trade restrictions concerning its transactions in China. Temporary export restrictions on China, imposed on May 23, resulted in a reduction of China's revenue contribution to 9% in Q2 2025, down from 11% in Q1 2025. However, the company reported that broad-based strength in other regions offset this near-term softness, preventing a net negative impact on overall Q2 revenue from these restrictions. The company has enhanced its compliance processes to address evolving trade restrictions. Cadence also reached settlements with the US Department of Justice and the Bureau of Industry and Security regarding investigations into certain transactions with customers in China that occurred between 2015 and 2021. These settlements involved a total of approximately $45M in sales over the six-year period. As a result of these settlements, Cadence recorded a loss related to contingent liability in the current period and anticipates a significant cash outflow in the upcoming quarter. The company stated that its guidance incorporates the timing of this settlement payment. Management indicated that while China will continue to invest in chip and system design, the percentage of revenue from China may remain similar or slightly decrease in the long term, not due to underperformance in China, but due to stronger growth in other regions globally.

Sources

• "Strength in other regions more than offset the impact of the export restrictions on China outlined in the BIS letter dated May 23, which was later rescinded." (John Wall, Earnings Call)

• "Finally, I'm pleased to share that we have entered into a settlement with the US Department of Justice and the US Department of Commerce's Bureau of Industry and Security. That resolved the previously disclosed investigations into certain transaction with customers in China that occurred between 2015 and 2021." (Anirud Devgan, Earnings Call)

• "As part of the agreements, we'll make a payment of approximately $141,000,000 in our third fiscal quarter." (John Wall, Earnings Call)

Analysis

The company recognizes the impact of trade policies, including tariffs and trade barriers, as a risk factor that could affect its future financial position and results of operations. These policies could lead to supply and pharmaceutical shortages and disruptions.

To mitigate potential adverse effects from tariffs, the company is developing and implementing resiliency plans. These plans are intended to offset possible impacts alongside other federal policy changes, such as the One Big Beautiful Bill Act and the scheduled expiration of enhanced premium tax credits. However, the company has not provided any specific financial figures quantifying the current or expected future impact attributed solely to tariffs.

Sources

• "These factors include, but are not limited to, (1) changes in or related to general economic or business conditions nationally and regionally in our markets, including inflation, and the impact of trade policies, including changes in, or the imposition of, tariffs and/or trade barriers; ... supply and pharmaceutical shortages and disruptions (including as a result of tariffs or geopolitical disruptions)" (Filing)

• "We continue our work to develop and execute resiliency plans to offset as much of any adverse impact as possible from the act, the potential expiration of the EPTCs, and other administrative actions such as tariffs." (Mike Marks, Company - CFO)

• "We will provide more information on our resiliency efforts during our fourth quarter twenty twenty five earnings call when we issue our 2026 guidance." (Mike Marks, Company - CFO)

Analysis

Chinese tariffs on polyethylene imports created market disruptions, impacting the Chemicals segment during the second quarter of 2025. This contributed to lower polyethylene margins for CPChem, driven by decreased sales prices in the segment. The effects were observed even though CPChem minimized its direct exposure to the Chinese market.

Separately, the Renewable Fuels segment experienced an increase in costs due to higher taxes related to feedstock imports at the Rodeo Complex. This contributed to increased feedstock costs, which negatively affected the segment's margins during the second quarter of 2025.

Sources

• "Second quarter was particularly problematic when you think about the disruptions that tariffs caused. At one point, the Chinese had imposed punitive tariffs of of a 100% on polyethylene imports. And CPChem has really minimized its exposure to China, but all that material that was flowing into China got pushed back into the world market. So that that was a big challenge this quarter." (Mark Lashier, CEO)

• "The increase for the six months ended June 30, 2025, was also impacted by an increase in taxes related to feedstock imports at the Rodeo Complex." (Filing)

• "Economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives." (Filing)

Analysis

The Volkswagen Group's financial performance in the first half of 2025 was negatively impacted by increased U.S. import tariffs. These tariffs resulted in significant expenses, including impairment losses on vehicle inventories and increased provisions for warranty obligations. Deliveries to North America declined by 7% in the first half of the year, with a notable 16% decrease in the second quarter, directly attributed to the tariff situation.

In response to the anticipated ongoing burden of tariffs, Volkswagen adjusted its full-year 2025 guidance. The company now expects sales revenue to remain on par with the previous year, a revision from its earlier forecast of up to a 5% increase. The operating return on sales guidance was lowered to a range of 4.0% to 5.0% from the initial 5.5% to 6.5%. Additionally, the Automotive Division's net cash flow guidance was reduced to €1 billion to €3 billion, and net liquidity guidance was adjusted to €31 billion to €33 billion.

Volkswagen is implementing strategies to mitigate the effects of these tariffs. The company is actively seeking a balanced trade agreement between the EU and the U.S. to foster stable trade relations and open markets. Recognizing the likelihood of tariffs becoming a permanent fixture, Volkswagen is accelerating its cost reduction initiatives and performance programs. The company also intends to scale its investment programs in the U.S., emphasizing its American brands like Scout and International, to adapt to the changed trade environment.

Sources

• "The changed import tariffs in The U. S. Resulted in expenses of around 1,300,000,000.0 Euro in the first half of the year. If the current import tariffs remain in place, the burden would increase to several billion." (Oliver Blummer - context earnings call)

• "Restructuring expenses will help us to achieve leaner cost structures in the future. However, tariffs are likely to remain a permanent burden and we must increase our efforts to offset this effect." (Company - CEO - context earnings call)

• "At the lower end of the ranges forecast for operating result, net cash flow and net liquidity, it is assumed that in particular the current US import tariffs of 27.5% will continue to apply in the second half of 2025; at the upper end, it is assumed that these tariffs will be reduced to 10%." (Filing - Outlook for 2025)

Analysis

The company has assessed the potential impacts of recent changes to U.S. trade policy, including increased tariffs on imports and non-U.S. retaliatory tariffs. These assessments are ongoing to understand the implications for the business.

To mitigate the impact of tariffs, the company is exploring various options. These include adjustments to its supply chain and pursuing potential exemptions and exclusions. These strategies aim to minimize the financial and operational effects of the tariffs.

Despite mitigation efforts, the company acknowledges uncertainties regarding future U.S. trade policy and tariff rates. Failure to effectively mitigate the impact of tariffs, including potential significant inflation and other effects on customers, could result in reduced demand for its products. This scenario could adversely affect the company's business, financial condition, and results of operations.

Sources

• "In response to recent changes to U.S. trade policy, such as increased tariffs on imports and including non-U.S. retaliatory tariffs, we have and will continue to assess potential impacts on our business. As needed, we will pursue options to mitigate the impact of tariffs, including through our supply chain and potential exemptions and exclusions." (Form 10-Q)

• "Failure to sufficiently mitigate the impact of tariffs, including significant inflation and other impacts on our customers, could also reduce demand for our products and adversely affect our business, financial condition and results of operations. Given the uncertainties around U.S. trade policy and future tariff rates, we are unable to predict the nature of the tariffs and whether we will be able to successfully mitigate their impact." (Form 10-Q)

• "For tariffs, yeah, we said think a nickel for the full year back last quarter. It's probably less than half that now is our current expectation, which is similar to what you've probably heard from other companies." (Scott Ullum, context earnings call)

Analysis

Uncertainties related to tariffs impacted the company's Wines and Spirits division. Specifically, tariffs weighed on cognac demand in both the US and China. The company noted that Hennessy's depletions were stronger than sales in the US market.

