Tariff Impact Tracker

Analysis

Tariffs are affecting retailers, placing increased pressure on their operations. This impact is particularly noticeable for smaller retailers, as larger entities like Costco, Walmart, and Amazon are less affected. The full financial implications of these tariffs are expected to materialize in 2026, following their implementation in April 2025.

Specifically, tariffs are projected to reduce EBITDA for Catalyst, one of the company's investments, by $200M. Catalyst is prioritizing not passing these costs on to consumers. This financial strain contributes to a challenging environment for retailers.

This tariff-related pressure is expected to lead to additional bankruptcies among retailers in 2026, a factor not fully accounted for in the company's initial 2026 guidance set in mid-December. This indicates a potential headwind for future financial performance.

Despite the challenges posed by tariffs, the company notes positive trends in shopper traffic and retail sales. Management also highlights its ability to replace underperforming tenants with more productive ones at higher rents, as demonstrated by the re-leasing potential of spaces vacated by retailers like Saks OFF 5TH. The company maintains a bullish outlook on the broader economy and aims to leverage its various revenue streams and redevelopment projects to drive future growth.

Sources

• "I think the tariffs are clearly having an effect on retailers, so it is definitely putting more pressure on them." (David Simon)

• "the full impact will really be 2026, because it was implemented, you know, who knows, in April, I guess." (David Simon)

• "we see it from Catalyst point of view, and I mean, it's gonna take $200mn of EBITDA away from Catalyst to pay the government." (David Simon)

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Analysis

The company has incorporated the potential effects of tariffs into its financial outlook for 2026. This indicates that tariffs are considered a factor influencing future performance, although specific financial quantification of their impact is not separately detailed within the provided guidance. The company states it is well positioned to maintain supply continuity to customers despite these tariff impacts.

Sources

• "We've captured impacts of tariffs under current laws in our outlook, and we remain well positioned to maintain supply continuity to our customers." (Andrew Emerson (EVP and CFO))

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Analysis

The company identified higher tariffs as a negative factor impacting its financial performance in 2025, alongside other macroeconomic headwinds such as lower category growth and increased raw material inflation. This indicates tariffs contributed to a challenging operating environment during the year.

Looking ahead to 2026, the company continues to monitor the volatile geopolitical environment, which includes tariffs, particularly in Latin America. While tariffs are integrated into the company's 2026 financial guidance, no specific quantitative impact attributed solely to tariffs is disclosed. Management emphasizes its operating model's flexibility and resilience as a means to navigate such uncertainties.

Sources

• "We delivered organic sales, net sales, gross profit, base business earnings per share, and free cash flow growth in 2025, despite lower-than-expected category growth, higher-than-anticipated raw material inflation, and the impact of higher tariffs." (Noel Wallace, Chairman, President, and CEO)

• "The geopolitical environment, including tariffs, is volatile, particularly in Latin America, and the U.S. market remains sluggish." (Noel Wallace, Chairman, President, and CEO)

• "Based on current spot rates and including the estimated impact of tariffs announced and finalized as of January 28, 2026: The Company expects net sales to be up 2% to 6%, including a low-single-digit positive impact from foreign exchange." (Press Release)

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Analysis

Air Products is monitoring reports concerning the Carbon Border Adjustment Mechanism (CBAM) tariffs in Europe, specifically as they relate to fertilizers. These tariffs are relevant to the potential low-emission ammonia project in Louisiana, where Air Products is in advanced negotiations with Yara International.

The company states that any changes in CBAM rules would have an indirect effect on the Louisiana project. This is because significant CBAM tariffs are primarily applicable to gray ammonia imports, not green ammonia, which the project would produce. The regulatory risk associated with CBAM changes is borne by Yara, the potential partner responsible for distributing and commercializing the ammonia.

While Air Products is following the subject closely with Yara, the primary factor for the final investment decision on the Louisiana project remains the capital cost estimate, not the CBAM tariffs. The company views the impact of CBAM as indirect and uncertain.

Sources

• "We are monitoring recent reports related to fertilizers CBAM tariffs in Europe." (Eduardo Menezes (CEO))

• "Any change in the CBAM rules would have an indirect effect on our potential Louisiana project, as only gray ammonia imports are subject to significant CBAM tariffs." (Eduardo Menezes (CEO))

• "Overall, Yara bears the regulatory risk related to CBAM changes if the project goes forward." (Eduardo Menezes (CEO))

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Analysis

Tariffs contributed to increased costs for the company's products. This impact partially offset the positive effects on product gross margin that resulted from a favorable product mix in the first quarter of fiscal year 2026.

The company recognizes that tariffs and other measures applied to its products or components could materially affect its business, supply chain, raw material availability, pricing, and gross margin. New tariffs were announced beginning in the second quarter of 2025 on imports from various countries, including China, India, Japan, South Korea, Taiwan, Vietnam, and the European Union.

The future impact of tariffs remains uncertain. It depends on factors such as the imposition of additional U.S. tariffs, retaliatory measures from other countries, and the overall duration and scale of these trade measures. The company's guidance for the March quarter assumes that global tariff rates, policies, and their application remain consistent.

Sources

• "Products gross margin and gross margin percentage increased during the first quarter of 2026 compared to the same quarter in 2025 primarily due to a different mix of products, partially offset by tariff costs." (Q1 2026 Form 10-Q)

• "On the tariff piece, we had outlined an amount of $1.4bn for the December quarter, and we landed roughly in that range, you know, at that level." (Kevan Parekh)

• "Tariffs and other measures that are applied to the Company's products or their components can have a material adverse impact on the Company's business, results of operations and financial condition, including impacting the Company's supply chain, the availability of rare earths and other raw materials and components, pricing and gross margin." (Q1 2026 Form 10-Q)

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Analysis

During fiscal year 2025, the company faced tariff headwinds that partially offset its adjusted EPS growth and contributed to a 10 basis point decrease in adjusted gross margin in the fourth quarter. Despite these challenges, the company's operational execution and cost improvements enabled it to achieve a second consecutive year of at least 100 basis points of adjusted operating margin expansion.

For fiscal year 2026, the company anticipates total tariff impacts of approximately $400M. This includes an incremental $200M compared to fiscal year 2025, with this additional amount expected to be realized in the first half of the year. The company's guidance incorporates these anticipated tariff impacts, and management expects to continue driving meaningful margin expansion through ongoing mitigation activities and enhanced earnings power.

Sources

• "While managing tariff headwinds, our teams delivered a second consecutive year of at least 100 basis points of adjusted operating margin expansion." (Kevin Lobo, Chair and CEO)

• "Our fourth quarter adjusted earnings per share of $4.47 was up 11.5% from the same quarter last year, driven by sales growth and operating margin expansion, partially offset by tariffs, higher interest expense, and a higher effective tax rate." (Preston Wells, CFO)

• "In addition, we expect full-year tariff impacts to be approximately $400mn, which includes an incremental $200mn compared to 2025 that will be realized in the first half of the year." (Preston Wells, CFO)

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Analysis

Geopolitical factors, including tariffs, have had an adverse impact on the company's results of operations. During the three months ended December 31, 2025, the company's gross margin was negatively affected by tariffs, which were included within other service and manufacturing costs. This negative impact was partially offset by lower inventory-related charges.

The current tariff burden is estimated to be approximately 50 to 100 basis points on gross margins. The company is actively implementing internal process changes to mitigate this impact.

Looking forward, the company expects the tariff burden to diminish as calendar year 2026 progresses, due to these internal process adjustments.

Sources

• "Geopolitical factors, such as government regulations and tariffs, have had an adverse impact on our results of operations." (Executive Summary)

• "Other service and manufacturing costs included lower inventory-related charges partially offset by the impact of tariffs during the three months ended December 31, 2025, compared to the same period in the prior year." (Filing)

• "I talked about a 50-100 basis point impact related to tariffs. We're closer to the top end of that range today, and we'll see that come down, I think, over time." (Bren Higgins, CFO)

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Analysis

Sanofi anticipates a minimal impact from tariffs on its gross margin expansion for the full year 2026. This expectation follows an agreement reached with the U.S. administration in December 2025. The company projects that this agreement will allow its gross margin expansion to continue.

Sources

• "Our gross margin expansion is expected to continue with minimal tariff impact following the agreement reached with the U.S. administration last December." (François-Xavier Roger (CFO))

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Analysis

Caterpillar reported net incremental tariff headwinds of $1.7 billion for the full year 2025, which impacted the company's financial performance. Despite these headwinds, the full year adjusted operating profit margin was 17.2%, falling within the target range.

Tariffs led to a 270 basis points decrease in adjusted operating profit margin during the fourth quarter of 2025 compared to the prior year. This reduction was primarily due to higher manufacturing costs. Excluding the impact of tariffs implemented in 2025, the full year margin would have been in the top half of the target range.

The company employs mitigating actions against tariffs. These actions include sourcing changes aimed at reducing the direct tariff exposure. Additionally, cost control measures and pricing strategies are utilized to lessen the impact on profitability. In 2025, approximately $100 million in cost controls were specifically attributed to tariff mitigation efforts.

For 2026, incremental tariff costs are expected to be around $2.6 billion, an increase of $800 million compared to 2025. This figure represents the absolute incremental tariff cost after accounting for mitigating actions that reduce the absolute value of tariff exposure against a 2024 baseline. The company expects the run rate of incremental tariff costs to improve in the second half of 2026 as further actions are taken to reduce tariff exposure. Tariffs are noted to be volume-sensitive. For the first quarter of 2026, incremental tariff costs are anticipated to be around $800 million.

Sources

• "In a dynamic environment with net incremental tariff headwinds of $1.7bn, we delivered full year adjusted operating profit margin within the target range at 17.2% and adjusted profit per share of $19.06." (Joe Creed)

• "Versus the prior year, the 270 basis points decrease was primarily due to higher manufacturing costs driven by tariffs." (Andrew Bonfield)

• "For the full year, incremental tariff costs are expected to be around $2.6bn, which is $800mn higher than occurred in 2025." (Andrew Bonfield)

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Analysis

Tariffs are noted as a continuing strong headwind for the Renewable Diesel segment. The potential for tariffs on foreign feedstocks and the elimination of credits for foreign imports could lead to higher D4 RIN prices. This scenario suggests a challenging environment for generating compliance within the Renewable Fuel Standard program, as it combines increased obligations with harder conditions for generation.

Sources

• "We do see that there's a lot of talk of tariffs continue to be a pretty strong headwind, but we'll see what the Supreme Court comes out with." (Eric Fisher)

• "So if you see that and with the combination of tariffs on foreign feedstocks and the elimination of credits for foreign imports, the entire compliance, essentially you're raising the obligation while also making it harder to generate. That all points to a higher D4 RIN price, especially as you draw the bank down, which a 5.2-5.6 obligation number would certainly do." (Eric Fisher)

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Analysis

Norfolk Southern cited persistent tariff uncertainty as a factor throughout 2025, contributing to what management described as a challenging and dynamic year. The company noted that this uncertainty, alongside competitive dynamics and a softening macro environment, influenced its overall performance.

Looking ahead to 2026, the company's guidance indicates that Intermodal import volumes are expected to remain soft due to continued tariff volatility and evolving trade pressures. Management reiterated that the impacts of shifting tariff policies remain uncertain, making the broader macroeconomic backdrop difficult to assess. The company emphasized a focus on controlling internal factors such as cost and operational efficiency, regardless of the external demand environment.

Sources

• "It started with a challenging winter, followed by persistent tariff uncertainty, and then competitive dynamics tied to the announced merger." (Mark George, President and CEO)

• "For our Intermodal markets, import volumes are expected to remain soft due to continued tariff volatility and evolving trade pressures." (Ed Elkins, Chief Commercial Officer)

• "While we are seeing long-awaited stabilization in truck pricing, the impacts of shifting tariff policies remain uncertain, and many customers continue to adjust to fluid conditions. So the macro backdrop remains hard to read, but we are staying sharply focused on the fundamentals." (Mark George, President and CEO)

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Analysis

During 2025, the company's diagnostics division experienced a tariff impact of CHF 64 million. This impact contributed to the overall increase in the cost of sales for the diagnostics division. In response to tariffs, the company also increased its inventories.

Looking forward, the company expects to continue dealing with similar tariff impacts in 2026 for its diagnostics division. In a mitigating development, the company reached an agreement with the US government, securing an exemption from tariffs for the next three years. This contract also involves commitments from the company, including agreeing to Medicaid rebates for some products, encouraging other nations to support biopharmaceutical innovation, supporting direct-to-patient medication access for its influenza portfolio, and investing $50 billion in the United States over five years in R&D and PP&E.

Sources

• "Last but not least, we had a tariff impact on the diagnostic side of CHF 64 million half-year impact. So that's also something we potentially have to deal with in 2026." (Alan Hippe (CFO))

• "The other piece here is net trade working capital inventories. We had the situation that we had to deal with the tariffs. So we brought inventories up a little bit that contributed to this." (Alan Hippe (CFO))

• "Now the agreement we reached with the US government is not an LOI; it's a contract with the U.S. government. And based on this contract with the US government, which is terminated for the next three years, we get an exemption from tariffs and we get an exemption of the demo projects." (Thomas Schinecker (CEO))

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Analysis

The company experienced an impact of $485M on its cash flows during fiscal year 2025 due to tariffs. These tariffs were enacted or expanded by the U.S. or other countries on imported materials and component parts. The company anticipates recovering a substantial portion of this impact over time.

To address the tariff effects, the company is implementing several mitigating strategies. These strategies include seeking exclusions from tariffs, utilizing drawbacks, obtaining refunds, and recovering increased costs by adjusting product pricing. The company also aims to secure alternative sources of materials or products to reduce its exposure to tariffs. A contributing factor to mitigation is that a significant volume of the company's imports already qualifies for duty-free entry.

While the company notes that near-term cash flow volatility could persist due to the timing differences between tariff payments and recoveries, it currently does not expect tariffs to have a material adverse effect on its long-term results of operations or financial condition.

Sources

• "Tariffs that have been enacted or expanded by the U.S. or other countries had an impact of approximately $485 million on our cash flows during the year ended December 31, 2025." (Management's Discussion and Analysis)

• "However, we expect a substantial portion of this impact to be recoverable over time." (Management's Discussion and Analysis)

• "We are pursuing available options to fully or substantially mitigate the impact of the increased tariffs or any future tariffs, including seeking exclusions, through drawbacks, refunds, recovering the costs in the pricing of our products, or securing alternative sources of materials or products." (Management's Discussion and Analysis)

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Analysis

Tariffs negatively affected the Coil division within the Performance Coatings Group, contributing to a low single-digit sales decrease in 2025, as new account wins were insufficient to offset steel tariff impacts. This represents a specific impact within a segment.

The overall realization of tariff impacts in 2025 was less severe or delayed than initially expected. This situation, combined with other factors, influenced the company's decision to reinstate its 401(k) matching program sooner than anticipated.

Looking into 2026, tariffs are expected to contribute to a low single-digit percentage increase in the company's raw material basket, alongside other inflating commodities. This suggests an anticipated headwind on costs.

Steel tariffs are also anticipated to continue exerting pressure on the Coil market, with flattish sales expected in that division for 2026, indicating ongoing challenges from these tariffs.

Sources

• "Coil sales decreased by low single digits as meaningful new account wins were not enough to offset steel tariff impacts." (Heidi G. Petz)

• "At the same time, some of the risks that we saw in July did not materialize or were less severe than expected, including the delayed realization of some tariff impacts." (Heidi G. Petz)

• "We expect the market basket of raw materials to be up a low single-digit % in 2026, driven by tariffs, along with select commodities also inflating." (Heidi G. Petz)

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Analysis

Tariffs on Chinese manufactured goods, combined with increased enforcement efforts, showed early signs of impacting the illicit e-vapor marketplace in 2025. This led to a moderation in the growth of disposable e-vapor volumes, which increased approximately 30% in 2025, compared to over 50% in 2024. This moderation, in turn, reduced the estimated cross-category impact on the cigarette industry decline rate from a prior estimate of 3%-4% to 2%-3% over the past 12 months, which benefited Altria's smokable products segment.

Despite these moderating effects on illicit e-vapor growth, Altria views the overall enforcement against illicit flavored disposable e-vapor products as protracted and ineffective in meaningfully reducing illicit volumes to date. This regulatory environment contributed to substantial non-cash impairment charges in the e-vapor reporting unit in 2025, primarily due to lower projected volume and revenue for NJOY.

Looking ahead to 2026, Altria is implementing a strategy to leverage cigarette import and export activity to realize duty drawback benefits. This involves planned investments in contract manufacturing capabilities, which are driving an elevated capital expenditure guidance of $300 million to $375 million for 2026. These investments are projected to have a payback period of less than one year, with a progressive increase in cigarette import and export activity expected to weight adjusted diluted EPS growth to the second half of 2026. Altria aims to avoid a competitive disadvantage concerning these duty drawbacks and continues to seek expansion opportunities.

Sources

• "Early signs suggest that these efforts, together with tariffs of Chinese manufactured goods, are beginning to impact the illicit marketplace." (Billy Gifford, context earnings call)

• "We now estimate that cross-category impacts, primarily driven by illicit flavored disposable e-vapor, contributed approximately 2%-3% to the cigarette industry decline over the past 12 months, versus our prior estimate of 3%-4%." (Sal Mancuso, context earnings call)

• "The primary driver of the increase is are the investments for our import/export business. ... the payback is less than a year." (Sal Mancuso, context earnings call)

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Analysis

Dow encountered trade and policy volatility, along with anti-competitive behaviors by certain industry players, throughout 2025. These external pressures created challenges for the company.

Despite the presence of tariff uncertainties, Dow's Performance Materials and Coatings segment achieved increased volumes in 2025. This marked the second consecutive year of growth for its downstream silicones franchise, indicating the segment's ability to navigate these conditions.

The company is actively addressing anti-competitive trade practices, particularly the dumping of material into the European market. Management noted that regions without a cost advantage have been exporting into Europe, negatively impacting local industries. To counter this, there has been progress in anti-dumping cases in the Americas, with similar efforts gaining attention in Europe.

A specific development in trade policy is the announced elimination of the 13% duty drawback for exports out of China. This policy change, expected to take effect at the end of the first quarter in April, is anticipated to remove an advantage for competitors who previously benefited from these rebates, thereby promoting fairer trade conditions.

Sources

• "Even with the impacts from tariff uncertainties, we delivered increased volumes in 2025, marking the second consecutive year of growth for our downstream silicones franchise." (Karen S. Carter, COO)

• "...the announcement that the 13% duty drawback for exports out of China is going away at the end of first quarter in April, I believe, is when it goes away." (Jim Fitterling, Chair and CEO)

• "There's been more traction in the Americas than there has been in Europe. Europe is a bit slower to respond, but it is on the radar screen and is getting attention in Europe." (Jim Fitterling, Chair and CEO)

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Analysis

Tariffs impacted the company's Aerospace segment in 2025. The company had to contend with these tariffs, but management stated that execution was strong, leading to the Aerospace segment finishing the year with a segment margin of 26%.

There was a lag in the pricing impact relative to tariffs in the Aerospace original equipment (OE) business during the first quarter. This was attributed to the timing of contract renewals.

For 2026, the company expects tariffs to be largely resolved. Pricing is anticipated to improve in Aerospace, with better alignment with tariff costs contributing to modest margin expansion. This pricing strategy aims to ensure that price-cost dynamics do not become a headwind, thereby preserving volume and margins.

Sources

• "So we entered 2025, and we said we'll finish about 26% for the year. That's exactly what we did, and the team executed well, despite the Expiration Day, having to contend with the tariffs. Largely, tariffs are behind us. Going to 2026, price will be better, for aerospace." (Mike Stepniak, SVP and CFO)

• "Julian, one last piece I would just add on. Just think about the first quarter reminder that Expiration Day was in April, so there's a little bit of a lapping where we have that little bit of a lag on the pricing impact relative to the tariffs in Aerospace in the first quarter for the OE business." (Mark Macaluso, Former Head of Investor Relations)

• "Segment margin should expand modestly as volume leverage, better pricing alignment with tariff costs, and tapering acquisition integration costs more than offset mixed pressure from stronger growth in defense and space and commercial OE." (Mike Stepniak, SVP and CFO)

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Analysis

Tariffs impacted Thermo Fisher Scientific's financial performance, creating headwinds for adjusted operating margins in 2025. The company stated that it actively managed these tariffs and related U.S. policy dynamics, employing its PPI Business System to maintain operational performance throughout the year.

The combined effect of tariffs and related foreign exchange fluctuations reduced the company's adjusted operating margin by over 100 basis points for both the fourth quarter and the full fiscal year 2025. This impact was a primary factor in the year-over-year margin changes observed in the Analytical Instruments segment during Q4 2025.

For its 2026 guidance, Thermo Fisher Scientific's outlook incorporates the tariffs currently in effect. The guidance does not include any assumptions for future changes in tariff policy or their potential effects on foreign exchange rates. The company intends to respond swiftly to any additional tariffs, aiming to minimize their business impact and provide transparent reporting if such events occur.

Sources

• "We actively managed the company, and our team responded with agility, effectively managing tariffs and the U.S. policy dynamics to deliver a very strong year." (Marc Casper, context earnings call)

• "Adjusted operating margin was 23.6%, 30 basis points lower than Q4 last year, which includes over 100 basis points of headwind from tariffs and related FX." (Stephen Williamson, context earnings call)

• "In terms of the macro environment, our guidance is based on the tariffs that are in place as of today. It doesn't contemplate any future changes in tariffs, nor their potential impact on FX rates. Should additional tariffs be levied, as we did last year, we will act with speed and scale to minimize them and provide our usual level of transparency as to their impact." (Stephen Williamson, context earnings call)

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Analysis

Trane Technologies reported that tariffs resulted in costs for the company during fiscal year 2025. This impact is expected to continue into fiscal year 2026, with an anticipated increase in costs for the full year. The company is implementing strategies to mitigate these tariff-related expenses.

Management indicated plans to address the tariff costs through appropriate pricing adjustments. Additionally, the company is engaging with suppliers to reduce the impact of these costs over both the short and long term. This includes exploring options to move sources of supply to further mitigate the financial burden imposed by tariffs.

Sources

• "But your specific question, just given time on tariffs, we described it about a bit higher than $140mn of tariff cost in 2025 on our last call. We're in that range for what that cost was in 2025 for the full year." (Chris Kuehn)

• "And think about that wrapping into 2026. We really have three quarters of that tariff cost in 2025. Now you've got four quarters of that. So we expect it to be inflationary from a tariff perspective, maybe in that $50-ish million range in the ballpark." (Chris Kuehn)

• "All in, maybe it's $200-ish million of costs that we'll make sure we price accordingly for. But the first step we do is we make sure we mitigate the tariff cost." (Chris Kuehn)

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Analysis

The company reported no direct financial impact from tariffs on software or software services, as these are not subject to such duties. However, indirect effects were observed. In the first half of 2025, the company experienced slower bookings attributed to a "tariff debate." This contributed to a "certain toll" on the top-line performance in 2025, alongside broader geopolitical and trade tensions.

While the public sector faced challenges in H1 2025 due to new requirements and certifications within this context, the company stated these were overcome, with Q4 2025 showing strong performance in the U.S. public sector.

Management noted that the growing emphasis on sovereignty and resilience, partly driven by geopolitical and trade tensions, presents an opportunity for vendors offering solutions that reduce dependencies on dominant offerings. As a non-U.S. software vendor, SAP aims to leverage its position to meet this demand. The company also confirmed that its 2026 guidance assumes the 2025 geopolitical and trade environment as the new normal.

Sources

• "I mean, there are no tariffs on software or software services, which is good. So there is no direct impact, and we hope it stays like that because we have, again, customers everywhere in the world, and tariffs, digital tariffs, would immediately fire back, no matter where are you in the world." (Christian Klein (CEO))

• "no, today there is no actually direct or indirect impact. Let's hope it stays like that. You never know." (Christian Klein (CEO))

• "While geopolitical and trade tensions have taken a certain toll on our top-line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that can offer technologies and tools to reduce dependencies from dominant offerings." (Dominik Asam (CFO))

• "the two factors that weighed on us was first, in the first half, it was this tariff debate, where the bookings were slower, and then the factors Christian mentioned as a surprise towards the end." (Dominik Asam (CFO))

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Analysis

The company experienced reduced factory efficiencies in the six months ended December 28, 2025 due to higher tariff-related spend. This negatively impacted gross margin percentage, partially offsetting gains from favorable customer mix during the period.

Looking forward, the company acknowledges that volatility in the semiconductor industry environment, including tariffs, has had and may continue to have a negative impact on its revenue and operating margin in the short term. This indicates an ongoing risk associated with tariff policies.

Sources

• "The increase in gross margin as a percentage of revenue in the six months ended December 28, 2025 compared to the same period in the prior year was primarily due to favorable changes in customer mix, partially offset by reduced factory efficiencies from higher tariff-related spend." (Lam Research Corporation 2025 Q3 10-Q)

• "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 Q3 10-Q)

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Analysis

Tariffs had an identifiable impact on the company's financial results for the year ended December 31, 2025. The automotive segment experienced an increase in tariffs compared to the prior year, contributing to the cost of automotive sales revenue. The energy generation and storage business was also significantly affected, with higher tariffs partially offsetting cost reductions from lower raw material and manufacturing costs for Megapack and Powerwall deployments. This indicates a direct upward pressure on the cost of goods sold across both core business segments.

In response to trade and fiscal policy changes, including tariffs, the company is implementing mitigating strategies. These include efforts focused on cost reduction, innovation in manufacturing, and increased localization of procurement and supply chains. Producing battery packs with 4680 cells helps navigate supply chain complexities and tariff risks. The company also emphasizes vertical integration and operational efficiencies to counter potential adverse impacts on its cost structure and profitability.

Looking forward, the company expects ongoing policy uncertainty, particularly regarding tariffs, to continue impacting its global supply chain, cost structure, and product availability. This includes potential effects on vehicle production and facility expansions. The energy segment anticipates margin compression due to low-cost competition, policy uncertainty, and the cost of tariffs. Higher import tariffs by the US government and provisions like OBBBA could increase battery cell expenses and consumer costs, negatively affecting demand. The company is considering building a "Terafab" for chip production to reduce reliance on external suppliers and mitigate geopolitical risks, which could include tariff-related supply chain disruptions.

Sources

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

• "Cost of automotive sales revenue decreased...partially offset by lower fixed cost absorption and an increase in tariffs compared to the prior year." (Filing)

• "This improvement came despite the impact of lower fixed cost absorption and the impact of tariffs, which were in excess of $500mn in Q4." (Vaibhav Taneja, context earnings call)

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Analysis

Tariffs reduced the company's Aerospace segment operating margins by 30 basis points in 2025, equating to $41 million. The cost impact on earnings occurs at aircraft delivery, which differs from the cash outlay timing when materials enter the country.

While the company considers the overall impact of tariffs on its consolidated results not material, the tariff impact is expected to be higher in 2026 for the Aerospace segment. These expected tariff costs are already factored into the company's 2026 margin guidance for the Aerospace segment.

The company anticipates future margin improvements in Aerospace, driven by factors like improved pricing and efficiency, which may help offset tariff headwinds. Price increases to reflect cost increases from the supply chain, including tariffs, often occur in periods subsequent to when the costs are incurred.

Sources

• "Our Aerospace business has been impacted by inflationary pressures and the administration's implementation of tariffs. To date, the tariffs have not had a material impact on our results but did reduce the Aerospace operating margins by 30 basis points in 2025." (Filing)

• "So the impact of tariffs in 2025 was $41 million." (Danny Deep, Head of Investor Relations)

• "So the tariffs that we are going to see in 2026 are largely based on cash that we expended in 2025. It will be higher than in 2025, so higher than the $41mn, but those tariffs are contemplated in our 2026 margins." (Danny Deep, Head of Investor Relations)

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Analysis

Product and distribution costs for the first quarter of fiscal year 2026 increased approximately 140 basis points, largely due to inflationary pressures primarily driven by tariffs and elevated coffee pricing. This contributed to a consolidated GAAP operating margin contraction of 290 basis points year-over-year.

Specifically, the North America segment's operating margin contracted by 480 basis points, with approximately 150 basis points attributable to inflationary pressures, including tariffs and elevated coffee pricing. The International segment also experienced inflationary pressures, primarily driven by elevated coffee pricing, contributing to its operating margin dynamics.

Looking forward, the company expects these tariff pressures, alongside coffee prices, to peak in the second quarter of fiscal year 2026. Management anticipates some relief from these pressures in the back half of the fiscal year.

Sources

• "Product and distribution costs as a percentage of total net revenues increased 220 basis points for the first quarter of fiscal 2026, largely due to inflationary pressures (approximately 140 basis points), primarily driven by elevated coffee pricing and tariffs." (Filing)

• "Approximately a third of North America's margin contraction was also driven by our product and distribution cost inflation, led by tariffs and elevated coffee pricing." (Cathy Smith, CFO)

• "And third, while market dynamics can change, we continue to expect coffee prices and tariff pressures to peak in Q2 and find some relief in the back half of the fiscal year." (Cathy Smith, CFO)

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Analysis

Danaher Corporation experienced tariff-related cost pressures during the full year 2025. Despite these pressures, the company reported earnings growth and strong free cash flow generation. This performance indicates that the company's disciplined execution and productivity investments helped to offset the financial impact of tariffs. The Danaher Business System was leveraged by the team to navigate the dynamic geopolitical and policy environment and drive productivity gains across businesses.

Sources

• "Our earnings growth and strong free cash flow generation in the face of tariff-related cost pressures and significant productivity investments underscore the differentiated quality of our earnings and business models." (Rainer Blair)

• "They did a tremendous job leveraging the Danaher Business System to navigate a dynamic geopolitical and policy environment while continuing to deliver for our customers and drive productivity gains across our businesses." (Rainer Blair)

• "These factors include, among other things: the impact of tariffs and related actions implemented by the U.S. and other countries,..." (Press Release)

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Analysis

The company reported that tariffs significantly impacted its Wines and Spirits division in 2025, particularly Cognac sales in China and the United States. The impact on this segment exceeded initial forecasts. However, the overall effect of tariffs on the company's 2025 results was partial due to the strategic management of inventory at the beginning of the year, which temporarily mitigated the full financial consequence.

Looking ahead to 2026, the company anticipates that the full impact of these tariffs will be realized for the Wines and Spirits division over the entire year. Additionally, tariffs are expected to affect the Fashion and Leather Goods and Watches and Jewelry segments. The company noted that the pricing power within these segments differs from Wines and Spirits, suggesting a varied impact on their respective bottom lines. The company is actively working to reach agreements to address these trade tensions.

Sources

• "In Wines and Spirits, our brands are displaying good resilience in a challenging context, difficult in particular for Cognac, which both in China and the United States is affected by tariffs that have exceeded our forecasts." (Company Presentation)

• "There's also lower volumes and lower mix, and the first effects of trade tensions with China and the US." (Cécile Cabanis (Deputy Finance Director))

• "This is only a partial effect because we had pushed stocks inventories at the beginning of the year. So the real effects will be felt in 2026 over the full year. There will also be an effect on fashion and leather goods and watches and jewelry." (Cécile Cabanis (Deputy Finance Director))

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Analysis

Tariffs impacted the company's operations and supply chain during 2025, contributing to a volatile global trade environment. The company's year-to-date financial results for 2025 reflect the estimated impacts of tariffs enacted by December 31, 2025, along with the effects of mitigating actions.

Specific challenges included a temporary pause in aircraft deliveries to certain Chinese customers in 2025, which occurred in response to ongoing tariff negotiations between the U.S. and China. The U.S. also maintained tariffs on goods imported from China, as well as on aluminum, steel, and copper imports. The company actively monitors the global trade environment and implements mitigation strategies to address tariff impacts on its business and supply chain, including pursuing bilateral trade agreements.

Looking forward, the U.S. and China extended a pause on reciprocal tariffs until November 10, 2026. Despite past disruptions, the company expects a similar number of deliveries to China in the current year as in the previous year. The potential for new or increased tariffs and retaliatory actions remains a watch item, with the company continuing to engage with the U.S. administration on trade barriers.