The company has not engaged in advanced shipments to distributors or wholesale partners to preempt potential tariff changes. Management indicated that it holds some stock on its US balance sheet, but this is not a result of strategic advanced shipments in response to tariff concerns.

Mitigating strategies for tariffs involve several levers, although not all activities have access to the same options. These strategies include moderate price increases in certain activities, such as fashion and leather goods. Supply chain optimization is also being pursued, including leveraging local production facilities in the US for brands like Louis Vuitton and optimizing flows for Tiffany's production in Europe and the US to serve respective local markets. Moët is identified as the division with the fewest levers for mitigation due to its fixed production location and limited pricing flexibility, which could result in a margin impact.

Sources

• "In cognac and spirits, the uncertainties related to tariff weighed on cognac demand in The US and China, although Hennessy's depletions were better than selling in The US." (Rodolphe (Executive))

• "On your question regarding advanced shipment in tariff, we don't have that. We have not pushed shipment to distributors or wholesale. We might have some stocks on our balance sheet in the U.S., but we have not put some advanced shipment." (Cecile (CFO))

• "Probably the one that will be the most difficult is Moët because it has the less levers because you can't move the production by definition. And your prices, you can't play too much with your prices. So probably, that's where there might be an impact on margin." (Cecile (CFO))

Analysis

Tariffs contribute to overall economic uncertainty, which has influenced external forecasts for total light product demand growth. The company acknowledges these broader market effects.

Within the Renewable Diesel segment, the company is actively adjusting to the ongoing impact of tariffs placed on foreign feedstocks. These tariffs, coupled with other policy considerations, influence the pricing dynamics between feedstock costs and credit prices. Market adjustments are necessary for foreign feedstock prices to align with domestic alternatives, which is a factor in increasing production.

Sources

• "With some of the economic uncertainty, especially around tariffs, forecasts have fallen off to where a lot of are only forecasting around 400,000 barrels a day total like product demand growth." (Gary Simmons, context earnings call)

• "So I think the offset there is we're still adjusting to all the different tariffs that are be throwing that are constantly moving around." (Eric, context earnings call)

• "So you'll see most of the fat prices are tracking the D4 RIN. So even though fat prices have moved up, credit prices are slowly moving up, they haven't separated yet to reflect the impacts of some of the other policy comments on lower PTC, half RIN in the RVO and really a lot of the tariffs that have been placed on foreign feedstocks." (Eric, context earnings call)

Analysis

Roche acknowledges tariffs as a source of risk and uncertainty, which has contributed to its conservative stance on financial guidance. The company has not adjusted its guidance in response to these potential impacts.

To mitigate the potential effects of tariffs, Roche has implemented several strategies. These include relocating inventories to safeguard against the imposition of new tariffs. Additionally, the company has increased production for medicines already manufactured in the United States. Roche has also initiated a technology transfer for a medicine identified as most susceptible to tariff impacts, moving its production to the United States. This transfer is expected to be completed by the end of the current year or early next year, contingent on FDA site approval.

Roche possesses a significant manufacturing footprint within the United States, supported by 50% free capacity derived from cell line efficiencies. This existing infrastructure is intended to enhance the company's resilience against tariff-related challenges. The company is actively engaging with the U.S. government in discussions regarding trade negotiations and investigations, such as the two-thirty-two investigation, which may involve transitional periods for pharmaceutical enterprises.

Sources

• "Well, tariffs is the major point, yeah, which holds us back to to make a step here, and it looks a bit inconsistent. I agree. Nevertheless, the risk is there. The uncertainty is there." (Alan, CFO)

• "So what we've also done is, obviously, move around inventories to make sure that we are protected in case tariffs will come. Also, we've ramped up production of, all the different medicines that we already produced in The US where we didn't produce enough, and we started the tech transfer of the one, medicine that would be, the most impacted. We started tech transfer into The US, and, hopefully, we'll have that done in the not too distant future, maybe end of the year, beginning of next year." (Thomas Schinecker, CEO)

• "Again, we are in a very good position because we already have a lot of manufacturing sites, and we have the capacity, about 50% free capacity because of our cell line efficiencies. And so the one which would be the biggest impact we have processed that movement." (Thomas Schinecker, CEO)

Analysis

Tariff uncertainties negatively impacted Union Pacific's performance during the second quarter of 2025. Lower iron ore shipments were directly attributed to ongoing tariff uncertainties. Additionally, automotive shipments experienced decreases in the second quarter and year-to-date periods, with tariff uncertainties cited as a contributing factor alongside reduced production.

The company observed a volume surge in July 2025 that was linked to a

Sources

• "The volume gains were partially offset by lower iron ore shipments impacted by ongoing tariff uncertainties, and softness in the paper market." (Results of Operations)

• "Automotive shipments decreased in the second quarter and year-to-date periods of 2025 compared to 2024 due to reduced production and tariff uncertainties." (Results of Operations)

• "Month to date in July, we are seeing the impact of the tariff pause as reflected in the current volume surge. Similar to last year, we're seamlessly handling this volume, although we do expect volume to moderate to the point of sequential declines through the quarter." (Jennifer Hayman, CFO)

Analysis

Tariff-related cost inflation directly impacted the company's free cash flow in the second quarter of 2025. This cost increase led to higher inventory levels.

The company reported that pricing adjustments for aerospace original equipment contracts lag behind the pace of tariff-driven cost inflation. This contributes to temporary margin pressure in the Aerospace Technologies segment for the full year 2025.

In Industrial Automation, incremental tariff-related cost inflation is expected to keep full-year margins flat compared to the previous year. This is despite other factors such as productivity improvements and commercial excellence efforts.

To address these conditions, the company employs several mitigation strategies. These include supply chain simplification, aligning with local supply sources, implementing pricing actions, and pursuing dual source strategies. They also engage directly with key suppliers and develop new suppliers to manage supply chain and pricing volatility. The company states that these strategies have minimized current exposure.

Management is monitoring the potential for a lagging effect on business demand from recently announced tariffs. They aim to fully offset tariff impacts through a combination of productivity initiatives, pricing adjustments, and alternative sourcing to balance margin protection and demand.