Sources

• "During 2025, certain customers in China temporarily paused accepting delivery of our aircraft in response to ongoing tariff negotiations between the U.S. and China." (Filing)

• "Collectively, these tariffs, and any retaliatory actions taken by countries in response to the U.S. tariffs, could have a material impact on our financial position, results of operations and/or cash flows. Our year-to-date results reflect our best estimate of the impacts of the tariffs enacted as of December 31, 2025, and certain potential mitigating actions." (Filing)

• "Having said that, as we saw last year, we were shut down for a little while in deliveries into China. That got resolved, and we got the deliveries done. We do have about the same number of deliveries this year into China as we had last year." (Kelly Ortberg, CEO)

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Analysis

Over 2025, new tariffs implemented by the U.S. and other governments impacted the company and its suppliers. These tariffs applied to vehicles and parts imported into the U.S., with the tariff environment remaining dynamic. The company reported a $3.1 billion impact to EBIT-adjusted in 2025 due to these tariffs, which increased material and freight costs.

To counter these tariff costs, the company implemented several mitigating strategies. These included go-to-market actions, adjustments to the manufacturing footprint, and various cost reduction initiatives. These efforts allowed the company to offset over 40% of the gross tariff costs in 2025.

Looking ahead to 2026, the company expects gross tariff costs to range from $3.0 billion to $4.0 billion. This anticipated increase from 2025 is primarily due to an additional quarter of tariff exposure. However, the projected gross impact is partially offset by a reduced tariff rate for Korea and an expanded MSRP offset program. The company expects the cost savings realized in 2025 to be sustained and additional actions are planned to further mitigate the tariff impact, aiming for net tariffs to be lower in 2026 compared to 2025. Investments are also planned for 2026 and 2027 to expand U.S. manufacturing capacity, which is expected to help reduce tariff exposure further starting in 2027.

Sources

• "In 2025, impacts to earnings before interest and taxes (EBIT)-adjusted from tariffs were $3.1 billion." (MD&A)

• "For the full year, we were able to offset more than 40% of these gross tariff costs through a combination of go-to-market actions, footprint adjustments, and cost reduction initiatives." (Paul Jacobson (EVP and CFO))

• "Starting with tariffs, we anticipate gross tariff costs in the $3-$4 billion range, slightly higher than 2025 due to an additional quarter of tariff exposure, partially offset by the reduced Korea tariff and expanded MSRP offset program." (Paul Jacobson (EVP and CFO))

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Analysis

Roper Technologies experienced commercial challenges in its Neptune business during 2025, which were attributed to a tariff surcharging program and copper pricing. The company implemented this surcharge program in July 2025 to mitigate increased costs, resulting in an initial shock to the system during the third quarter and affecting commercial activity.

By the end of 2025, the commercial challenges related to the tariff surcharging program had eased. For the fourth quarter of 2025, Neptune's revenue was slightly down, consistent with expectations due to strong prior-year comparisons and ongoing surcharge negotiations.

Looking ahead to 2026, the company maintains a cautious outlook for Neptune. The 2026 guidance does not assume a recovery for this business and anticipates modest top-line weakness compared to 2025. This conservative approach for Neptune, combined with other factors, contributes to the expectation that the Technology Enabled Products segment will see lower organic growth in the first half of 2026 as Neptune's backlog continues to normalize.

Sources

• "Neptune was down slightly, as expected, as we comped against a stronger prior fourth quarter and worked through the final surcharge negotiations." (Jason Conley, EVP and CFO)

• "Although the second-half commercial challenges tied to our tariff surcharging program eased late in the year, we remain cautious and are not underwriting a recovery in our 2026 guidance." (Neil Hunn, President and CEO)

• "I would say that what we talked about last quarter, largely in the bucket of tariffs, but it's tariffs, it's copper pricing. Generally, the shock to the cost structure of a water meter, when we started in really July of last year pushing a surcharge to accommodate for that increase in cost of goods, it was definitely a shock in the system in Q3, and it really abated during Q4." (Neil Hunn, President and CEO)

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Analysis

RTX experienced financial impacts from tariffs during the fourth quarter and full year 2025, with anticipated mitigation in 2026. In the fourth quarter of 2025, the company's free cash flow included $600 million in tariff-related impacts.

Tariffs also contributed to a reduction in adjusted operating profit across both the Collins Aerospace and Pratt & Whitney segments during the fourth quarter of 2025. For the full year 2025, Collins Aerospace's organic margins experienced a 90 basis point drag due to tariffs.

For 2026, the company's guidance indicates that tariff-related impacts are expected to be approximately $75 million lower compared to 2025, representing a tailwind. However, the first quarter of 2026 is expected to incur an additional quarter of tariff expense for Collins Aerospace, which will partially offset this overall annual reduction.

Sources

• "Free cash flow for the quarter was very strong at $3.2bn, bringing our full-year free cash flow to $7.9bn, as Chris said. This included approximately $1bn of powder-metal-related compensation and approximately $600mn of tariff-related impacts." (Neil Mitchill, Analyst, RTX)

• "I would tell you that from a tariff perspective, that was a 90 basis point drag. So if you were to add that back, we saw Collins, I'll call it, organic margins at 17.1%, which was really, really nice to see. Obviously, we're still living with the tariff situation. We do expect to see a bit of a tailwind as we move from 2025 to 2026 on tariffs, probably about $75mn lower. Keep in mind, we're picking up an extra quarter of tariff expense in 2026." (Chris Calio, Analyst, RTX)

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Analysis

During fiscal year 2025, the company encountered unexpected headwinds from tariffs, which contributed to cost inflation. These incremental tariff-related costs were a factor in the 100 basis point decrease in adjusted gross margin for the full year 2025, alongside unfavorable pricing net of other cost inflation and planned investments. Tariffs were also noted as part of the approximately $200 million in input costs managed during the year.

The company's operating model enabled it to navigate these changes in the global tariff environment, with some tariff-driven costs partly mitigated in 2025. For 2026, the company's guidance is that it expects to fully mitigate tariff-related costs. This mitigation, combined with strong productivity, is expected to support overall cost stability, with input costs projected to be largely flat year-over-year. This approach is intended to strengthen the company's path toward achieving an adjusted gross margin of at least 40% before the end of the decade.

Sources

• "That included the headwinds, which were unexpected related to tariffs." (Nelson Urdaneta, Q4 2025 earnings call)

• "Our model has enabled us to navigate headwinds, such as changes in the global tariff environment and short-term impacts resulting from private label business exits." (Michael Hsu, Chairman and CEO, Prepared Remarks from Earnings Release)

• "Moving forward, as we fully mitigate tariff-related costs and continue to deliver industry-leading productivity, our visibility to achieving Adjusted Gross Margin of at least 40% before the end of the decade remains strong." (Nelson Urdaneta, Prepared Remarks from Earnings Release)

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Analysis

Tariffs and changes in global trade policies, including the de minimis exemption, have affected the company's international segment. These changes led to a shift away from more profitable U.S. import lanes and impacted volume in the fourth quarter of 2025.

In the fourth quarter of 2025, International segment operating profit decreased by $154M year-over-year. More than half of this decline was attributed to trade policy changes that resulted in a shift away from higher-margin U.S. import lanes. International export average daily volume declined by 5.8%, with U.S. import volume decreasing by 24.4% year-over-year, specifically due to the de minimis exemption changes affecting lanes from Canada, Mexico, and China to the U.S.

To mitigate these impacts, the company adjusted its international network and focused on revenue quality efforts across all regions. The company previously invested in Asian diversification, which unlocked growth in various Asian countries, with trade shifting towards Europe and India. The company is also managing its block hours in response to these shifts.

The dynamic environment from trade policy and de minimis changes is expected to continue impacting the international segment in 2026. Export volume growth is projected to be subdued, partly due to difficult year-over-year comparisons from tariff front-running in 2025. For the first quarter of 2026, International operating profit is expected to decrease by approximately 30% year-over-year, driven by trade lane changes and challenging comparisons from 2025. The company anticipates that the negative comparative impact from tariffs will abate by May 2026, and from de minimis changes by September 2026, potentially leading to positive growth after these periods.

Sources

• "In 2025, we operated through a very dynamic macro environment, including significant change in global trade policies and increasing geopolitical concerns." (Carol B. Tomé)

• "Operating profit in the International segment was $908mn, down $154 million year-over-year, with more than half of the decline related to trade policy changes, which resulted in a shift away from more profitable U.S. import lanes." (Brian Dykes)

• "Outside the U.S., export volume growth is expected to be subdued, partly due to the tough comparisons coming from the boost of tariff front-running in 2025." (Carol B. Tomé)

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Analysis

Vigorous enforcement of trade remedy laws and the full reinstatement of Section 232 steel tariffs without exemptions have contributed to a significant reduction in steel imports. The foreign import share of the U.S. finished steel market declined from approximately 25% a year ago to 16% in October and an estimated 14% in November 2025. This reduction in imported steel volume has created opportunities for domestic producers.

Specifically, the material decrease in import levels for sheet steel alone has shifted approximately 4 million tons of consumption to the domestic supply chain. Nucor expects to capitalize on this trend, particularly given its strong backlogs, which are up 40% year-over-year in the steel mill segment and 15% in steel products.

Looking ahead, Nucor anticipates imports will continue to trend at or below current levels in 2026, as the market fully absorbs the effects of Section 232 tariffs and recent trade case determinations. The company expects these trade policies, combined with healthy demand, to contribute to a projected 5% increase in Nucor's steel mill shipments compared to 2025.

Nucor actively advocates for trade policies that prevent illegally dumped and subsidized imported steel from entering the U.S. market. The company supports strengthening rules of origin, continued enforcement of Section 232 policies, and the passage of the Level the Playing Field Act 2.0. This proactive stance aims to ensure a competitive domestic steel industry.

Sources

• "Vigorous enforcement of our trade remedy laws and the full reinstatement of the Section 232 steel tariffs without exemptions last year have helped drive down steel imports." (Leon Topalian, Chair and CEO)

• "Foreign import share of the U.S. finished steel market has dropped from approximately 25% at this time last year to 16% in October, and an estimated 14% in November." (Leon Topalian, Chair and CEO)

• "The material decrease in the import levels on sheet alone are 4 million tons of consumption that the domestic supply chain gets to now contribute." (Leon Topalian, Chair and CEO)

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Analysis

Intuitive's financial performance in 2025 and its 2026 guidance reflect the ongoing impact of tariffs. For the full year 2025, tariffs contributed to pressures on the company's pro forma gross profit margin, with an approximate 65 basis point impact. The company states that cost efficiency initiatives were implemented to partially offset these pressures.

In the fourth quarter of 2025, tariffs had a more pronounced effect, impacting the pro forma operating margin by approximately 95 basis points. This also contributed to a year-over-year decline in the pro forma gross margin by 95 basis points. Despite these tariff impacts, the company reported an overall improvement in its full-year 2025 pro forma operating margin.

Looking ahead to 2026, the company expects a higher impact from tariffs. It forecasts an estimated impact of 1.2% of net revenue on its gross profit margin, which equates to approximately 120 basis points. This represents an increase of around 50 basis points compared to the 2025 impact. The company has identified imports from Mexico (instruments and accessories), Germany (endoscopes), and China (materials) as areas subject to these tariffs and notes that further changes to tariff policies could materially alter its financial results.

Sources

• "Operating margins of 37% reflected our deliberate investments in R&D and manufacturing scale, as well as the impacts of tariffs and newer platform mix. Cost efficiency initiatives helped to partially offset these pressures." (Dave Rosa, CEO)

• "Pro forma operating margin was 37%, which included an impact of approximately 95 basis points from tariffs and a $70mn contribution to the Intuitive Foundation." (Jamie Samath, CFO)

• "This year, we forecast an impact from tariffs of 1.2% of net revenue, ±10 basis points." (Dan Connally, VP of Investor Relations)

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Analysis

The company identified tariff pressures as a factor influencing customer behavior in the industrial chemicals market. This contributed to a weak market environment where customers are carefully managing their freight expenditures. The industrial chemicals sector experienced an 11% decline in volume, which is part of the broader merchandise franchise facing market-driven headwinds. This situation illustrates how tariffs can indirectly affect the company's performance by impacting customer spending and specific market segments.

Sources

• "The industrial chemicals market remains weak, and many of our customers are carefully controlling freight spend as they manage through inflation and tariff pressures." (Maryclare Kenney, SVP and Chief Commercial Officer)

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Analysis

Despite the implementation of new tariffs in 2025, the company achieved its original target of double-digit earnings growth in adjusted earnings per share. This indicates that while tariffs presented a headwind, the company's overall performance was strong enough to absorb their impact and meet financial objectives.

The adjusted gross margin profile for the fourth quarter was 57.1% of sales, representing an increase of 20 basis points compared to the prior year. This improvement occurred despite the presence of tariffs, suggesting that other factors contributed positively to gross margin expansion, offsetting any negative pressure from tariffs.

Sources

• "We delivered top-tier margin expansion and achieved our original target of double-digit earnings growth in earnings per share despite the implementation of new tariffs and heightened market challenges in China." (Robert Ford (CEO))

• "Regarding other aspects of the P&L, the adjusted gross margin profile was 57.1% of sales, which, despite the impact of tariffs, increased 20 basis points compared to the prior year." (Philip Boudreau (CFO))

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Analysis

Tariffs negatively impacted the company's gross margin by 60 basis points during the three months ended December 31, 2025. This impact on gross margin was partially offset by productivity savings and higher pricing actions implemented by the company.

For fiscal year 2026, the company expects a pre-tax headwind of approximately $500 million due to higher costs from tariffs. This is anticipated to result in an after-tax headwind of about $400 million to earnings per share guidance.

Managing tariffs is identified as a global financial risk that can affect financial performance. Tariffs are also categorized as government policies that can impact net sales, net earnings, and cash flows.

Sources

• "Reported gross margin for the quarter decreased 120 basis points versus the prior year. ... Benefits from gross productivity savings of 160 basis points and increased pricing of 50 basis points were more than offset by ... 60 basis points of higher costs from tariffs." (Press Release)

• "Our fiscal 2026 outlook continues to expect approximately $500mn before tax and higher costs from tariffs." (Andre Schulten (CFO))

• "Outlooking $0.4bn after-tax headwind from tariffs" (Q2 FY 2026 Results, Earnings Release Slide)

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Analysis

The company recognized a potential exposure for Section 301 unpaid duties, fees, and interest related to certain products imported into the U.S. As a result, a reserve of $27 million was established during the current period. This investigation remains ongoing, and the ultimate financial outcome, including potential duties, fees, interest, and penalties, may deviate from the current reserved amount.

For the second quarter of fiscal 2026, the company's guidance incorporates the anticipated impact of currently enacted tariffs and the planned mitigation efforts. This indicates that expected sales and earnings figures for the upcoming quarter already reflect the known effects of these tariffs and the strategies in place to address them.

Sources

• "As part of our ongoing internal compliance activities, we have been investigating compliance with relevant country of origin for import matters and recently made a voluntary disclosure to the U.S. Customs and Border Protection Agency regarding potential Section 301 unpaid duties, fees, and interest for certain imported products into the U.S. We are unable to predict the timing and final outcome of investigation into this matter. An unfavorable outcome may include unpaid duties, fees, interest, and penalties imposed in response to our disclosures. Based on currently available information, we have reserved an aggregate of $27 million related to this exposure." (Filing)

• "In the second quarter of fiscal 2026, we expect our net sales to be approximately $4.7 billion, as compared to $4.1 billion in the second quarter of fiscal 2025. This increase is due to sales growth in both the Industrial Solutions segment, which will continue to benefit from the fiscal 2025 acquisition of Richards Manufacturing, and the Transportation Solutions segment. In the second quarter of fiscal 2026, we expect diluted earnings per share from continuing operations to be approximately $2.26 per share. This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of approximately $180 million and $0.05 per share, respectively, in the second quarter of fiscal 2026 as compared to the same period of fiscal 2025 and includes the impact of currently enacted tariffs and our planned mitigation of those tariffs." (Filing)

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Analysis

Tariffs impacted the company's financial performance, specifically increasing costs in the Beer segment and negatively affecting shipment volume in the Wine and Spirits segment during the nine months ended November 30, 2025. The company incurred increased cost of product sold due to tariffs on aluminum.

For the three months ended November 30, 2025, Beer segment's cost of product sold increased by $13.6M due to tariffs on aluminum. For the nine months ended November 30, 2025, this impact grew to $43.1M. Additionally, tariffs negatively impacted branded wine and spirits shipment volume in both periods.

Looking forward to Fiscal 2026, the company expects a total tariff impact of $83M. This includes an approximate $70M impact from tariffs on the Beer segment and an approximate $13M impact on the Wine and Spirits segment. The company stated that tariffs will be a further headwind in the fourth quarter of Fiscal 2026 due to aluminum pricing, an ongoing shift in product mix towards aluminum, and the timing of tariff accruals and releases.

Sources

• "Additionally, we believe our branded wine and spirits shipment volume was negatively impacted by both tariffs imposed by the U.S. government and by retaliatory tariffs and actions in certain international markets." (MD&A)

• "The increased cost of product sold is primarily due to (i) $43.1 million in tariffs on aluminum..." (MD&A)

• "For Fiscal 2026, we expect an approximate $70 million impact from tariffs." (MD&A)

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Analysis

Tariffs contributed to increased costs impacting the company's financial results during the second quarter of fiscal 2026. The gross tariff inflation for this period was in line with the company's expectations.

For fiscal 2026, tariffs are expected to contribute approximately 3% to the annual cost of goods sold inflation, prior to the implementation of mitigating actions. This tariff component is included in the company's guidance for a total cost of goods sold inflation of approximately 7%, alongside core inflation.

Conagra Brands' primary tariff exposure involves tin plate steel. The tariff levels on tin plate steel have not changed, which limits the favorable impact the company receives from more recent general adjustments in tariff policies.

To counter the tariff impacts, the company is implementing accelerated cost savings initiatives, exploring sourcing alternatives, and undertaking targeted pricing actions. Despite these mitigation efforts, the company expects the net tariff expense, after accounting for these actions, to increase sequentially throughout the remainder of fiscal 2026.

Sources

• "In the second quarter of fiscal 2026, we saw an impact to our financial results due to increased costs resulting from changes to trade policies." (Filing)

• "Combined, these tariffs are expected to increase cost of goods sold by approximately 3% annually, prior to mitigating actions including accelerated cost savings initiatives, sourcing alternatives, and targeted pricing actions." (Prepared remarks, Dave Marberger)

• "On an absolute basis, we continue to expect tariff expense net of mitigation to increase sequentially as we progress through the remainder of the year." (Prepared remarks, Dave Marberger)

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Analysis

Tariffs significantly impacted the company's gross margin and inventory costs in the second quarter of fiscal 2026. Consolidated gross margin decreased 300 basis points, primarily attributed to higher tariffs in North America. Specifically, higher product costs, largely due to these tariffs, decreased NIKE Brand gross margin by approximately 360 basis points. Inventory levels also saw an increase in product costs, contributing to a 3% rise in inventories compared to the end of the previous fiscal year.

The company is implementing actions to mitigate the adverse effects of these tariffs. While new U.S. tariffs impacted North America's gross margins by 520 basis points, the region's overall gross margin contraction was 330 basis points, indicating some success in mitigation efforts.

Looking ahead, the company anticipates a gross incremental cost of approximately $1.5 billion on an annualized basis due to new tariffs for fiscal year 2026. Through mitigation actions, the company aims to reduce this gross headwind of approximately 320 basis points to a net impact of around 120 basis points on its fiscal 2026 gross margin. For the third quarter of fiscal 2026, higher gross product costs related to new tariffs are expected to negatively impact gross margins by 315 basis points.

Sources

• "Gross margin for the second quarter of fiscal 2026 decreased 300 basis points to 40.6% primarily due to higher tariffs in North America." (Press Release)

• "As a result of new tariffs, we expect a gross incremental cost of approximately $1.5 billion on an annualized basis. We are taking actions to mitigate the impact of new tariffs; however for fiscal 2026, we expect a negative impact on gross margin." (Filing)

• "North America gross margins only declined 330 basis points versus the prior year, despite 520 basis points of impact from new U.S. tariffs." (Matthew Friend, EVP and CFO)

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Analysis

During the second quarter and first half of fiscal year 2026, FedEx experienced negative impacts from global trade policy changes. These changes, including the August 2025 removal of the de minimis exemption for goods imported into the U.S. from countries other than China, contributed to lower international export package volumes. Specifically, international export package volume decreased by 1% in the second quarter and 2% in the first half of fiscal year 2026.

These policy changes also led to increased credit losses and higher customs-related brokerage fees, which contributed to an 11% increase in other operating expenses in the second quarter and a 10% increase in the first half. The uncertain global trade environment and its associated policy changes were identified as a headwind to adjusted operating income for the current period. In response to shifting global trade patterns, FedEx reduced its Purple Tail trans-Pacific Asia-bound capacity by approximately 25% year-over-year and its third-party White Tail capacity by nearly 35%, while strategically shifting some capacity to the Asia to Europe lane, which generally features a high B2B mix and load factors.

Despite these challenges, the company's international export package yield increased by 3% in the second quarter and 4% in the first half, partly due to higher weight per shipment tied to the de minimis change. For the full fiscal year 2026, FedEx anticipates a $1 billion headwind to adjusted operating profit resulting from the global trade environment. The company expects to offset this headwind through $1 billion in transformation-related savings.

Sources

• "We grew adjusted operating income by $231mn despite the headwind from global trade policy changes, higher variable incentive compensation accruals, weaker-than-expected LTL results, a $30 million headwind from the expiration of the postal service contract, and a $25mn impact from the grounding of our MD-11 fleet." (John Dietrich, EVP and CFO)

• "Additionally, since the third quarter of 2025 there have been significant changes within the global trade environment, such as the August 2025 removal of the de minimis exemption for goods imported into the U.S. from countries other than China. The uncertain and evolving global trade environment is negatively affecting our results in the second quarter and first half of 2026." (Filing)

• "embedded in our assumptions is the $1bn in headwind to adjusted operating profit from the global trade environment, offset by $1bn in transformation-related savings." (John Dietrich, EVP and CFO)

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Analysis

Tariffs contributed to increased input costs for the company during the second quarter of fiscal 2026. The original guidance for fiscal year 2026 anticipated an additional 1-2 percentage points of headwind to base inflation, which was forecast at approximately 3 percent, with tariffs being a component within this additional headwind.

The impact of tariffs was minimal in the first quarter of fiscal 2026, then increased in the second quarter. The company expects this tariff impact to increase further in the second half of fiscal 2026. Management noted that it expects to mitigate some, but not all, of the tariff-related headwinds within the current fiscal year.

The combination of growth investments, input cost inflation (including tariffs), and the normalization of corporate incentive expense is projected to outweigh Holistic Margin Management cost savings and other efficiency benefits in fiscal 2026. This is expected to result in a headwind to both operating profit and earnings per share for the fiscal year.

Changes in commodity prices, such as wheat, have a delayed effect on the cost line of the P&L due to coverage. Therefore, any short-term reductions in wheat prices are more likely to impact fiscal year 2027 costs rather than fiscal year 2026.

Sources

• "Our original guidance included an expectation of about 1-2 points of additional headwind to base inflation of about 3%. Our base inflation forecast, despite puts and takes, remains roughly around that 3% mark. Tariffs certainly comfortably within that range." (Kofi Bruce, Earnings Call Transcript)

• "The tariff phasing was pretty minimal in Q1, stepped up in Q2, and we'd expect in the second half for that to step up a little further. So in aggregate, 3% base, we're still comfortable with the 1%-2% guide on the tariff additional headwind." (Kofi Bruce, Earnings Call Transcript)

• "Our predictions about future net sales and earnings could be affected by a variety of factors, including: imposed and threatened tariffs by the United States and its trading partners;" (Press Release)

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Analysis

Tariffs directly influence the cost of certain merchandise for the company. The magnitude of this exposure varies based on the type of goods, the rates imposed, and the timing of their implementation. Elevated tariffs are more likely to negatively affect financial outcomes.

To counter the effects of tariffs, the company has implemented several mitigating strategies. These include shifting the country of production for some items and increasing the procurement of goods manufactured in the U.S. The company also centralizes its global buying activities to achieve lower merchandise costs and emphasizes its Kirkland Signature private label, which allows for greater supply chain control.

These strategies have resulted in adjustments to the company's product assortment. For the holiday season, for example, the number of available SKUs is lower than in previous years. Tariff-affected items have been substituted with alternative products, frequently U.S.-produced seasonal food, health and beauty products, and live goods, which are largely not impacted by tariffs.

Monthly sales results have shown some variability, which the company attributes in part to consumer uncertainty stemming from tariffs. This factor contributes to sales fluctuations alongside other influences such as port strikes.

Sources

• "Government actions in various countries relating to tariffs affect the costs of some of our merchandise. The degree of our exposure is dependent on (among other things) the type of goods, rates imposed, and timing of the tariffs. Higher tariffs are more likely to adversely impact rather than improve our results." (Filing)

• "Our buyers continue to do a great job reducing the impact of tariffs for our members. The strategies being deployed to achieve this include changing the country of production for some items, sourcing more items produced in the U.S., consolidating buying efforts globally to lower the cost of goods across all our markets, and leaning into Kirkland Signature, where we have more control over the supply chain." (Gary Millerchip (CFO))

• "And when you look at month by month, there's definitely been some lumpiness in the individual monthly sales results that we've posted, but a lot of that has been to do with whether it was uncertainty around tariffs one month to another or port strikes that we had to cycle." (Gary Millerchip (CFO))

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Analysis

China export control restrictions, specifically the Q3 2025 Bureau of Industry and Security (BIS) Restrictions, negatively impacted the company's business in China, particularly within the Design IP segment during fiscal year 2025. These restrictions disrupted customer design starts in China and contributed to a substantial decline in revenue from the region.

The company noted a decline in its Design IP segment revenue, with these restrictions cited as a contributing factor alongside other issues such as weaker demand from a major foundry customer and internal roadmap decisions. In response to these challenges and to strengthen the segment's performance, the company initiated actions to improve execution and reallocate resources toward higher-growth opportunities within Design IP.

Looking forward to fiscal year 2026, the company maintains a pragmatic outlook on its China business, anticipating a continued challenging environment due to ongoing Trade Restrictions. While the company stated that the Ansys portfolio performed well in China, the classic Synopsys business has experienced a decline as customers seek alternatives when advanced solutions cannot be supplied due to restrictions.

Management indicated that the impact of these restrictions primarily affects the Design IP segment given the company's market leadership in that area. They also observed a shift in the competitive landscape within China, where customers facing restrictions on purchasing from the company are turning to local electronic design automation (EDA) or IP providers.

Sources

• "weakness in our business in China, which saw revenue decrease 22% compared to fiscal 2024, excluding Ansys, and in our Design IP segment due to several headwinds, including China export control restrictions, such as the Q3 2025 BIS Restrictions" (Filing)

• "China export control restrictions, including the Q3 2025 BIS Restrictions, have negatively impacted our business in China, including in our Design IP segment, and may continue to impact design starts or other aspects of our business in China in the future." (Filing)

• "Geographically, China continued to be challenged, consistent with our commentary last quarter. China ended 2025 down 18%. Excluding Ansys, China was down 22% this year." (Shelagh Glaser (CFO))

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Analysis

Macroeconomic conditions, including uncertain tariff policies, continue to create a challenging retail environment, affecting consumer spending on discretionary items. The U.S. administration's actions to increase tariffs on most products imported into the U.S. have introduced uncertainty regarding global trade and the company's cost structure. The majority of products manufactured through the Brand Portfolio segment and a large portion of merchandise for U.S. and Canada Retail segments are sourced from Asia, making these segments susceptible to tariff changes.

The company has implemented mitigating actions to address these impacts. These include adjusting sourcing diversification by optimizing where products are sourced to reduce risk, maximize flexibility, and decrease costs. Other measures involve cost mitigation and potential price adjustments. The sourcing team is also expanding sourcing capabilities across multiple regions to reduce reliance on any single country and strengthen supply chain resilience.

Despite these efforts, the company acknowledges that sourcing diversification could lead to product quality issues, higher product costs, or an inability to source desired quantities on a timely basis. There is no assurance that the company can fully mitigate the impact of existing or new tariffs. The future impacts from macroeconomic conditions and tariffs remain uncertain and could materially adversely affect the company's business, results of operations, and liquidity. These factors could also necessitate further operating efficiency measures.

For the Brand Portfolio segment in the third quarter of 2025, operating income increased by $0.5M year-over-year. This increase is attributed to disciplined expense management and tariff mitigation efforts, despite lower top-line sales in the segment.

Sources

• "Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S." (Filing)

• "Operating income for the quarter increased by $500,000 year-over-year despite a lower top line, a result driven by our disciplined expense management and tariff mitigation efforts." (Doug Howe (CEO), context earnings call)

• "As the tariff landscape remains uncertain, our disciplined approach to diversification helps us to maintain flexibility while supporting supply continuity and protecting margins." (Doug Howe (CEO), context earnings call)

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Analysis

During the first quarter of fiscal 2026, AutoZone reported a $98 million non-cash LIFO charge, which negatively impacted gross margin by 212 basis points and diluted earnings per share by $4.39. This LIFO charge was attributed to higher costs resulting from tariffs.

The company is actively implementing mitigation strategies to address the impact of tariffs. These strategies include negotiating lower costs with vendors, diversifying sourcing to different countries, and seeking multiple suppliers for product categories. Additionally, the company adjusts retail prices as part of its playbook to manage increased costs.

Management indicated that it has not experienced as significant a cost impact as initially anticipated, partly due to the effectiveness of its mitigation efforts. Furthermore, the company noted that announcements regarding a reduction in EPA tariffs on China, from 20% to 10%, contributed to a lower future expectation for tariff-related costs.

Despite the reduced expectations, AutoZone anticipates continued higher costs due to tariffs. These higher costs are expected to influence the average ticket price and comparable sales in future quarters.

Sources

• "This quarter, we had a $98 million LIFO charge, or 212 basis points unfavorable LIFO comparison to last year." (Jamere Jackson, CFO)

• "We're planning a LIFO charge of approximately $60mn for each of the next three quarters as we're continuing to experience higher costs due to tariffs that impact our LIFO layers." (Jamere Jackson, CFO)

• "I think the second dynamic is you saw the announcements where the EPA tariffs on China moved from 20% down to 10%. So that does lower our expectation going forward." (Jamere Jackson, CFO)

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Analysis

Victoria's Secret & Co. reported that tariffs negatively impacted its operating income. For the third quarter of 2025, tariffs, net of mitigation efforts, reduced operating income by $15 million. Year-to-date 2025, the negative impact on operating income from tariffs was $25 million.

These tariff costs also partially offset improvements in the gross profit during the third quarter of 2025. While gross profit dollars increased due to higher net sales and reduced promotional activity, increased tariff costs limited the overall improvement. Similarly, the gross profit rate increase was partially offset by increased tariff costs.

The company stated it faces ongoing uncertainty in the macro environment regarding U.S. tariffs on imports and potential retaliatory measures. Management continues to identify and execute mitigation strategies to address the evolving tariff environment.

Sources

• "We estimate tariffs, net of mitigation efforts, negatively impacted operating income (loss) by approximately $15 million and $25 million in the third quarter of 2025 and year-to-date 2025, respectively." (Filing)

• "We continue to identify and execute mitigation strategies as the tariff environment evolves." (Filing)

• "The gross profit rate increase compared to the third quarter of 2024 was primarily driven by leverage in buying and occupancy expenses as a result of the increase in net sales and a decrease in promotional activity, partially offset by an increase in tariff costs." (Filing)

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Analysis

The company experienced a quantifiable impact from tariffs in fiscal year 2025. International tariffs contributed to a rapid deterioration of the macroeconomic environment during the second quarter of fiscal 2025. This environment led to an indicator of potential impairment, resulting in a goodwill impairment charge of $1.4 billion in the Hybrid Cloud reporting unit during that quarter.