Sources

• "Second quarter free cash flow was $1,000,000,000 down roughly $100,000,000 from the previous year as tariff related cost inflation pushed up inventory levels and capital project spending expanded as planned." (Mike Stepniak, Earnings Call)

• "Reduced margin expectations from the prior guidance stemmed from the high decrementals of delayed energy project work and the lag effect of pricing relative to tariff related cost pressures in our Aerospace business." (Mike Stepniak, Earnings Call)

• "We're factoring in non tariffs as they are written assuming any moratorium means a later revision to higher rates, net of all of our mitigation actions. Keeping in close communication with our customers and suppliers, we remain committed to fully offsetting the effect of these tariffs with a combination of productivity, pricing and alternative sourcing as we balance protecting both margins and demand." (Mike Stepniak, Earnings Call)

Analysis

The company identified that the prolonged industry downturn has been intensified by heightened trade and geopolitical uncertainties. These conditions have contributed to strained profitability across the industry and increased volatility in global markets, negatively impacting the company's results of operations and cash flows. The macroeconomic conditions are expected to persist in the near term.

In the second quarter of 2025, North American polyethylene prices settled down $0.03 per pound, a decline attributed to tariff uncertainty that led to the halting of several export channels. This uncertainty also limited polyethylene exports to Asia Pacific, contributing to volume decreases in that region. The company noted that the $0.03 per pound price decline and an associated operating rate drop were significant factors affecting second quarter performance in Packaging & Specialty Plastics, with each contributing approximately 50% to the sequential decline.

Trade and tariff uncertainty also caused demand disruption in China, driving local siloxane prices to new record lows, with prices declining throughout the second quarter. This impacted the Performance Materials & Coatings segment.

In response to anti-competitive oversupply activities, particularly imports into Europe and Latin America, the company is actively engaging in these regions to defend its local asset footprint and promote a fair trade environment. The company is also involved in discussions with governments globally regarding trade and tariff uncertainties and indicates confidence in its ability to mitigate these impacts.

Sources

• "This quarter the Dow team advanced several aggressive actions in response to the lower-for-longer earnings environment that our industry is facing, amplified by recent trade and tariff uncertainties." (Jim Fitterling, CEO Quote, Press Release)

• "prices in North America settled down $0.03 per pound, weighed down by the tariff uncertainty that halted several export channels. We believe that absent these uncertainties, prices would have remained at least flat and may have increased given healthy demand and higher feedstock costs." (Karen S. Carter, Chief Operating Officer, Earnings Call)

• "Increasingly, we are seeing anticompetitive oversupply activities, particularly when it comes to imports into Europe and Latin America. Our teams are actively engaged in these regions to aggressively defend our local asset footprint and to ensure that a fair trade environment remains." (Jim Fitterling, Chair and Chief Executive Officer, Earnings Call)

Analysis

Tariffs are influencing customer behavior, particularly within the manufacturing sector. This includes customers in transportation and mobility, and high-tech industries. These customers are rethinking their global strategies and rebalancing activities across different countries. This environment necessitates efficient supply and demand management.

Dassault Systèmes leverages its 3DEXPERIENCE platform to assist these companies. The platform is positioned to help manufacturers navigate the complexities introduced by tariffs, enabling them to make faster and more informed decisions regarding supply chains and overall operations.

Tariffs also contribute to increased deal volatility, specifically in the US automotive and aerospace sectors. Deals are shifting from one quarter to another at approximately twice the usual rate. Despite this, the company indicates that this level of volatility is manageable and does not represent an extreme magnitude. In the Life Sciences sector, global trade pressures are observed to be shifting investments from research and development towards manufacturing and supply, an area where the company's P&M portfolio is positioned for growth.

Sources

• "First, more than ever, our customers are facing more complexity, whether it's scaling up, driving innovations, managing costs or rebalancing activities from one country to another one due to the tariff." (Pascal Dalloux, CEO, Earnings Call)

• "We are also seeing those manufacturers rethinking their global strategy with tariff in place and that's a space where we are really well positioned, helping them to move faster to make better decisions across the supply and demand." (Pascal Dalloux, CEO, Earnings Call)

• "Answering your question, this volatility is clearly coming from the auto and the aerospace. And why so? Because you know what Mr. Trump is doing to have America back in the manufacturing space. This is good for the nations, but for many American companies it is a nightmare because they source most of the systems or the subsystems from abroad. And for them, when they import the systems or parts, it's like considering they are exposed to the same tariffs than any kind of company. So this is the reason why, yes, you are right, we have a little bit of volatility, we can see. But it's not an order of magnitude, which is crazy. I was making this comment this morning. Usually we have between 27.5 million shifting from one quarter to another one. And here it's two times, to give you an order of magnitude what we are talking about." (Pascal Dalloux, CEO, Earnings Call)

Analysis

Tariffs had a small impact on the company's financial performance in the first half of 2025. This limited impact was attributed to short-term mitigation efforts undertaken by the company. These actions also contributed to a small impact on cash flow in the first half.

However, the company anticipates a larger negative effect from tariffs in the second half of 2025. This increased impact is expected to contribute to a significant reduction in gross margin during that period.

Despite these increasing headwinds, the company's full-year UTOP margin guidance of at or above 16% already incorporates the expected negative impact from currently enacted tariffs and prevailing foreign exchange rates. The company clarified that this guidance does not account for any potential future changes in tariffs or broader economic environment shifts.

Sources

• "UTOP margin was slightly better than our expectations, even though we stepped up growth investments and faced some headwinds from tariffs and FX." (Anna Manz)

• "Gross margins declined 60 basis points in the first half against the same period last year. Forward cover partially delayed the increase in commodity costs hitting the P and L, and the impact of tariffs was small due to short term mitigation efforts." (Anna Manz)

• "And on tariffs, small impact in H1, and that's really because we worked hard to mitigate the impact. As I look at the full year, think about tariffs as a couple of tens of basis points impact for the group." (Anna Manz)

Analysis

Tariffs increased the company's cost of sales. The cost of tariffs rose by $300M sequentially in Q2-2025, with approximately two-thirds of this increase affecting the automotive segment and the remaining one-third impacting the energy business. This indicates a direct adverse effect on the company's cost structure during the period.

The current tariff regime is expected to have a comparatively larger impact on the energy generation and storage business than on the automotive business. The full financial implications of these tariffs are anticipated to manifest in subsequent quarters, indicating a projected increase in costs in the near term. This suggests potential shifts in demand and profitability within the energy storage sector.

To mitigate the impact of tariffs and other trade policies, the company is implementing strategies focused on cost reduction, production innovation, process improvements, and logistics optimization. Vertical integration and supply chain localization are also key components of this approach. Furthermore, the company is investing in U.S. manufacturing by regionalizing energy storage production capacity, with plans to bring an LFP cell manufacturing facility online by the end of the year and launch a third Megafactory in 2026.

Sources

• "Sequentially, the cost of tariffs increased around $300 million with approximately two thirds of that impact in automotive and rest in energy." (Vaibhav Taneja, earnings call)

• "The current tariff regime will have a relatively larger impact on our energy generation and storage business compared to our automotive business." (Overview, 10-Q)

• "Lastly, we continue to invest heavily in U.S. manufacturing to mitigate policy and tariff impacts, expecting our first LFP cell manufacturing facility to be online by the end of the year and launching our third Megafactory near Houston in 2026." (Mike Snyder, earnings call)

Analysis

During the second quarter of 2025, tariffs had a lower impact on costs than previously anticipated. This contributed to a decrease in food, beverage, and packaging costs, which were 28.9% of total revenue, representing a 50 basis point decrease from the prior year. The company benefited from this lower impact alongside favorable avocado prices and cost of sales efficiencies.