Looking forward, the company expects global trade uncertainty, including the tariff environment, to continue. This is anticipated to contribute to higher prices for components, end products, and services, potentially limiting revenue and margin growth in the near term. The company is employing mitigating strategies such as reliance on its global supply chain, disciplined cost and pricing management, and supply chain diversification, although the success of these actions is not guaranteed.

Sources

• "Additionally, there continues to be significant uncertainty surrounding the tariff environment and import/export regulations due to numerous factors, including but not limited to tariff imposition delays, changes to tariff rates and policies, and enactment of reciprocally restrictive trade policies and measures around the world. These have enhanced global trade uncertainty and contributed to higher prices of components and end products and services." (Form 10-K, page 46)

• "While we have sought to mitigate these adverse impacts by relying on our global supply chain and implementing pricing measures, we expect such a mixed macroeconomic environment to largely continue and possibly limit revenue and margin growth in the near term." (Form 10-K, page 46)

• "During the second quarter of fiscal 2025, the macroeconomic environment experienced a rapid deterioration, primarily driven by the announcement and subsequent modifications of international tariffs, an escalation in global trade tensions, and increasing geopolitical uncertainty... As a result, we recorded a goodwill impairment charge of $1.4 billion in the second quarter of fiscal 2025." (Form 10-K, page 53)

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Analysis

In the third quarter of 2025, tariffs negatively affected the company's gross margin rate by 50 basis points. This impact was partially offset by mitigation efforts, which resulted in a net gross margin rate decline of 20 basis points. These mitigation efforts included shared cost negotiations, vendor discounts, and strategic price adjustments.

The increase in merchandise inventories by 0.7% year-over-year was attributed to tariff-related cost increases.

Looking ahead to the full fiscal year 2025, the company's guidance assumes that current tariffs will remain in place. The estimated tariff impact on gross margin for the full year is projected to be between 40 and 50 basis points, translating to an adjusted EPS impact of $0.25 to $0.35. This revised expectation for the full-year tariff impact is lower than previous estimates.

Sources

• "Gross margin rate of 39.4% declined 20 basis points. The decline was primarily attributable to a 50 basis point tariff impact, which was better than company expectations reflecting positive response to mitigation actions." (Press Release)

• "Excluding a 50 basis point tariff impact, gross margin rate would have expanded approximately 30 basis points. The third quarter tariff impact was lower than anticipated, as mitigation actions performed well." (Tom Edwards, earnings call)

• "We now estimate 40-50 basis point tariff impact to gross margin, which equates to roughly $0.25-$0.35 of EPS. This is below our prior expectation 40-60 basis points and $0.25-$0.40 of EPS." (Press Release)

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Analysis

During the third quarter of fiscal 2025, Dollar Tree's gross margin expansion was partially offset by higher tariff costs. Despite these increased costs, the company reported a 40 basis point increase in gross margin to 35.8%.

To manage these increased costs from tariffs, Dollar Tree implemented several mitigation strategies. These included renegotiating supplier terms, re-engineering products for efficiency, shifting the country of origin, discontinuing lower-margin items, and executing targeted retail price changes.

Looking forward, the company expects its results to continue to be impacted by higher costs due to the volatility in the tariff environment in the fourth quarter of fiscal 2025. Dollar Tree's guidance for the full fiscal year 2025 assumes that current tariff levels remain in effect and that the company will be able to mitigate most of the incremental margin pressure. For fiscal years 2026-2028, the company anticipates that the absence of recent discrete cost items, including those tied to tariff mitigation, will contribute to adjusted EPS growth, with an expectation of high-teens percentage growth in fiscal year 2026.

Sources

• "Gross profit increased 10.8% to $1.7 billion and gross margin increased 40 basis points to 35.8%. The expansion in gross margin was primarily driven by improved mark-on from pricing initiatives, lower domestic and import freight costs, favorable sales mix, partially offset by higher tariff costs, markdowns, and shrink." (Press Release)

• "Drivers of this improvement were merchandise margin, successful execution of our five merchant levers, renegotiation, re-engineering, shifting country of origin, discontinuing, and targeted price changes, all contributed to our ability to manage increased costs from tariffs." (Stewart Glendinning)

• "During fiscal 2025, we have experienced increased costs associated with the tariff environment and implementation of our mitigation strategies, including discrete price-change costs. We expect our results to continue to be impacted by near-term challenges, including higher costs due to the volatility in the tariff environment, in the fourth quarter of fiscal 2025." (Filing)

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Analysis

Tariffs and trade restrictions with countries like China and Russia present risks to the company's operations. These risks include the potential for customers in affected regions, particularly China, to develop proprietary solutions, vertically integrate their operations, or source fully developed solutions from alternative third-party providers. Such developments could reduce the demand for the company's products.

The company monitors the environment for long-term implications of tariffs on both supply and demand dynamics.

Sources

• "risks related to tariffs and trade restrictions with China, Russia and other foreign nations including risks related to the ability of our customers, particularly in jurisdictions such as China that may be subject to trade restrictions (including the need to obtain export licenses) to develop their own solutions, vertically integrate which may reduce the need for our products, or acquire fully developed solutions from third parties;" (Filing)

• "We continue to monitor the environment for potential long-term impact on supply and demand from tariffs." (Filing)

• "the impact of international conflict (such as the current armed conflicts in the Ukraine and in Israel and the Gaza Strip) and economic volatility in either domestic or foreign markets including risks related to trade conflicts or tensions, regulations, and tariffs, including but not limited to, trade restrictions imposed on our Chinese customers;" (Press Release)

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Analysis

Okta's financial disclosures indicate that tariffs, alongside other macroeconomic and political uncertainties, have had and could continue to have an adverse effect on business operations or financial results. The company notes that increasing trade protectionism is among the factors contributing to these potential adverse effects. This statement is part of a broader risk assessment concerning the macroeconomic environment. The document does not provide specific details on the direct or indirect financial impact of tariffs on the company's revenue, costs, or profitability for the current period or any quantifiable future periods. No mitigating strategies specifically against tariffs are mentioned; the company generally focuses on improving sales productivity, product innovation, and leveraging channel partners.

Sources

• "Worldwide economic and political uncertainties and negative trends, including financial and credit market fluctuations, tariffs and increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, changing interest rates, inflation and other impacts from the macroeconomic environment have, and could continue to, adversely affect our business operations or financial results." (Filing)

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Analysis

The company acknowledged that changes in U.S. trade policy and the imposition of tariffs on imported goods from various countries have had an ongoing impact on its inventory costs. Management continues to monitor these trade policies to assess their effects.

To mitigate the ongoing impacts of tariffs, the company is evaluating several strategic adjustments. These include changes to its merchandise assortment, pricing strategies, and global supply chain operations. A specific mitigating action being considered is the continued diversification of country of origin for its products.

Sources

• "During the year, the United States has enacted significant changes to its trade policy and imposed tariffs on imported goods from a number of countries." (Filing)

• "The Company has been, and continues to, monitor these trade policies and their ongoing impacts on the cost of our inventory." (Filing)

• "We will also continue to evaluate adjustments to our merchandise assortment, pricing, and global supply chain strategies, including continued country of origin diversification, as potential mitigating actions." (Filing)

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Analysis

New and substantial tariffs on imports to the United States have been in effect since April 2025, impacting the company's financial performance in fiscal year 2025. These higher tariff costs were not fully offset by pricing and other measures implemented during the period.

The overall gross margin for fiscal year 2025 decreased by 1.5 percentage points. This decline was primarily attributed to higher commodity and tariff costs, along with shifts in product mix and unfavorable currency impacts. Specifically, the Personal Systems segment saw its gross margin decrease due to elevated commodity and tariff costs, though this was partially mitigated by pricing actions. In the Printing segment, the gross margin decline was mainly driven by higher tariff costs.

The company has undertaken mitigating strategies, including efforts to enhance supply chain resiliency, implement cost controls, and adjust pricing. For instance, an increase in days of supply in inventory was partly due to tariff mitigation and supply chain resiliency actions. Pricing adjustments were made, particularly in the print sector, but competitive dynamics, such as the favorable foreign currency environment for some competitors, meant these actions did not fully prevent some share loss in commercial printing.

Looking ahead, the company's fiscal year 2026 outlook factors in additional costs from U.S. trade-related regulations. The guidance includes an estimated $0.3 impact on non-GAAP diluted net EPS, which encompasses both projected memory cost increases and these trade-related costs. The company indicated it will continue to use pricing as a tool to manage these impacts, adapting strategies based on specific markets and product categories.

Sources

• "Since April 2025, new, substantial tariffs have been imposed on imports to the United States." (Filing)

• "During fiscal year 2025, we experienced higher commodity and tariff costs, which were not fully mitigated by pricing and other actions enacted during the period." (Filing)

• "In fiscal year 2025, gross margin decreased by 1.5 percentage points primarily driven by products gross margin due to higher commodity and tariff costs, mix shifts towards Personal Systems and unfavorable currency impacts..." (Filing)

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Analysis

The company acknowledged the imposition of tariffs by several countries, including the United States, during the first nine months of Fiscal 2026. These trade protection measures, alongside other macroeconomic conditions, are identified as factors that may influence the company's results of operations in certain markets. To counter these potential effects, Dell Technologies utilizes the agility and scale of its supply chain to mitigate the impact of tariffs. The company also stated its intention to adapt to evolving market conditions as necessary. Management indicated that past experiences with tariffs have provided valuable lessons for addressing external pressures like commodity cost increases.

Sources

• "During the first nine months of Fiscal 2026, a number of countries, including the United States, imposed or proposed tariffs on imports, and may continue to do so. The impacts of trade protection measures, including increases or changes in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility, and global macroeconomic conditions, or uncertainty regarding the impact of proposed or future trade protection measures, may affect our results of operations in some markets." (Filing)

• "We continue to leverage the agility and scale of our world-class supply chain to mitigate impacts of tariffs and will continue to respond to changing market conditions as needed." (Filing)

• "Those lessons learned from the COVID time and most recently what happened with tariffs, I think, show that we can operate with the right sense of urgency." (Jeff Clarke (COO))

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Analysis

U.S. tariffs on hospital products sourced from New Zealand impacted the company's gross margin by 32 basis points during the first half of the 2026 financial year. This reduction was offset by ongoing improvement efforts across the business, including manufacturing efficiency and other efficiency gains, contributing to an overall gross margin increase.

The company views tariffs as a standard business cost and integrates them into its operational framework. Management's primary focus remains on improving clinical practice and product development rather than prioritizing tariff-related mitigation strategies that might detract from growth initiatives. The company believes that its emphasis on clinical engagement and patient outcomes yields better results in both the short and long term.

Looking ahead, if current global tariffs persist, the company expects an annualized gross margin impact of approximately 130 basis points. For the full 2026 financial year, tariffs are expected to impact gross margin by about 75 basis points. Additionally, an incremental impact of 65 basis points is anticipated in the 2027 financial year. Despite these headwinds, the company's continuous improvement efforts are projected to more than compensate for the tariff impact, leading to an overall gross margin improvement for the full 2026 financial year.

Sources

• "U.S. tariffs on hospital products sourced from New Zealand impacted our gross margins by 32 basis points in this half. If the current global tariffs remain in effect as they currently are, our gross margin would be impacted by approximately 130 basis points on an annualized basis, with approximately 75 basis points impacting in the 2026 full financial year." (Lyndal York (CFO))

• "I mean, I think our thinking about tariffs is somewhat colored, maybe compared to most. Anything we think about to do with tariffs or to manage tariffs or to change things because of tariffs, that's time and effort that we're not putting into growth. That's always, I'd say, front of mind for us, actually, when tariffs are the topic." (Lewis Gradon (Managing Director and CEO))

• "Yeah, David, look, you're spot on that there's another top-up of that headwind of tariffs coming into FY 2027. You're right. The 65 basis points." (Lyndal York (CFO))

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Analysis

Tariffs have introduced uncertainty in the global economy and impacted the company's business and operations. The U.S. announced new universal baseline tariffs, along with additional country-specific tariffs, affecting merchandise sourced from predominant countries. These trade policies are subject to ongoing negotiations, and further tariffs could be introduced or changed.

To mitigate these impacts, the company is evaluating supply chain footprint changes and negotiating with supply chain vendors. It is also pursuing operating expense reductions and planning to increase average unit retail (AUR) through lower promotions, reduced clearance selling, and targeted ticket increases starting post-holiday. The company operates with a diversified sourcing footprint across over a dozen countries, which aids in cost negotiation and speed to market.

While the company has not broadly implemented ticket price increases through the holiday season, targeted price adjustments are planned for spring deliveries, beginning in late December and January. These measures aim to meaningfully offset tariff headwinds in the longer term. Despite these challenges, the company has continued to invest in the business and has returned cash to shareholders through share repurchases, all while maintaining targeted operating margins.

Sources

• "Assuming the estimated impact from the tariffs on goods imported into the U.S. based on trade policies in effect as of November 21, 2025, and factoring in certain planned mitigation strategies, we expect to incur approximately $90 million of net tariff expense, or 170 basis points as a percent of net sales, which will correspondingly negatively impact our operating profit in Fiscal 2025." (Abercrombie & Fitch Co. 2025 3Q Form 10-Q)

• "The 280 basis point decline in operating margin from Q3 2024 was driven primarily by 210 basis points of tariff expense included in cost of sales." (Robert Ball, earnings call)

• "We continue to reflect tariffs and mitigation consistent with our second quarter call commentary, and the team continues to find cost efficiencies through vendor discussions as we plan 2026." (Robert Ball, earnings call)

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Analysis

The company recognizes tariffs as a component of the dynamic macroeconomic environment, which contributes to fluctuations in product costs and availability. These changes in international trade policies also carry the potential to influence pricing strategies, consumer discretionary spending, and the overall promotional environment.

For the third quarter of 2025, the company stated that the impact of tariffs was integrated within its merchandising margin for the DICK'S Business. Despite these influences, the DICK'S Business reported a 27 basis point expansion in gross margin, with merchandise margins increasing by five basis points, indicating that the business managed to absorb or offset tariff-related costs.

The updated full-year 2025 guidance for the DICK'S Business explicitly includes the expected impact from all tariffs currently in effect. The company raised its guidance for comparable sales growth and adjusted EPS for the DICK'S Business, suggesting that the projected effects of tariffs have been incorporated into these positive outlooks.

Sources

• "Fluctuations in product costs and availability due to tariffs, currency exchange rate fluctuations, inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors;" (Filing)

• "Our updated guidance reflects our strong Q3 performance and includes the expected impact from all tariffs currently in effect." (Navdeep Gupta)

• "The tariff impact was within that quarter, our results as well within the merchandising margin." (Navdeep Gupta)

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Analysis

During fiscal 2025, tariffs and policy-related factors were identified as potentially contributing to an unquantified upside in automotive volumes. This effect was attributed to customer pull-ins, though the precise impact remained uncertain.

The company maintained a cautious outlook on the automotive market due to the lack of clarity regarding how tariffs and market volatilities might ultimately affect the company and its customers. This suggests ongoing uncertainty for future periods.

Management also acknowledged tariffs and trade uncertainty as persistent macro and geopolitical headwinds, which are considered in the company's overall business planning for fiscal year 2026 and beyond.

Sources

• "We do think some of the upside we've seen in the volumes in our business this year was tariff and policy-related." (Richard Puccio, CFO)

• "It can't be precise or certain, but we did make that estimation." (Richard Puccio, CFO)

• "We are still being a bit cautious on the market as it is unclear how the tariffs and volatilities we saw will ultimately impact us and our customers." (Richard Puccio, CFO)

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Analysis

The company reported that tariff headwinds negatively impacted its financial performance in the fourth quarter of fiscal year 2025. Gross margins experienced a 100 basis point year-over-year decline directly attributable to tariffs. Operating margins were also affected, decreasing slightly year-over-year due to these same pressures.

To address the effects of global tariff changes, Agilent established a dedicated cross-functional tariff task force. This initiative, part of the broader Ignite operating system, focused on developing and implementing a coordinated strategy to accelerate tariff mitigation efforts.

Looking ahead to fiscal year 2026, the company expects to fully mitigate the impact of existing tariffs. This mitigation is planned to be achieved through a combination of cost savings and strategic pricing actions. While the fiscal year 2026 operating margin expansion target of 75 basis points includes absorbing incremental material costs from tariffs, the overall guidance reflects the expectation of full mitigation.

Despite the planned full mitigation over the fiscal year, the impact of tariffs on the profit and loss statement is expected to cause earnings to be somewhat weighted towards the second half of fiscal year 2026. Additionally, the company noted that a stabilizing tariff environment is a factor contributing to positive trends observed in the pharma market.

Sources

• "The cross-functional task force rapidly developed a unified strategy and executed a suite of interconnected projects that greatly accelerated our tariff mitigation efforts. As a result, we are highly confident that we will fully mitigate current tariffs in FY26." (Company - CEO)

• "On a year-over-year basis, they were down 100 basis points due to tariff headwinds." (Company - Other Officer)

• "This guidance also incorporates achieving full mitigation of existing tariffs over the course of the year, using cost savings and pricing actions." (Company - Other Officer)

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Analysis

Tariffs and trade restrictions contributed to continued uncertainty in Walmart's business and the global economy. Less than one-third of products sold in the U.S. are imported, with primary sources including China, Mexico, Vietnam, India, and Canada. The company's operating results were influenced by strategies in sourcing, pricing, merchandising, and inventory management in response to these cost increases.

Management indicated that the impact of tariffs observed was less than initially expected earlier in the fiscal year. Some relief on tariffs for certain key food categories also helped to mitigate the overall impact. In response to tariffs, the company focused on disciplined inventory management, managing price gaps, and optimizing merchandise mix, with strong performance in categories like fashion. Price increases attributable to tariffs were noted in electronics, toys, and seasonal categories, although efforts were made to minimize the impact on consumer pricing across other product categories.

Despite higher costs related to tariffs, specifically affecting Walmart U.S. inventory, the company managed inventory levels effectively. Walmart U.S. inventory increased by 2.6%, approximately half the rate of sales growth, while maintaining healthy in-stock levels.

Sources

• "We expect continued uncertainty in our business and the global economy due to tariffs and trade restrictions." (Filing)

• "Inventory levels increased approximately 3% for the total company, with Walmart U.S. inventory up 2.6% despite higher costs from tariffs." (John David Rainey (EVP and CFO))

• "In terms of the impact of tariffs, certainly I think we have seen less impact than what we thought we would have expected early in the year. There has been some relief on some key Food categories, which certainly is helping." (John Furner (President and CEO))

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Analysis

The company recorded a significant impact in the first quarter of fiscal year 2026 due to U.S. government export license requirements for its H20 products destined for the China market. This resulted in a $4.5 billion charge for excess inventory and purchase obligations as product demand diminished.

While the direct charge was incurred in the first quarter, geopolitical issues and an increasingly competitive market in China led to sizable purchase orders not materializing in the third quarter of fiscal year 2026. Despite these restrictions, the company managed to generate approximately $50 million in H20 revenue during the third quarter under granted licenses.

Management is not assuming any Data Center compute revenue from China in its forward-looking guidance, indicating an ongoing impact on potential sales. The rapid evolution of global trade policies, including export controls and tariffs, continues to add complexity and increase costs across the supply chain, creating uncertainty for investment decisions, operations, and customer purchases. Future regulatory changes, including potential revenue sharing with the U.S. government on licensed sales, could further impact financial results.

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)

• "Sizable purchase orders never materialized in the quarter due to geopolitical issues and the increasingly competitive market in China." (Colette Kress, EVP and CFO)

• "Consistent with last quarter, we are not assuming any Data Center compute revenue from China." (Colette Kress, EVP and CFO)

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Analysis

Tariffs on imports from China and other countries continue to be a focus for the company. The company monitors changes in international trade relations, economic and monetary policies, legislation, and regulations related to these tariffs.

The company has implemented and is considering additional measures to mitigate the impact of tariffs. Its buying organization's ability to execute its merchandise sourcing model is a key factor in offsetting these pressures.

The overall impact of tariffs remains uncertain. This uncertainty depends on factors such as trade negotiations, responses from other countries, potential exceptions, and the cost of alternative merchandise sources. Actions taken to adapt could increase risk, lead to costly operational modifications, or affect pricing on certain items. The company also notes ongoing uncertainty regarding the impact on direct imports, indirect imports, vendor and competitor pricing, consumer demand, tariff pass-throughs, and reciprocal or retaliatory tariffs.

Despite these pressures, the company's mitigation strategies successfully offset all tariff pressure during the third quarter of fiscal 2026. The guidance for the fourth quarter of fiscal 2026 assumes that the company will continue to offset expected tariff pressure.

Sources

• "We continue to closely monitor changes in international trade relations, economic and monetary policies, and legislation and regulations including those related to tariffs on imports from China and other countries." (Filing)

• "Importantly, we are very pleased with our mitigation strategies, which allowed us to offset all the tariff pressure we saw in the third quarter." (John Klinger (CFO))

• "As such, our guidance assumes that we will be able to continue to offset the tariff pressure on our business in the fourth quarter." (John Klinger (CFO))

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Analysis

Tariffs were imposed by the U.S. government in April 2025, affecting products manufactured in various foreign countries and jurisdictions. Approximately 50% of the company's merchandise is sourced from outside the U.S., with China being the primary international source. The company is actively monitoring the evolving consumer and regulatory landscape and adjusting its plans as necessary in response to these developments. The company's management has affirmed that the team has undertaken efforts to mitigate the impact of these tariffs.

The company acknowledges that the combined effect of tariffs, along with sourcing strategies, pricing actions, and consumer behaviors, could materially influence its sales and operational results in future periods.

Sources

• "In April 2025, the U.S. imposed a range of tariffs on the vast majority of products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs. The U.S. has indicated that it is actively negotiating or expects to negotiate country-specific agreements that it expects will result in changes to imposed tariff rates. Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or through our vendors, with China as the single largest source of merchandise we import." (Filing)

• "The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods." (Filing)

• "Against the backdrop of a very difficult environment, I am proud of the team's hard work this year to navigate a very high level of complexity, including their work to mitigate the impact of tariffs and navigate challenging consumer conditions." (Jim Lee, CFO)

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Analysis

Tariffs increased duties on imported goods, partially offsetting favorable currency impacts and changes in Italian payback accruals in the cost of products sold for the three and six months ended October 24, 2025. This resulted in a 20 basis points headwind to adjusted gross margin in the second fiscal quarter.

For fiscal year 2026, the company estimates a pre-tax net tariff impact of $185 million. The majority of this impact is expected to be recognized in the second half of the fiscal year, with approximately $90 million to $95 million specifically anticipated in the third fiscal quarter. This total tariff impact is projected to contribute to a roughly 40 basis points decrease in fiscal year 2026 gross margin and a 50 basis points decrease in operating margin.

Medtronic is implementing proactive steps to mitigate these tariff effects. The company indicates that its fiscal year 2026 diluted non-GAAP EPS guidance already accounts for this potential tariff impact.

Sources

• "Based on current rates as of November 18, 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)

• "Next, tariffs were a 20 basis points headwind..." (Thierry Piéton, Vice President and Chief Financial Officer)

• "We anticipate a tariff impact to COGS of approximately $185mn, including $90-$95 million in the third quarter. Including tariffs, we expect a fiscal 2026 gross margin decrease of roughly 40 basis points." (Thierry Piéton, Chief Financial Officer)

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Analysis

The company experienced an initial impact from additional US duties in the first half of the current fiscal year. This impact was limited to EUR 50 million due to proactive inventory management and the phased implementation of different tariff rates, starting at 10%, then 15% for Europe-made products, and 39% for Swiss-made products.

The Jewellery Maisons and specialist watchmakers were affected, with US duties contributing to gross margin pressure alongside unfavorable foreign exchange movements and rising raw material costs. Price adjustments were implemented to mitigate these headwinds.

A greater unfavorable impact from US tariffs is anticipated in the second half of the fiscal year, particularly if the 39% tariffs on Swiss-origin products remain in effect. The estimated total adverse impact from increased US tariff rates for the full current fiscal year is around EUR 300 million.

Additionally, the company noted that European tariffs, specifically a 15% rate, represent the largest overall tariff impact. These tariffs affect products manufactured in the EU, including jewelry, fashion, accessory items, and one watch brand. The costs associated with these European tariffs are recycled into the income statement as inventory is sold.

Sources

• "In the first half, the impact of increased US tariff rates was limited to some EUR 50 million, thanks to our proactive inventory management since April and due to the phasing of the implementation of different tariff rates, starting with 10%, then 15% for Europe-made products, followed by 39% in August for Swiss-made products." (Burkhart Grund, CFO)

• "With this phasing in mind, we anticipate a greater unfavorable impact in the second half, particularly if the 39% tariffs on Swiss origin products are maintained. Based on the current levels of our US inventories and planned shipments, we estimate the full adverse impact of the increased US tariff rates to be around EUR 300 million for the full current fiscal year." (Burkhart Grund, CFO)

• "Let's not forget that the biggest impact of tariffs comes from the European tariffs, which is, as you know, 15% because we produce a significant amount of jewelry, fashion, and accessory items, and one watch brand as well in the European Union or inside the European Union." (Burkhart Grund, CFO)

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Analysis

Applied Materials' fiscal 2025 growth rate was tempered by increased trade restrictions and an unfavorable market mix. Multiple trade rule changes over the past 12 months reduced the company's accessible market in China. China's contribution to total systems and service revenues decreased to 28% in fiscal 2025 and 25% in the fourth quarter, compared to 37% in fiscal 2024.

The impact of these restrictions on the China market significantly increased in fiscal 2025, more than doubling from approximately 10% of the China wafer fab equipment (WFE) market in fiscal 2024 to over 20% in fiscal 2025. Restrictions, which previously targeted leading-edge logic and domestic NAND markets, extended to include China's DRAM market and certain ICAPS (IoT, Communications, Automotive, Power, Sensors) market segments at the beginning of fiscal 2025. This was a notable impact, especially since the company held a high share in the DRAM segment.

Despite these challenges, Applied Materials is pursuing mitigating strategies by focusing on areas where it can still compete. The company believes it is maintaining its market share in China ICAPS where restrictions do not apply, and it is introducing new ICAPS products for both China and global markets to expand its addressable market and enhance competitiveness in cost-sensitive segments. The company also emphasizes its strong positions in leading-edge foundry logic, DRAM, and advanced packaging outside of China, which are expected to be the fastest-growing market segments.

For fiscal 2026, the company anticipates lower wafer fab equipment spending in China and does not expect significant new restrictions. China business is projected to normalize to the mid-20s percentage of total revenue. A $600M revenue opportunity, previously affected by an affiliate rule that has since been suspended, is expected to materialize in fiscal 2026, with $110M shipping in the first quarter and the remaining $490M throughout the rest of the year.

Sources

• "Looking back at fiscal 2025, while it was a growth year for Applied, our growth rate was tempered due to increased trade restrictions and an unfavorable market mix. Over the past 12 months, multiple trade rule changes have reduced the size of our accessible market in China." (Gary Dickerson, CEO)

• "Semiconductor systems revenue was up 4%, growing even as the impact of trade restrictions significantly reduced our access to the market in China. The impact of these restrictions was equivalent to around 10% of the China market in fiscal 2024 and more than double that amount in fiscal 2025." (Brice Hill, CFO)

• "Starting with the affiliate rule that came out and affected our Q4 and then was suspended. We had shared that $110mn would be affected in our Q4. We did not ship that in Q4, but we will ship that in Q1. The first answer is that is included in our guide for Q1. The $600mn is still a good estimate for what is in the rest of 2026." (Brice Hill, CFO)

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Analysis

Siemens acknowledges the presence of tariffs and trade restrictions as factors within its operating environment. The company states that its broad geographic footprint acts as a strategic advantage, enhancing its resilience against these restrictions. This approach provides a competitive advantage that supports growth above market averages.

Sources

• "This broad geographic footprint strengthens Siemens’ resilience against tariffs and trade restrictions, providing a competitive advantage that supports above-market growth." (Press Release)

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Analysis

Public policy outcomes, including new or escalating tariffs, are identified as potential factors that could impact Duke Energy. The company monitors these developments. These tariffs could disrupt Duke Energy's supply chain, affect future financial results, influence capital plan execution, or hinder the ability to achieve its vision for a smarter energy future. Additionally, increased tariffs could affect commodity prices, which may impact liquidity positions and asset values. The company notes the ability to recover such costs through the regulatory process when appropriate.

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 timing and extent of changes in commodity prices, including any impact from increased tariffs, export controls and interest rates, and the ability to timely recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;" (Filing)

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Analysis

The company reported experiencing isolated and de minimis impacts from tariffs, along with tax exemption changes, within its buy now, pay later business during the third quarter of 2025. Despite these minimal effects, Gross Merchandise Value (GMV) growth remained strong, reporting 17% growth year-over-year and 18% on a constant currency basis in the third quarter.

The company's 10-Q filing generally acknowledges

Sources

• "We saw only isolated impacts from tariffs and sort of the de minimis tax exemption changes that appeared in our buy now, pay later business. But even with that, GMV growth remained strong at 17%. Or 18% on a constant currency basis in the third quarter." (Amrita Ahuja, Foundational Lead)

• "changes in political, business, and economic conditions, including changes due to actual or potential tariffs" (Filing)

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Analysis

Tariffs have contributed to a softer business environment, influencing customer sentiment and their willingness to make capital investments. This factor, combined with other market conditions, has led to a business tone that is less robust than previously anticipated. The company observed that customer psyche was impacted, causing some to hold back on capital investments. While December is historically a weaker sales quarter, the influence of tariffs was noted as one reason the current quarter's guidance, though better than seasonal, was not as high as expectations from six to nine months prior. No specific financial quantification of the tariff impact on revenue or margins was provided.

Sources

• "But number one, the overall softer tone in the business environment, and number two, some impact of. Tariffs on. Customer psyche, and people don't know when to make capital investments or not, and people are holding back." (Steve Sanghi, President and CEO)

• "The impact of national security protections, trade restrictions and changes in tariffs, including those impacting China;" (Filing)

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Analysis

Tariffs unfavorably impacted BD's gross profit margin across its Medical, Life Sciences, and Interventional segments in fiscal year 2025. This negative effect contributed to absorbing 40 basis points on the adjusted operating margin for the full fiscal year and a 140 basis point impact in the fourth quarter. The tariff headwind also reduced the full fiscal year 2025 adjusted diluted EPS growth by 2 percentage points and the fourth quarter adjusted diluted EPS growth by 6 percentage points.

For fiscal year 2026, tariffs are expected to continue to adversely affect operating expense, resulting in an incremental $185M, or 80 basis points, year-over-year headwind to adjusted operating margin. Tariffs are anticipated to be most prominent in the first quarter of fiscal year 2026 and continue through the third quarter. The company expects a tariff headwind of approximately 3.5 percentage points on adjusted diluted EPS growth for fiscal year 2026.

BD's mitigation strategies include sourcing optimization and pursuing tariff exemptions for qualifying products. However, the company acknowledges uncertainty regarding the timing and ultimate effectiveness of these efforts, noting that mitigation strategies may be challenged or eliminated through legislation or other means.

Sources

• "We delivered adjusted diluted EPS of $14.4, which represents strong growth of 9.6%, including a two-point tariff headwind." (Chris DelOrefice, earnings call)

• "Moving down the P&L, we expect continued strong adjusted operating margin consistent with FY2025 of about 25%. This includes absorbing an incremental $185mn, or 80 basis points year-over-year headwind from tariffs, in line with what we've previously communicated." (Tom Polen, earnings call)

• "While sourcing optimization and tariff exemptions for qualifying products are key aspects of our mitigation strategy, the timing of such or the ultimate results we will realize from these efforts are uncertain." (Filing)

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Analysis

Diageo anticipates an annualized impact of approximately $200M from tariffs on US imports from the UK and Europe. These tariffs are assumed to remain at 10% on UK imports and 15% on European imports, with Mexican and Canadian spirits imports staying exempt under USMCA. The company expects to mitigate around half of this impact on operating profit on an ongoing basis through actions taken, prior to considering any pricing adjustments. The guidance for fiscal 26 organic operating profit growth incorporates the expected impact from these tariffs. During the first quarter of fiscal 26, US Spirits experienced some benefit from a pull-forward of imports related to European tariffs, which impacted net sales comparatives.