For the third quarter of 2025, the company expects cost of sales to increase by 40 basis points due to tariffs. This will contribute to an overall step up in cost of sales to the high 29% range.

The company projects an ongoing impact of 50 basis points on cost of sales from tariffs. This estimate excludes any impact from Mexican or Canadian imports that are covered by the USMCA exemption.

Sources

• "Relative to our guidance, we benefited from lower than anticipated avocado prices, a better than expected benefit from cost of sales efficiencies and a lower impact from tariffs." (Adam Reimer, Chief Financial Officer)

• "For Q3, we expect our cost of sales will step up to the high 29% range with about 60 basis points of the step up due to the mix impact from rolling off Chipotle Honey Chicken and 40 basis points due to tariffs." (Adam Reimer, Chief Financial Officer)

• "We estimate that we will see about a 50 basis point ongoing impact from tariffs, which remains in line with our commentary from last quarter and does not include any impact from Mexican or Canadian imports that fall under the USMCA exemption." (Adam Reimer, Chief Financial Officer)

Analysis

The U.S. government's recent trade policy has influenced the copper market, specifically impacting the pricing dynamics for Freeport-McMoRan Inc. (FCX). In February 2025, the President issued an executive order designating copper as a critical material and initiated a Section 232 investigation into the effects of copper imports on U.S. national security. This was followed by an announcement in July 2025 of a 50% tariff on U.S. imports of semi-finished copper products and copper-intensive derivative products, effective August 1, 2025. This development led to a significant divergence between COMEX and LME copper prices, with COMEX prices experiencing a substantial premium.

FCX, as the leading copper supplier in the U.S., accounting for approximately 70% of total U.S. refined copper production, is directly affected by these changes. The company's U.S. copper sales are generally based on COMEX settlement prices, while international sales rely on LME prices. This differential has provided a financial benefit to FCX's U.S. operations. The company is actively monitoring the detailed implementation of the tariff schedule and its potential implications for various copper products.

In terms of cost structure, FCX's second-quarter 2025 costs were not significantly impacted by U.S. tariffs. However, the company is assessing ongoing impacts on its business, cost structure, and supply chains. FCX estimates that the tariffs in effect and announced to date could potentially increase the costs of goods it purchases in the U.S. by approximately 5%, primarily due to the potential pass-through of tariffs incurred by suppliers. To mitigate these potential impacts, FCX is evaluating alternative sourcing options.

FCX is also advancing initiatives to expand its domestic production capabilities. These efforts include innovative copper leaching initiatives across its U.S. operations, targeting a significant increase in annual copper output. The company views these initiatives as crucial for increasing domestic refined metal production more quickly and cost-effectively than through traditional smelter development. These internal strategies are aimed at strengthening FCX's U.S. copper portfolio and investment plans in response to the evolving trade policy landscape.

Sources

• "Following the July 2025 tariff announcement, the Commodity Exchange Inc. (COMEX) copper settlement price, which is generally the reference price used for FCX's U.S. copper sales, increased to approximately $1.25 per pound (approximately 25%) above the London Metal Exchange (LME) copper settlement price, which is generally the international reference price for FCX's Indonesia and South America copper sales." (Freeport Reports Second-Quarter and Six-Month 2025 Results)

• "FCX's second-quarter 2025 costs were not significantly impacted by U.S. tariffs, and FCX is continuing to monitor impacts on its business, cost structure and supply chains associated with tariffs on U.S. imports." (Freeport Reports Second-Quarter and Six-Month 2025 Results)

• "Based on FCX's current supply chains and discussions with its suppliers, FCX estimates that the tariffs in effect and announced to date could have the potential to increase the costs of goods it purchases in the U.S. by approximately 5%, primarily reflecting the potential pass-through of tariffs incurred by suppliers." (Freeport Reports Second-Quarter and Six-Month 2025 Results)

Analysis

NextEra Energy acknowledged the imposition of tariffs on various imports, along with other legislative and administrative activities in 2025. The company stated that it must manage its operations against the backdrop of these tariffs and trade actions.

To date in 2025, the company reported no material impact on its operations or financial performance as a direct result of these tariff developments. NextEra Energy will continue to assess these developments for potential future impacts.

NextEra Energy has implemented mitigating strategies by including limited protections related to tax and trade measures within its contracts.

Sources

• "Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders, agency rule makings, tariffs and trade actions." (John Ketchum, context earnings call)

• "There has been no material impact on NEE's or FPL's operations or financial performance as a result of these developments to date in 2025, but NEE will continue to assess these and further developments for potential impacts in future periods." (Filing)

• "In all of our contracts, we have some limited protections around tax and trade measures as well as we've talked about on some of our prior calls." (John Ketchum, context earnings call)

Analysis

The company anticipates incurring incremental costs due to the current schedule of reciprocal tariffs on U.S. imports and increased tariffs from China on U.S. manufactured products. Trade and tariff policies are identified as factors that could create economic challenges and negatively impact business operations and results.

The expected full-year headwind from tariffs for 2025 is approximately $100M. This figure is a reduction from the previously estimated $200M headwind.

The company is monitoring the situation and exploring opportunities to mitigate the impacts of these tariffs. However, there is no guarantee that the impact of tariffs will be fully offset, as the ultimate effect depends on various factors including timing, scope, duration, nature of tariffs, and other trade restrictions or mitigation opportunities.

Sources

• "We anticipate incurring incremental costs under the current schedule of reciprocal tariffs on U.S. imports recently announced by the U.S. government, as well as the subsequent increase in tariffs introduced by China on U.S. manufactured products." (10-Q, page 45)

• "We continue to monitor the situation while exploring opportunities to mitigate the impacts of such tariffs." (10-Q, page 45)

• "Based on the current schedule of expected tariffs, we now anticipate a full year headwind of approximately $100,000,000 down from our approximate $200,000,000 estimate that we provided on our Q1 earnings call." (John Monson, context earnings call)

Analysis

Tariffs had an approximate impact of 1.5% of sales in the third quarter of fiscal 2025, which was lower than the previously expected 3% of sales due to policy changes. The company stated that the earnings impact from tariffs in the third quarter was minimal. Management mitigated the tariff impact through sourcing changes and implementing pricing actions. The impact of tariffs was more pronounced in the Industrial segment. The company reported no meaningful impact on customer pull-ins as a result of tariff risk.

Sources

• "The impact from tariffs in the third quarter was approximately 1.5% of sales with minimal earnings impact." (Heath Mitts)

• "Based upon what is currently enacted, we expect the impact from earnings in Q4 to be similar levels." (Heath Mitts)

• "With our global footprint, we will continue our strategy of mitigating tariff impacts through both our sourcing changes by TE and our customers as well as implementing pricing actions." (Heath Mitts)

Analysis

Tariffs significantly affected Thermo Fisher Scientific's financial performance in the second quarter of 2025. The impact of tariffs and related foreign exchange resulted in a 5% headwind to adjusted operating income dollars. This also led to a 140 basis point headwind to reported adjusted operating margins and a reduction of approximately 150 basis points in adjusted gross margins for the quarter.