Sources

• "Our guidance for the expected impact of tariffs into the US from UK and European imports remains unchanged at c.$200m pre mitigation on an annualised basis." (Filing)

• "This assumes that the current tariffs remain at 10% on imports from the UK and 15% on imports from Europe, and that Mexican and Canadian spirits imports remain exempt under USMCA, with no other changes to tariffs." (Filing)

• "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." (Filing)

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Analysis

The company is monitoring changes in global trade policy, including tariffs and related trade actions from the U.S., China, and other countries. The extent of the impact of these tariffs and trade actions on the business, financial condition, and results of operations is uncertain and depends on future developments.

Changes to global trade policies have the potential to negatively affect demand, pricing, and costs for the company's products and technologies. These policy changes also contribute to uncertainty in estimating future customer demand. This uncertainty may lead to increased excess or obsolete inventory, or reserve charges, which could negatively affect results of operations and cash flows.

U.S./China trade relations and national security protection policies are identified as factors that may negatively impact the company's business, growth prospects, and results of operations. A significant portion of the company's business is concentrated in China, and U.S./China trade and national security tensions exacerbate the risks associated with this concentration.

Sources

• "We continue to monitor the recent changes in global trade policy, including tariffs and related trade actions announced by the U.S., China and other countries." (Annual Report)

• "The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain." (Annual Report)

• "Changes to global trade policies may negatively impact demand, pricing and cost for our products and technologies, and contribute to the inherent uncertainties in estimating future customer demand, which may result in increased excess or obsolete inventory or reserve charges, negatively impacting our results of operations and cash flows." (Annual Report)

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Analysis

The United States and other nations have implemented tariffs and reciprocal tariffs on a broad range of products and countries, including Canada, China, the European Union, Japan, and Mexico. These actions contribute to increased material cost inflation, component shortages, and supply chain disruptions. Despite these macroeconomic pressures, the company has largely mitigated the impact of tariffs enacted to date.

To counter the effects of tariffs and other trade restrictions, the company has adopted several mitigation strategies. These actions include strengthening its regional manufacturing strategy, pivoting to local sourcing within its supply chain, accelerating pricing adjustments, and asserting contractual rights through change orders. The company has also expanded and redistributed its supplier network, utilized supplier financing, and implemented accelerated purchasing and productivity improvements.

The company acknowledges that the effectiveness of its mitigation actions for continuing to offset current and future trade restrictions remains uncertain. Should additional tariffs be implemented, they could negatively impact the company's revenue growth and margins in future periods. This potential impact would stem from decreased sales and increased cost of goods sold, emphasizing the ongoing monitoring and evaluation of these trade measures on its supply chain and operational results.

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)

• "it is uncertain as to whether the actions taken or contemplated to be taken by the Company will be effective in continuing to mitigate the impact of current and future trade restrictions and their related impacts." (Filing)

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Analysis

Emerson's financial performance in fiscal year 2025 was affected by tariffs. The company reported a 20 basis point negative impact on gross profit attributable to tariffs. Despite this headwind, Emerson achieved overall margin expansion. This expansion was driven by factors such as favorable price-cost dynamics, a higher mix of software in its sales, and realized cost reductions and synergies from recent acquisitions. These positive operational factors more than offset the combined effects of inflation and tariffs during the period.

Sources

• "Margin expansion was driven by strong price cost, higher mix of software and the benefit of cost reductions in synergy realization offsetting a 20 basis point impact of. Gross profit from tariffs." (Lal Karsanbhai, President and CEO)

• "...the remaining 110 basis points of improvement came from positive price cost, the benefit of cost reductions and synergies from the test and measurement and Aspen Tech acquisitions which more than offset inflation and tariffs." (Michael Baughman, EVP and CFO)

• "Examples of risks and uncertainties that may cause our actual results or performance to be materially different from those expressed or implied by forward looking statements include... tariffs, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC." (Filing)

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Analysis

Amgen's full-year 2025 guidance for total revenues and adjusted earnings per share (EPS) incorporates the estimated impact of tariffs that have been implemented. The company did not provide a specific financial quantification of this tariff impact for the third quarter of 2025, nor was a separate figure provided for the full-year guidance.

The company explicitly stated that its guidance does not account for any tariffs or pricing actions that have been announced or described but not yet implemented. This also applies to any sector-specific tariffs or pricing actions that could be implemented in the future, indicating an unquantified potential future risk from such policy changes.

Sources

• "We expect 2025 total revenues in the range of $35.8 billion-$36.6 billion and non-GAAP earnings per share between $20.6 and $21.40. This guidance includes the estimated impact of implemented tariffs. It does not account for tariffs or pricing actions announced or described, but not yet implemented." (Peter Griffith (CFO))

• "This guidance includes the estimated impact of implemented tariffs, but does not account for any tariffs or potential pricing actions announced or described but not implemented as well as any tariffs, sector specific tariffs, or pricing actions that could be implemented in the future." (Press Release)

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Analysis

Zoetis acknowledges that its business operations are exposed to risks stemming from tariffs and other trade protection measures imposed by the United States and other countries, including key markets such as China, Canada, and the European Union. The United States government initiated additional tariffs on certain goods imported into the U.S. starting in early 2025, which were met with reciprocal tariffs and actions from other nations. These measures carry the potential to negatively affect product demand and increase product costs for the company.

The company is actively monitoring the evolving trade situation. It is evaluating potential actions to mitigate and minimize the adverse effects of these tariffs. The company's full-year 2025 financial guidance incorporates the anticipated impact of these enacted and announced tariffs.

Sources

• "Our business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States or other countries, as well as U.S. international trade relations, including those with China, Canada and the European Union." (Filing)

• "Starting in early 2025, the United States government announced additional tariffs on certain goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. 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)

• "This guidance reflects foreign exchange rates as of late October and the impact of enacted and assumptions on announced tariffs." (Filing)

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Analysis

The company previously experienced negative impacts on its margins due to tariff costs. However, management has confirmed that mitigation strategies are now in place to cover these costs. As a result, tariff costs are no longer a drag on the company's margins and are not expected to dilute them through the end of the current fiscal year. These efforts have neutralized the prior negative impact of tariffs on profitability.

Sources

• "First, because we had a backlog we could deliver on. Second, because the team now covers for all the tariff costs and is not a drag on the margins. So it's not only recovering on the dollar-by-dollar basis by the end of the year now, but also is not diluted to margins, which is great news." (Paulo Ruiz (CEO))

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Analysis

Trade policy evolution and challenges with international trade flows negatively impacted the Crushing subsegment. These factors contributed to lower margins and a 93% decrease in operating profit compared to the prior year quarter. The Refined Products and Other subsegment also experienced negative effects on biodiesel and refining margins in North America due to trade policy evolution, which contributed to a 3% decrease in its operating profit.

For the nine months ended September 30, 2025, the Ag Services subsegment's results were further impacted by decreased volumes and the influence of certain export duties. Tariffs and inflation continue to pose challenges to the Human Nutrition market. The company revised its full-year 2025 adjusted EPS guidance downward, primarily reflecting lower crush margins influenced by the evolving global trade landscape and deferred U.S. biofuel policy. This uncertainty regarding trade policy clarity contributes to market participants engaging in hand-to-mouth transactions, which affects the orderly flow of the supply chain.

In response to these challenging trade dynamics, the company is focusing on operational excellence, improving plant efficiency, and optimizing its portfolio. ADM is positioning its asset network to maximize opportunities anticipated from expected improvements in market conditions, particularly from global trade evolution. The company expresses optimism for a more constructive environment in 2026, contingent on clarity regarding trade deals and biofuel policy.

Sources

• "tariffs and inflation continue to pose challenges to the Human Nutrition market" (Filing)

• "The deferral of U.S. biofuel policy and the evolving global trade landscape continued to impact demand for AS&O, primarily in our crushing and refined products businesses." (Monish Patolawala, Analyst, ADM)

• "Ag Services results were further impacted by a decrease in volumes, the impact of certain export duties, and the temporary disruption at a key port facility in Brazil." (Filing)

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Analysis

The company expects tariffs to have an immaterial cost impact for the full year 2025. This assessment is based on current knowledge of tariff rates and regulations. The company's significant U.S. presence and a geographically diverse supply chain are cited as reasons for this immaterial impact.

However, the company notes that its foreign third-party manufacturers and suppliers are subject to U.S. legislation, including tariffs and trade restrictions. These factors could potentially lead to increased costs, a reduction in material supply, or delays in the procurement or supply of materials. This outlook remains subject to change given the dynamic nature of the tariff situation and the potential for sector-specific tariffs.

Sources

• "We continue to expect an immaterial cost impact from tariffs in 2025 based on what we know today due to our significant U. S. presence in our geographically diverse supply chain. Of course, given the dynamic nature of the tariff situation, including the potential for sector specific tariffs, this outlook is subject to change." (Charlie Wagner, context earnings call)

• "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)

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

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Analysis

The Coastal Virginia Offshore Wind (CVOW) Commercial Project's estimated total cost of $11.2 billion reflects an impact from certain tariffs that became effective in 2025. This project cost includes a $0.3 billion increase attributable to current projections of tariffs on equipment delivered from March 2025 through the end of 2025 from specific countries, and on steel-containing equipment delivered from March 2025 through the end of 2026. This quarter, the company accelerated the recognition of steel tariffs through the end of 2026, which impacted the project's reported costs.

A specific after-tax charge of $50 million was recorded in the third quarter of 2025. This charge addresses costs not expected to be recovered from customers, stemming from the tariff-driven project cost increase. This financial impact is managed through a cost-sharing settlement with Virginia regulators and a 50% cost-sharing agreement with Stonepeak, which covers certain costs beyond a defined project threshold.

Looking forward, the company anticipates a potential for an additional $0.2 billion increase in project costs for offshore wind and onshore electrical interconnection equipment. This further increase would occur if the current tariffs remain in effect through the end of 2026. The cost-sharing agreement with Stonepeak specifies that capital costs between $11.3 billion and $11.8 billion for the project will be shared, with Dominion bearing two-thirds and Stonepeak one-third, providing a mechanism for managing potential future tariff impacts.

Sources

• "The 2.6 GW project is expected to be placed in service by the end of 2026 with an estimated total project cost of approximately $11.2 billion, excluding financing costs, that reflects an estimated impact of certain tariffs which became effective during 2025." (MD&A)

• "The expected total project cost increase of $0.3 billion relative to Virginia Power's August 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 2025 that originates from Mexico, Canada, a European Union member or other applicable countries and on equipment expected to be delivered from March 2025 through the end of 2026 that contains steel." (MD&A)

• "As a result of this project cost increase, we recorded a modest charge this quarter, about $50mn after tax, included on Schedule 2 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 Stonepeak." (Steven Ridge (EVP and CFO))

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Analysis

Tariffs have influenced regional metals trends and U.S. manufacturing activity. In the metals sector, new capacity opportunities in the U.S. have been supported by tariffs, contributing to its performance as a bright spot. Manufacturing activity in the United States has also shown a healthy uptick, with the company noting it has

Sources

• "Metals trends were region-specific and also impacted by tariffs. China is up, where Linde benefits from supplying tier-one customers. ... The U.S. has been a bright spot for metals, not just production levels, but also new capacity opportunities as they've been supported by the new tariffs." (Sanjiv Lamba (CEO))

• "Manufacturing, which grew at 3% year-on-year, was the fastest-growing industrial end market. Starting in the Americas, we're seeing solid volume growth, especially in the United States. We seem to have lapped some of the tariff concerns, and this has translated into a healthy uptick in manufacturing activity." (Sanjiv Lamba (CEO))

• "I'd say that there remains a degree of caution. There is no question we have lapped the tariff concerns, but there still remains a degree of caution. I think we see people progressing on looking at their major expansion projects or CapEx investment into the ground, but we still see a degree of caution around that." (Sanjiv Lamba (CEO))

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Analysis

During the third quarter of 2025, higher tariffs partially offset the company's expansion in non-GAAP operating margin. Specifically, the Products and Systems Integration segment experienced a 0.2% decrease in gross margin as a percentage of net sales, primarily due to these tariffs.

The company absorbed tariff-related costs ranging from $70 million to $80 million in its P&L during the second half of 2025. Despite these challenges, the company's product mix favorability contributed to increased margins within the LMR segment.

To mitigate the impact of tariffs, the company implemented several strategies. These include inventory acceleration, utilizing dual sourcing with two electronic manufacturing services providers, and engaging in load balancing. The company benefits from a significant portion of its manufacturing being USMCA-compliant, which helps in tariff mitigation. Proactive anticipation of various tariff scenarios guides the company's operational improvements.

Looking ahead, the company expects to face continued tariff headwinds in the first half of 2026. However, these impacts are projected to be more moderated compared to the $70 million to $80 million absorbed in the second half of 2025, as tariffs were not in place during the corresponding period of the previous year. The company plans to continue developing mitigation actions.

Sources

• "non-GAAP operating margin was 30.5% of sales, up 80 basis points, driven by higher sales and improved operating leverage, partially offset by higher tariffs." (Jason Winkler, EVP and CFO)

• "Within LMR... we have faced some margin challenges related to tariffs. Those are largely in the second half of this year, somewhere between $70mn and $80 million in the second half of this year. Despite those tariffs, the product mix favorability has led to increased margins." (Jason Winkler, EVP and CFO)

• "In terms of mitigating actions, we've done tariff mitigation, inventory acceleration, dual sourcing with two EMSs. There is some load balancing we can do with some lead time. A lot of the manufacturing is USMCA-compliant, which is a friendly fact and a way to mitigate tariffs." (Jack Molloy, EVP and COO)

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Analysis

The company's gross margin performance in the third quarter of fiscal 2025 reflected successful execution of tariff mitigation strategies. These efforts enabled the company to maintain healthy merchandising price gaps relative to competitors and protect its profitability.

Mitigating strategies included negotiations with vendors, sourcing from alternative countries, and increasing retail pricing as deemed appropriate. These actions allowed for transitioning SKUs from around the world to navigate the tariff environment. Despite these actions, tariffs have increased inventory costs and associated cost of sales. This may lead to increased retail prices and could negatively affect sales by impacting consumer demand.

While the company has managed the impact, the current geopolitical environment and potential changes in global trade and tariffs create uncertainty. This uncertainty surrounds the future state of the global economy and its related impacts on the supply chain. The U.S. has imposed significant additional tariffs on products from most sourcing countries, with further tariffs under consideration. The durability of any pauses in these tariffs remains unclear. Additionally, some countries may impose new tariffs on the U.S. in response, potentially escalating trade conflicts.

Sources

• "We're proud of our disciplined expense management and gross margin performance, which reflect a successful execution of our tariff mitigation strategies." (Thomas Taylor)

• "Living through the tariff environment, mitigating that. Transitioning SKUs from around the world. In a continuing tough environment, to be able to grow gross margin in that environment, I feel pretty good about what we've been able to do." (Thomas Taylor)

• "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." (Filing)

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Analysis

The impact of tariffs was not material to the company's profitability and cash flows for the fiscal 2026 first quarter. However, the company anticipates that higher tariff rates will adversely affect fiscal 2026 profitability and cash flows.

The company is implementing mitigation measures. These include leveraging available trade programs, optimizing its regional manufacturing footprint to bring production closer to consumers, and increasing supply chain agility. These actions are intended to offset over half of the expected tariff impacts and allow for adaptation to evolving trade policies.

While the first quarter did not show material tariff impact, the financial officer noted that tariffs typically have a lag before affecting the profit and loss statement. The impact on gross margin is expected in the second, third, and fourth quarters of fiscal 2026. The company's manufacturing operations are not primarily located in China, which limits some direct tariff effects, though materials brought in are subject to tariffs.