The Analytical Instruments segment was particularly affected. The decrease in its organic revenues and segment income margin was directly attributed to the impact of tariffs and related foreign exchange, combined with the policy focus of the U.S. administration, which led to muted demand for equipment and instrumentation.

Despite these headwinds, the company's performance exceeded expectations due to active management. Sales in China were less impacted by tariffs than initially assumed, contributing to the outperformance. The company is actively managing the situation by leveraging its Practical Process Improvement (PPI) business system to adjust supply chains and aggressively manage its cost base, aiming to minimize the impact of tariffs for 2025 and beyond.

Sources

• "In Q2, the year over year impact of tariffs and related FX was a 5% headwind to adjusted operating income dollars and a headwind to reported margins in the quarter of 140 basis points." (Stephen Williamson, Senior Vice President and Chief Financial Officer)

• "Tariffs and related FX reduced adjusted gross margins by approximately 150 basis points." (Stephen Williamson, Senior Vice President and Chief Financial Officer)

• "This was driven by the impact of tariffs and the policy focus of the U. S. Administration, which is leading to a more muted demand for equipment and instrumentation." (Stephen Williamson, Senior Vice President and Chief Financial Officer)

Analysis

The company noted that tariffs contributed to extended approval workflows and elongated sales cycles in certain sectors. This impact was particularly observed in the US public sector and among manufacturers.

The ongoing uncertainty regarding trade policy led to a dampening effect on bookings during the second quarter. This resulted in a sequential one percentage point deceleration in current cloud backlog growth.

Management acknowledges that it is difficult to predict when these delayed opportunities will close. The company is preparing for potentially less favorable outcomes by focusing on elements within its control, such as cost protection and safeguarding free cash flow. This approach is intended to maintain resilience regardless of how external conditions evolve.

Sources

• "In a few individual industries impacted by uncertainty, we are seeing extended approval workflows on the customer side, for example, in The US public sector and among manufacturers affected by tariffs." (Christian Klein, CEO)

• "As we look towards half year two, we are mindful of the broader environment, including geopolitical developments, notably the ongoing uncertainty about trade policy that has contributed to elongated sales cycles in certain sectors such as US public sector and industrial manufacturing." (Dominik Asam, CFO)

• "The sequential one percentage point deceleration in current cloud backlog growth is underscoring the dampening effect on bookings in q two. It is obviously hard, if not impossible, to predict when exactly we'll catch up on the push outs." (Dominik Asam, CFO)

Analysis

The company reported that tariffs negatively impacted its gross profit margin by approximately 60 basis points for the three months ended June 30, 2025. This impact was a factor in the lower product and service gross profit margins observed during the period.

The U.S. imposed a 25% tariff on imports from Mexico and Canada in February 2025, though a significant majority of the company's instruments and accessories manufactured in Mexicali, Mexico, are exempt under the USMCA. In April 2025, the U.S. implemented a 10% universal tariff on nearly all imports not subject to the USMCA, with this suspension extended until August 1, 2025. The company imports certain raw materials and finished goods, including endoscopes primarily from Germany, which are subject to these tariffs. Suppliers may pass these increased costs to the company.

Regarding U.S.-China trade, the U.S. tariff on imports from China was set at 145% in April 2025, while China levied a 125% tariff on U.S. imports. An agreement in May 2025 reduced the U.S. tariff on Chinese imports to 30% plus applicable Section 301 duties (up to 25%), and China's tariff on U.S. imports to 10%. The company imports raw materials from China and also imports sub-assemblies to support its local manufacturing in China, as well as selling U.S.-manufactured da Vinci Xi systems into China. Both are subject to Chinese tariffs, which are expected to adversely affect the product cost of the da Vinci Xi surgical system in China.

Retaliatory trade measures by other countries, including restrictions on certain exports, could impact the reliability and efficiency of the company's supply chain if they target critical materials. The company is actively engaged in mitigating supply chain risks and disruptions. Additionally, the company has opened a new manufacturing facility in Bulgaria and plans to increase its manufacturing footprint in Germany and Mexico to support revenue growth and achieve industrial scale.

Sources

• "In addition, Q2 results also reflected an impact of approximately 60 basis points from tariffs." (Jamie Samat, earnings call)

• "Based on the announced and implemented global tariffs as of the date of this report, and assuming such tariffs remain in place, we anticipate a significant increase in our cost of revenues for the second half of 2025, which will impact our results of operations." (Management's discussion and analysis of financial condition as of June 30, 2025)

• "We are currently estimating the impact of tariffs for the year to be approximately 100 basis points, plus or minus 20 basis points, lower than the estimate we provided on last quarter's earnings call, primarily reflecting the reduction of bilateral tariff rates relating to US China trade." (Jamie Samat, earnings call)

Analysis

The company indicated that tariffs and geopolitics are affecting customer order behavior and reshaping global supply chains. An acceleration of demand was observed in the second quarter, which the company attributed in part to customers potentially building inventory to mitigate tariff-related disruptions. This increased demand normalized during the quarter.

The company leverages its global manufacturing capabilities to address customer needs in response to these supply chain disruptions. This flexibility is intended to support customers regardless of how the environment evolves. The company also highlighted its U.S. manufacturing footprint as providing geopolitically dependable capacity for customers.

Sources

• "We believe tariffs and geopolitics are disrupting and reshaping global supply chains and affecting customer order behavior." (10-K)

• "First, tariffs and geopolitics are disrupting and reshaping global supply chains. As we work closely with our customers, we are leveraging our global manufacturing capabilities to support their needs." (Haviv Ilan, context earnings call)

• "I think it's prudent to have a little bit of or to remember that what we saw in Q2 is probably a combination of customers wanting to have a little bit more inventory because of tariffs and also the cyclical recovery." (Haviv Ilan, context earnings call)

Analysis

The company stated that tariffs enacted or expanded by the U.S. or other countries did not materially impact its business or financial results for the six months ended June 29, 2025. However, specific quarter-to-date tariff impacts of $100M on free cash flow were realized during the second quarter of 2025. The company noted that increases in costs due to tariffs may impact cash flows, as full cost recovery might not occur in the same period as the costs are incurred, potentially leading to near-term cash flow effects.

The company is evaluating the potential future impacts of announced tariffs. It is pursuing available options to mitigate the impact of increased tariffs, including seeking exclusions, duty drawbacks, and refunds. Other strategies include recovering costs in product pricing, securing alternative material sources, or qualifying for duty-free treatment. The actual impact remains subject to factors such as the effective date, duration, scope, countermeasures by target countries, supplier reactions, substitution effects, and the success of mitigating actions.

For the full year 2025, tariff impacts contribute to a combined $500M headwind on free cash flow, which also includes challenges from a classified Aeronautics program. Despite these specific cash flow impacts, the company does not believe that tariffs will have a material adverse effect on its overall results of operations, financial condition, or cash flows.

Sources

• "We continue to experience supply chain challenges, including supplier shortages and performance issues... Supply chain challenges, including both the availability and cost of goods, may be further impacted due to the imposition of tariffs and the availability of rare earth minerals, as discussed below under "Recent Developments in Trade and Regulatory Policies."" (MD&A)

• "The tariffs that have been enacted or expanded by the U.S. or other countries did not materially impact our business or financial results for the six months ended June 29, 2025. We are currently evaluating the potential future impacts of the imposition of the announced tariffs to our business and financial condition. At this time, we do not believe that the tariffs announced by the U.S. or actions taken in response to these tariffs by other countries will have a material adverse effect upon our results of operations, financial condition, or cash flows." (MD&A)

• "Second, we realized quarter to date tariff impacts of approximately $100,000,000" (Evan Scott, Chief Financial Officer, context earnings call)

Analysis

The company reported a net tariff impact of $1.1B on EBIT-adjusted for the three months ended June 30, 2025. This impact was primarily due to increased material and freight costs.

For the full year ending December 31, 2025, the estimated gross tariff impact on EBIT-adjusted is projected to range from $4.0B to $5.0B. The tariff environment remains dynamic, with new tariffs announced in the first quarter of 2025 on vehicles and parts imported into the U.S. These tariffs include those under the U.S.-Mexico-Canada Agreement, and import tariffs from other countries continue to evolve.

The company is implementing strategic actions to mitigate the tariff impact, aiming to offset at least 30% of the full-year 2025 tariff expense. These mitigation efforts include manufacturing adjustments, targeted cost initiatives, and consistent pricing. Production and sourcing adjustments are being made to reduce reliance on imported components and vehicles from Canada, Mexico, and Korea.

New investments totaling $4.0B in U.S. assembly plants are planned to add 300,000 units of U.S. capacity for high-margin light duty pickups, full-size SUVs, and crossovers. This capacity is expected to come online within 18 months, enabling the company to build over 2,000,000 vehicles in the U.S. annually, thereby reducing tariff exposure and fulfilling unmet customer demand. These investments also provide flexibility to adjust production mixes between internal combustion engine (ICE) and electric vehicle (EV) models based on market demand. While the Q2 2025 net tariff costs were $1.1B, the company expects third-quarter net tariff costs to be higher due to the timing of certain indirect tariff costs.

Sources

• "Based on the current tariff environment, we estimate that impacts to EBIT-adjusted could range from $4.0 billion to $5.0 billion for the year ending December 31, 2025." (Filing)

• "EBIT adjusted was $3,000,000,000 for the quarter, inclusive of a net tariff impact of approximately $1,100,000,000 with minimal mitigation offsets." (Paul Jacobson, CFO)

• "However, we're still tracking to offset at least 30% of the 4,000,000,000 to $5,000,000,000 full year 2025 tariff impact through strategic actions such as manufacturing adjustments, targeted cost initiatives and consistent pricing." (Paul Jacobson, CFO)

Analysis

The company recognizes a volatile global tariff environment. However, it believes it is positioned to mitigate potential supply chain challenges due to its diversified production, worldwide supplier network, and established U.S. manufacturing base for nicotine pouches. Its existing supply chains are largely self-contained within their respective trade regions.

The impact of new tariffs on the company's business for the first six months of 2025 was not material to its condensed consolidated financial statements. The company continues to actively monitor developments, evaluate all changes, and adapt its operations and compliance practices accordingly.

Sources

• "While the global tariff environment is volatile, as a global company with a broadly diversified production, a worldwide supplier network, including an established U.S. manufacturing base for nicotine pouches, and existing supply chains that are largely self-contained within their respective trade regions, we currently believe we are well-positioned to mitigate potential supply chain challenges and that the changing tariff environment will not have a material impact on our business." (MD&A)

• "During the first six months of 2025, the impact of new tariffs on our business was not material to our condensed consolidated financial statements." (MD&A)

• "While the situation is volatile, we do not currently anticipate a material impact on our business from recently introduced or discussed tariffs." (Emmanuel Babeau, Chief Financial Officer)

Analysis

The U.S. government imposed tariffs on imports from February 2025, leading to counter-tariffs from other countries. The company's businesses and suppliers are affected by both U.S. imposed tariffs and counter-tariffs.

In the second quarter of 2025, the company's adjusted earnings per share included $0.06 of higher tariff costs. Free cash flow for the second quarter of 2025 was negatively impacted by $175M due to tariffs. Higher tariffs also affected the operating profit of Collins Aerospace and Pratt & Whitney during the period.

The company is implementing strategies to mitigate the impact of tariffs. These include utilizing available exemptions or exclusions, such as trade agreements and statutory relief. Operational and supply chain changes are also being evaluated, and price increases are implemented where feasible. Specific actions mentioned include expanding USMCA coverage, qualifying additional parts for military duty-free exemptions, maximizing the use of free trade zones, and optimizing material flow.

For the full year 2025, the company's current assessment indicates that tariff costs, net of mitigations, will be approximately $500M. The associated full year cash impact is estimated at $600M. The company has stated that it does not believe these tariffs will have a material adverse effect on its results of operations, financial condition, or cash flows based on current conditions. However, the actual financial impact depends on factors such as the scope and rate of tariffs, timing and duration, and the company's ability to continue mitigating these impacts.

Sources

• "As expected, free cash flow was an outflow of $72,000,000 This included approximately $250,000,000 for powder metal related compensation and $175,000,000 related to tariff impacts." (Neil Mitchill, CFO, earnings call)

• "As a result, our current assessment of 2025 tariff costs net of mitigations is around $500,000,000 with approximately $125,000,000 already incurred in the first half of the year. In addition, we see the associated cash impact to be around $600,000,000 for the full year, again, a notable improvement." (Neil Mitchill, CFO, earnings call)

• "We continue to pursue available options to mitigate the impact of tariffs and countermeasures, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, treaties or other statutory relief, (ii) evaluating operational and supply chain changes, and (iii) where feasible, increasing the prices of our goods and services." (Filing)

Analysis

Northrop Grumman acknowledges the existence of economic tensions and shifts in international trade policies, including widespread tariffs imposed by the U.S. on its primary trading partners. The company recognizes that higher tariffs on imported goods and materials, as well as potential retaliatory actions, could influence the global market for defense products, services, and solutions. The full effect of these governmental actions on macroeconomic conditions and the company's business remains uncertain and difficult to predict. The company continues to monitor the impact on its business, suppliers, and customers. However, Northrop Grumman does not currently believe that the tariffs in effect will have a material adverse effect on its business.

Sources

• "Economic tensions and changes in international trade policies, including, for example, the widespread tariffs announced this year by the U.S. on its major trading partners, higher tariffs on imported goods and materials and actions taken in response (such as retaliatory tariffs or other trade protectionist measures or the renegotiation of free trade agreements), could also further impact the global market for defense products, services and solutions." (Filing)

• "We are continuing to monitor the impact on our business, suppliers and customers, but do not believe that the tariffs in effect at this time will have a material adverse effect on our business." (Filing)

Analysis

The company reported that tariffs had a relatively small impact, specifically affecting a business referred to as their "test business." This impact was estimated to be in the range of $10M to $15M.

Management indicated that mitigation efforts were undertaken, including adjustments to the supply chain and pricing strategies. While the full effect remains to be seen, the impact is considered minor relative to the company's overall operations.

Sources

• "the tariffs is obviously all in our test business is relatively small. I think we said last quarter, it's in the 10,000,000 to $15,000,000 range. It's still in that." (Company - CEO)

• "The team is working very hard to mitigate. They've mitigated some of that and supply chain mitigated some of that in pricing." (Company - CEO)

• "it's too early to call it non effect, but for relative to others, it's quite small." (Company - CEO)

Analysis

During the second quarter of 2025, no specific impact from tariffs on the company's financial performance was reported. The company acknowledges that lingering tariff negotiations contribute to an uncertain macroeconomic environment.

For the second half of 2025, tariffs are expected to negatively affect the company's adjusted EBITDA margins. The estimated impact is a reduction of 20 to 40 basis points. This assessment assumes no changes to the tariffs currently in place. The company noted that its adjusted EBITDA margins for the second half would have expanded by this amount if not for the impact of tariffs.

Sources

• "This will however be partially offset by the impact of tariffs. Assuming no changes to the tariffs that are currently in place, we estimate that this will cost us between twenty and forty basis points of margin in the second half." (Stephane Biguet, Earnings Call)

• "Said another way, our adjusted EBITDA margins including the contribution of ChampionX would have expanded by about 20 to 40 basis points in the second half, if not for the impact of the tariffs." (Stephane Biguet, Earnings Call)

• "These statements are subject to risks and uncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by SLB's customers, and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of SLB's customers and suppliers; SLB's inability to achieve its financial and performance targets and other forecasts and expectations; SLB's inability to achieve net-zero carbon emissions goals or interim emissions reduction goals; general economic, geopolitical and business conditions in key regions of the world; foreign currency risk; inflation; changes in monetary policy by governments; tariffs; pricing pressure; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays or cancellations; challenges in SLB's supply chain; production declines; the extent of future charges; SLB's inability to recognize efficiencies and other intended benefits from its business strategies and initiatives, such as digital or new energy, as well as its cost reduction strategies; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, and climate-related initiatives; the inability of technology to meet new challenges in exploration; the competitiveness of alternative energy sources or product substitutes; and other risks and uncertainties detailed in this Form 10-Q and our most recent Form 10-K and Forms 8-K filed with or furnished to the SEC." (Filing)

Analysis

Tariffs negatively impacted 3M's financial performance, specifically contributing to increased cost of sales and affecting operating margins. The company recognized these impacts on both GAAP and adjusted operating margins. These impacts were part of broader challenges that included foreign currency fluctuations and the costs associated with exiting manufactured PFAS products.

To mitigate the adverse effects of tariffs, the company implemented several strategies. These include cost reductions, changes in sourcing, and pricing adjustments. Management indicated that approximately half of the gross tariff impact was offset by these cost and sourcing changes, with the other half addressed through pricing strategies.

3M revised its estimate for the gross tariff headwind for the full year 2025. The initial estimate of $0.60 EPS (earnings per share) was reduced to $0.20 EPS. This re-evaluation was primarily attributed to a significant decrease in tariff rates, particularly those related to trade with China. The company's updated full-year earnings guidance now incorporates these anticipated net tariff impacts, indicating a clearer financial outlook regarding this factor.

Sources

• "Both GAAP and adjusted operating margins reflect benefits from growth, productivity (outside of special items) and lower restructuring costs, partially offset by growth investments, as well as foreign currency and gross tariff impacts." (MD&A)

• "This included a $300 million benefit from volume growth, broad-based productivity, lower restructuring cost and equity comp timing, partially offset by $50 million of growth investments and $25 million from tariff impact and stranded cost headwind." (Anurag Maheshwari, CFO)

• "So the gross amount is about $140 million nets around 70, about half of that, say $75 million, is price, the other half $35-ish million is going to be cost savings as well as sourcing." (Bill Brown, CEO)

Analysis

Tariffs influenced copper prices in the second half of FY2025, leading to a premium on US COMEX prices. The United States later announced the exclusion of copper cathode from these tariffs in July 2025, which subsequently closed the COMEX-LME price differential.

Increasing geopolitical volatility and global trade restrictions, including tariffs, contributed to heightened risks in accessing key markets for the company.

The imposition of tariffs and other trade barriers across various jurisdictions in CY2025 is expected to adversely affect the company's costs, investments, and the demand and pricing for its products. Rising trade protectionism is considered a potential near-term headwind for global iron ore and steel demand.

Sources

• "In July 2025, the US announced tariffs would exclude copper cathode, largely closing the COMEX-LME differential. Forward curves suggest the market still sees a risk of future tariffs, which could continue to influence trade flows." (BHP Annual Report 2025 - OFR 12.1 Copper)

• "Exposure to risks associated with access to key markets increased in FY2025 due to increasing geopolitical volatility, tariffs and global trade restrictions impacting global supply chains." (BHP Annual Report 2025 - OFR 11 Risk factors: Accessing key markets)

• "The imposition of tariffs across various jurisdictions in CY2025 and other developments in international trade may also adversely impact our business." (BHP Annual Report 2025 - OFR 11 Risk factor: Optimising growth and portfolio returns)

Analysis

Tariffs are recognized as a headwind impacting the company's financial performance. The company expects these tariffs to have a negative impact on its financial results for the full year 2025.

To mitigate the effect of tariffs, the company is implementing a multi-pronged strategy. This includes examining six different work streams and considering the construction of a new cardiovascular manufacturing facility in the United States. Management views tariffs as difficult to reverse once implemented, necessitating a long-term strategic approach.

Sources

• "And even with that $1,000,000,000 we're still forecasting high single digit growth and absorbing the impact of tariffs, which we now expect to be just under $200,000,000 of impact." (Robert Ford)

• "Yes, I think Robert mentioned tariffs are a little less than $200,000,000 impact here, so down from previous estimates and then the FX impact here." (Phil Boudreaux)

• "So, as we've said, we have a whole team that's been working on this. There are like six different work streams that we're looking at. And, we've got a very strong manufacturing, network around the world around 90 manufacturing sites. We're going to build another cardiovascular manufacturing site here in The US, and began that process also. So, we're thinking about it, once tariffs get set in place. They're very difficult to walk away from." (Robert Ford)

Analysis

Tariffs are resulting in additional costs for the company and its supply chain. The company is actively working to mitigate these costs through operational plans, cost controls, and pricing actions.

The absence of reciprocal tariffs in China has reduced risk for spare engine and spare part deliveries. This reduced risk supports the company's increased revenue growth expectations for commercial services and commercial equipment.

Sources

• "Broadly speaking, we support promoting free and fair trade, including the duty free environment that has long fueled The US aerospace sector, leading to more than 1,800,000 US jobs and a $75,000,000,000 annual trade surplus." (Larry Culp, Chairman and CEO)

• "With the absence of reciprocal tariffs in China thus far, we currently see reduced risk for spare engines and spare part deliveries." (Rahul Ghai, CFO)

• "Assuming that reciprocal tariffs are implemented after the current pause, we still expect the net impact of tariffs to be roughly $500,000,000 in 2025, which we are offsetting through cost controls and pricing actions." (Rahul Ghai, CFO)

Analysis

The company reported that non-cash adjustments related to foreign exchange losses and fair value movements on equity derivatives were exacerbated by the market reaction to proposed tariffs by the US government. This market reaction occurred around the year-end date. The company noted that these impacts, specifically in equity markets, largely reversed subsequent to the year-end. No specific financial quantification of the direct impact of these proposed tariffs on the company's overall financial performance was provided. The company did not detail specific mitigating strategies directly in response to these proposed tariffs.

Sources

• "Reported PBT of £379.4m, a decrease of 24.3%. The Group's trading performance has been offset by foreign exchange losses (vs. gains in FY24) and non-cash fair value movements on equity derivatives, primarily relating to the material decline in the HUGO BOSS share price. Both of these non-cash adjustments were exacerbated by the market reaction to proposed tariffs by the US government around the year-end date, impacts which, in the case of equity markets, have largely reversed since year-end." (Press Release)

Analysis

The company has acknowledged that tariffs affect its operations. Management indicated that the impact of tariffs, despite their volatility, has been factored into the company's financial planning. This includes the implementation of mitigating actions already undertaken, with additional mitigants under consideration. These efforts are intended to address the financial implications arising from tariffs, particularly for the second half of the fiscal year.

Sources

• "On tariffs, we've factored that. Obviously, you know, it's a bit volatile, but we feel good about mitigating actions that we've already taken. We have some other mitigants that we have under consideration, we've factored that into the back half." (Jamie Caulfield, Executive Vice President and CFO)

Analysis

The company revised its anticipated tariff impact for fiscal year 2025, reducing it from approximately $400M to approximately $200M. This impact is exclusively related to the MedTech business. The company plans to reinvest the differential amount to accelerate its pipeline and support the launch of new products, existing products with new indications, and those with near-term anticipated approvals. The company continues to monitor potential future tariff impacts. Policies enabling investment in the U.S. contribute to the company's objective to manufacture all medicines consumed in the U.S. domestically.

Sources

• "During our first quarter conference call, we anticipated an impact from tariffs in 2025 to be approximately $400 million. Based on the current tariff landscape, we now anticipate the impact to be approximately $200 million exclusively related to our MedTech business." (Joe Wolk (CFO))

• "We will look to reinvest the differential to continue to accelerate our pipeline and further power the launch of our new products, those on the market with new indications and those with near term anticipated approvals." (Joe Wolk (CFO))

• "We continue to monitor what the future year's impact could be from tariffs on our business." (Joe Wolk (CFO))

Analysis

Tariffs contribute to the broader macro uncertainty, which influences customer decision-making and affects the pace of new leasing activity. Customers have expressed a need to continue business operations despite the ambiguity surrounding tariffs, indicating a level of exhaustion with adapting to shifting policies. This dynamic has resulted in a lengthening of decision-making time for some customers.

Despite this environment of policy uncertainty, the company's leasing pipeline has reached historically high levels. This indicates an accumulation of demand, with larger customers making significant capital investments and consolidating operations. This activity suggests an underlying need for space, even as the market experiences choppy conditions.

Sources

• "Finally, our broader customer dialogue simply reflects an emerging bias towards action summarized well by one prominent user describing the exhaustion of adapting to shifting tariffs and concluded that they need to just run their business and will quote figure out the tariff details when there is some clarity." (Tim Arendt, CFO)

• "Looking ahead consistent policy and settled trade arrangements will certainly help and be a key determinant of the overall pace of net absorption." (Tim Arendt, CFO)

• "Look decision making remains deliberate and so we see the pipeline building. Tim described a dynamic of the deals beginning to pile up. And when we speak with customers this is really about clarity on the macro front. And when we look at the headlines, when we look at economist forecasts, there's caution in the back half of the year." (Chris Caton, Managing Director)

Analysis

The company reported a lower than expected negative impact from tariffs on its second quarter 2025 gross margin. This contributed to the gross margin reaching 53.7%, which was above guidance.

Management identified potential direct impacts from tariffs, including those on system sales to customers in the United States, and on the import of materials for US manufacturing facilities and parts for US field operations. Additionally, tariffs on the export of parts from the US to other countries could have a direct effect.

The indirect impact of tariffs is considered more complex and difficult to assess, as it relates to potential effects on overall GDP and market demand. The company is collaborating with customers and suppliers to mitigate the direct financial impact of tariffs.

Increased macroeconomic and geopolitical uncertainties, encompassing tariffs, are causing caution among customers. This situation is impacting their investment decisions, leading to reduced clarity regarding future demand. Consequently, the company is unable to confirm growth for 2026 at this stage, despite preparing for it.

Sources

• "Gross margin for the quarter was above guidance at 53.7%, driven by an increase in upgrade business, one off items resulting in lower cost and lower than expected impact from tariffs..." (Roger Dassen, CFO)

• "With regard to tariffs, the direct impact results from tariffs related to system sales to our customers in The United States, the import of materials for our US manufacturing facilities, the import of parts and tools for our US field operations, and the export of parts from The US into other countries to the extent tariffs were to apply to those parts." (Roger Dassen, CFO)

• "Therefore, while we still prepare for growth in 2026, we cannot confirm it at this stage." (Christophe Fouquet, CEO)

Analysis

The company reported a specific financial impact from tariffs in the first quarter of fiscal year 2026. This impact was attributed to higher material costs for aluminum cans within the Beer segment. The company cited an increase of $6.9M in material costs due to tariffs on aluminum cans.

The company is subject to recent developments in international trade relations, including new and increased tariffs on product imports from countries such as Mexico, the European Union, Italy, and New Zealand. Retaliatory tariffs on U.S. goods from countries like Canada are also noted. These conditions are expected to continue in fiscal year 2026.

Looking forward, an incremental tariff that went into effect in June is expected to result in an additional impact of approximately $20M. This specific incremental tariff did not affect the first quarter's results. The company does not expect to fully offset this incremental tariff, which is anticipated to contribute to a 20 basis point hit to margins. While the company is implementing various cost, productivity, efficiency, and inventory management initiatives, along with commodity and foreign exchange hedging programs, there is no assurance that these measures will fully mitigate rising costs from new or increased tariffs.

Sources

• "$6.9 million is attributable to tariffs on aluminum cans" (Form 10-Q)

• "Specifically to the incremental tariff that went into effect in June. To be clear, that did not impact our Q1. Going forward, we think that the impact of that is going to be roughly $20,000,000" (Garth Hankinson, CFO)

• "We don't expect that we're going to be able to fully offset this incremental tariff." (Garth Hankinson, CFO)