Sources

• "The impact was not material to fiscal 2026 first quarter 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)

• "The Company has implemented a range of actions, including leveraging available trade programs and further optimizing its regional manufacturing footprint to bring production closer to the consumer--including through its facility in Japan. These efforts, combined with increased supply chain agility, are helping to offset more than half of the expected impacts and better position the Company to adapt quickly as trade policies continue to evolve." (Press Release)

• "Based on information available and net of planned mitigation actions through October 24, 2025, the Company continues to expect tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million." (Press Release)

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Analysis

The company recognizes global trade disputes and interruptions, including tariffs and trade protection measures, as factors that could exert pressure on product costs, pricing, reimbursement, and market access. New tariffs have been imposed or aligned upon by the U.S. and other countries. Although pharmaceuticals are currently exempt from certain tariffs, these exemptions are not guaranteed to continue or apply to future tariffs.

Should additional restrictions be enacted, they could lead to supply chain disruptions or delays, further increase operational costs, or negatively impact the business. The company notes that the nature of pharmaceutical regulation and commercialization may limit its ability to offset the burden of increased costs resulting from tariffs.

The company's 2025 financial guidance is predicated on the existing tariff and trade environment as of October 30, 2025. This guidance does not incorporate potential impacts from any future policy shifts, specifically those related to pharmaceutical sector tariffs, that could affect the business.

Sources

• "Reforms, initiatives, and other actions, including those that may stem from political initiatives, periods of uneven economic growth or downturns, or as a result of inflation or deflation, trade and other global disputes and interruptions including related to tariffs, trade protection measures, and similar restrictions, the emergence or escalation of, and responses to, international tension and conflicts, or government budgeting priorities, are expected to continue to result in added pressure on cost, pricing, reimbursement, and access for our products." (Filing)

• "For example, the U.S. and other countries have recently imposed or reached alignment on new tariffs. In some cases, imposed tariffs have been paused but may come into effect quickly and unpredictably. While pharmaceuticals are exempt from certain of these tariffs, such exemptions may be terminated or may not apply to any future tariffs. 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." (Filing)

• "This guidance is based on the existing tariff and trade environment as of October 30, 2025, and does not reflect any policy shifts, including pharmaceutical sector tariffs, that could impact business." (Press Release)

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Analysis

The company continues to monitor and evaluate the potential impact of tariffs and changes in trade policies. In response to enacted tariffs, the company is implementing several mitigating strategies. These include seeking exemptions and evaluating alternative sources for materials and subcontracted components. The company is also engaging in negotiations with suppliers to manage cost impacts. Additionally, it is considering price adjustments and other strategies aimed at supporting profitability.

Based on current conditions, the company does not anticipate a material impact from tariffs on its 2025 financial results. The company will continue to monitor developments and assess potential implications as trade policies evolve.

Sources

• "We continue to monitor and evaluate the potential impact of current and proposed changes in trade policies and in particular, tariffs. In response to enacted tariffs, we are seeking exemptions, evaluating alternative sources of materials and subcontracted components, as well as engaging in supplier negotiations to help manage cost impacts and are considering price adjustments and other strategies to support profitability. Based on current conditions, we do not expect a material impact on our 2025 results, but will continue to monitor developments and assess potential implications as trade policies evolve." (Filing)

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Analysis

The company identified that tariffs implemented by the U.S. government on certain foreign imports would result in additional expenses. These costs are anticipated to be less than $100 million for the full year 2025 and are expected to be reflected primarily within the Cost of sales.

Management highlighted that its gross margin assumption for approximately 82% for the full year 2025 incorporates this estimated cost related to tariffs. The company also noted a more favorable estimated tax rate and lower estimated costs related to the impact of tariffs contributed to a revised full-year 2025 non-GAAP EPS outlook.

Further, the company acknowledged that future changes to tariffs could adversely affect its business. This includes a specific concern regarding the potential imposition of U.S. tariffs on pharmaceutical products.

Sources

• "At this time, the Company anticipates that tariffs implemented to date will result in less than $100 million of additional expenses in 2025 (which will be primarily reflected within Cost of sales)." (Filing)

• "However, future changes to tariffs could have a further adverse effect on the Company's business. In particular, the U.S. government has indicated that it may impose tariffs on pharmaceutical products." (Filing)

• "Our gross margin assumption remains approximately 82%, including an updated estimate of less than $100mn in costs related to the impact of tariffs." (Caroline Litchfield (CFO))

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Analysis

The company reported that increased U.S. tariffs significantly impacted its financial performance. For the first nine months of 2025, these tariffs accounted for EUR 2.1 billion of the special effects burdening the operating result and EUR 1.9 billion in cash out. In the third quarter alone, the headwind from increased U.S. tariffs was approximately EUR 800 million.

Tariffs have also contributed to a decline in sales volume in North America, with a 10% decrease in Q3 and an 8% decrease year-to-date. This was partly due to measures taken to mitigate tariff effects, such as reducing the shipment of certain entry-level models from Mexico to the U.S. because a 27.5% tariff made them unprofitable.

Looking forward, the company anticipates tariffs will persist, with direct payments estimated between EUR 4 billion and EUR 4.5 billion annually, and a total impact, including lost margin and volume effects, of up to EUR 5 billion on an annual basis. To counteract this, management plans intensified cost reduction efforts and an acceleration of efficiency programs across all brands and units. The company is also exploring increased localization of production, specifically in the U.S., such as a potential Audi factory and the ongoing ramp-up of Scout production in South Carolina. Pricing adjustments are also under consideration as a measure to mitigate the financial impact.

Sources

• "On top, results were significantly impacted by headwinds of EUR 5.3bn in the third quarter, mainly by costs related to a realignment of Porsche product strategy and the goodwill impairment of our stake in Porsche in the combined magnitude of EUR 4.7bn and the increased U.S. tariffs of about EUR 800mn." (Arno Antlitz (CFO and COO))

• "The result after nine months includes special effects in a magnitude of EUR 7.5bn, mainly increased U.S. tariffs in a magnitude of EUR 2.1bn, EUR 2.7bn from goodwill impairment Porsche, and EUR 2bn related to the Porsche realignment as announced on the 19th of September." (Arno Antlitz (CFO and COO))

• "This includes basically the direct payment we have to do. This includes some countermeasures in terms of pricing. It also includes some measures where we lose margin. Why is that the case? Look, an entry-level Jetta, an entry-level Taos from Mexico shipped to the U.S. in a tariff regime of 27.5% is not feasible." (Arno Antlitz (CFO and COO))

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Analysis

During Q3 2025, tariffs impacted the company's financial performance through both direct cost pressures and market uncertainties. In North America, the company implemented positive pricing adjustments to counter tariff headwinds. However, the overall effectiveness of these pricing actions was partially offset by a deflationary economic environment in China.

Tariff uncertainties also contributed to specific regional weaknesses. Mexico experienced significant macroeconomic issues tied to tariff uncertainties, leading to a sharp decline in performance across its Energy Management and Industrial Automation segments. In North America, delays in decision-making for process and hybrid industrial automation projects were attributed to tariff uncertainty earlier in the year.

The company does not expect to fully offset the combined impacts of inflation and tariffs within the current calendar year. However, it anticipates that pricing actions, along with commercial and supply chain adjustments, and the leveraging of its multi-hub setup, will mitigate these impacts over the coming quarters. The company's reaffirmed 2025 financial targets incorporate the impacts of trade tariffs enacted or formally announced to date.

Sources

• "Products (48% of Q3 revenues) grew +3% organic in Q3. Growth was volume driven, with positive pricing in North America in response to tariff headwinds offset by the impact of a continuing deflationary environment in China." (Press Release)

• "Mexico was particularly weak across end markets due to macroeconomic issues tied to tariff uncertainties." (Hilary Maxson, CFO)

• "Net-net, we don't expect to fully offset, like I mentioned, the impacts of both inflation and tariffs in this calendar year. That said, we would expect, like in prior cycles, that we would offset those impacts over the coming quarters." (Hilary Maxson, CFO)

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Analysis

Russian sanctions are impacting the market by compelling the rerouting of crude oil and product volumes, which leads to increased costs. This situation has resulted in higher refining margins. The company notes that the market is underestimating the effect of U.S. sanctions targeting major Russian oil trading companies and European measures against countries trading Russian oil or products, such as India, Turkey, and China. Trading houses are exercising more caution, which contributes to the market impact.

TotalEnergies has observed an increase in refining margins, with figures captured since the beginning of October around $75 per ton. This is above the company's prior guidance of over $50 per ton. The company anticipates these margins could reach approximately $100 per ton. TotalEnergies ceased trading Russian oil by the end of 2022 to ensure compliance with sanctions. The company expects these market conditions, driven by sanctions, to contribute to cash flow generation, although a specific quantifiable impact on total company cash flow was not provided.

The potential for an EU ban on Russian LNG imports from 2027 is subject to a new regulation that requires clarification on its exact scope. The company is evaluating its commitments regarding LNG offtake in such a scenario, noting that its North Sea assets could gain value if LNG supply from the U.S. and Qatar to Europe is affected by these rules.

Sources

• "I think the market is underestimating what it means when you have U.S. sanctions." (Patrick Pouyanné)

• "The refining margins as we captured since the beginning of October for the last month is around $75 per ton. When we guided you at above $50, I think we are a little shy. In fact, it's fundamentally linked because we begin to see real impact in the market of these last Russian sanctions." (Patrick Pouyanné)

• "TotalEnergies, you know, we stopped trading any Russian oil since the end of 2022 somewhere. We penalize ourselves compared to other practice. I think it was the right way to comply and to be strict on the Russian sanctions." (Patrick Pouyanné)

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Analysis

Tariffs contributed to an acceleration of inflation into the mid-single-digit range in the third quarter of 2025, primarily affecting cost of sales. The impact of tariffs on cost of sales for the third quarter was 30 basis points. This partially offset the benefits derived from menu price increases implemented in 2024 and internal cost efficiencies.

Looking forward, the company anticipates an ongoing impact of approximately 50 basis points from tariffs, which is expected to continue into 2026. This forecasted impact does not include potential effects from Mexican or Canadian imports falling under the USMCA exemption. The company stated it does not plan to fully offset this incremental inflation in the near term through pricing. While this approach is expected to pressure margins, it is positioned as a means to continue providing customer value during the current economic climate.

Sources

• "Additionally, inflation is accelerating into the mid-single-digit range, primarily due to tariffs and rising beef costs, and we anticipate it will remain in this range in 2026." (Adam Rymer, earnings call)

• "Tariffs impacted the quarter by about 30 basis points, and we continue to estimate that we will see about a 50 basis point ongoing impact from tariffs, which does not include any impact from Mexican or Canadian imports that fall under the USMCA exemption." (Adam Rymer, earnings call)

• "Food, beverage and packaging costs in the third quarter of 2025 were 30.0% of total revenue... This decrease was primarily due to the benefit of menu price increases in 2024 and cost of sales efficiencies. This decrease was partially offset by inflation, primarily in beef and chicken, and the impact from newly enacted tariffs." (Press Release)

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Analysis

During the nine-month period ended September 30, 2025, MercadoLibre experienced increased expenses due to tax withholdings related to intercompany export services billing duties.

Product and technology development expenses saw an increase of $53 million, primarily attributed to these higher tax withholdings. This contributed to the overall rise in development costs.

Similarly, general and administrative expenses rose by $22 million, largely driven by the same higher tax withholding in connection with intercompany export services billing duties.

Sources

• "For the nine-month period ended September 30, 2025, the increase in product and technology development expenses as compared to the same period in 2024 was primarily attributable to a: ... iii) $53 million increase in other product and technology development expenses mainly related to higher tax withholding in connection with intercompany export services billing duties." (Filing)

• "For the nine-month period ended September 30, 2025, the increase in general and administrative expenses as compared to the same period in 2024 was primarily attributable to a: ... ii) $22 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties." (Filing)

• "Cost of net revenues and financial expenses primarily includes shipping operation costs (including warehousing costs), carrier and other operating costs, cost of goods sold, collection fees, sales taxes, funding costs related to our fintech business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization." (Filing)

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Analysis

The company reported an increase in taxes other than income taxes for the nine months ended September 30, 2025. This increase was partially influenced by a rise in tariffs and customs duties during the period. However, the primary factor contributing to the overall increase in these taxes was the expiration of the Biodiesel Blender Tax Credit. The specific monetary impact solely attributable to tariffs and customs duties was not quantified in the available information.

Sources

• "The increase for the nine months ended September 30, 2025, was also impacted by an increase in tariffs and customs duties." (Filing)

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Analysis

GSK's full-year guidance for 2025 incorporates tariffs that have been enacted thus far. This suggests that the company's current financial expectations already account for the impact of existing tariff conditions. The company has identified mitigation options to address the potential financial impact of these tariffs.

GSK is monitoring developments regarding tariffs, including the US Administration's investigation and an indicated potential European tariffs impact of 15%. This indicates an awareness of future tariff-related risks and a preparedness to implement strategies to manage them.

Sources

• "Our full-year guidance is inclusive of tariffs enacted thus far and indicated potential European tariffs impact of 15%." (Press release)

• "We are positioned to respond to the potential financial impact of tariffs, with mitigation options identified, and looking beyond, we remain very confident in our medium and longer-term outlooks to 2026 and 2031." (Julie Brown, Analyst, GSK)

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Analysis

The company identified tariffs and related uncertainty as one of the key factors that were not anticipated when initially providing 2025 guidance. These factors, alongside material destocking in the U.S. and a heat wave in Europe, contributed to the need to update the full-year outlook. The company is actively monitoring proposed and enacted tariffs, including retaliatory measures, as these are expected to adversely affect revenue and cost of goods sold.

Should currently delayed tariff provisions be implemented as originally proposed, or if new tariff actions are introduced, the financial impacts on business operations and performance could be significant. The company notes that additional protectionist trade measures could lead to increased costs, higher pricing pressures, disruptions in consumer spending patterns, and adverse effects on market stability and consumer confidence. The current outlook for 2025 does not incorporate any potential changes to tariffs under the United States-Mexico-Canada Agreement (USMCA).

Although most products and materials imported from Mexico and Canada currently comply with USMCA terms and are exempt from tariffs, the company cautions that the trade environment is rapidly evolving, and this exemption is not assured. The company does not provide specific mitigating strategies against tariffs, beyond general monitoring and evaluation of their impacts.

Sources

• "The three main ones are the tariffs and related uncertainty affecting the overall consumer confidence." (Luca Zaramella)

• "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. We are evaluating the potential impact of these developments as well as our ability to mitigate the impact, as they are expected to adversely impact our revenue and cost of goods sold." (Filing)

• "The implementation of additional protectionist trade measures, and any further retaliatory actions taken in response, could result in increased costs and pricing pressures, disrupt consumer spending patterns, and impact market stability and consumer confidence, any or all of which could adversely affect our operating results." (Filing)

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Analysis

The company recognizes digital services taxes (DSTs) and similar taxes imposed by various taxing authorities, particularly in the European Union, which target revenues from digital advertisements or the use of online platforms. These taxes are recorded within "Sales and other expenses" in the Unaudited Consolidated Statements of Operations. The rates for these taxes range from 1.5% to 10% of revenues deemed generated in the respective jurisdictions.

For the nine months ended September 30, 2025, the company observed a positive impact from lower digital services taxes and other similar taxes. This reduction contributed to a year-over-year decrease in "Sales and other expenses" as a percentage of total revenues. Specifically, the prior-year period (nine months ended September 30, 2024) included an accrual of $17 million related to Canadian digital services taxes for the years 2022 and 2023, which was enacted in June 2024 with retrospective effect. The absence of this specific prior-period accrual in the current nine-month period contributed to the lower overall digital services taxes.

Looking forward, the company acknowledges ongoing considerations by jurisdictions, especially in the EU, regarding the adoption of new or revised digital services taxes. While these potential taxes represent an ongoing operational factor, the company has not provided specific quantified guidance on their expected future financial impact.

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)

• "We record the applicable digital services taxes in 'Sales and other expenses' in the Unaudited Consolidated Statements of Operations." (Filing)

• "Sales and other expenses as a percentage of total revenues decreased year-over-year for the nine months ended September 30, 2025 due to efficiencies in third-party customer service costs, lower digital services taxes and other similar taxes, as well as lower provisions for expected credit losses, partially offset by the impact of increased merchant transactions, which grew faster than total revenue." (Filing)

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Analysis

The company's third quarter 2025 financial performance was influenced by the full implementation of its trade surcharge, which contributed to an acceleration in pricing. Pricing increased to 3% in the third quarter of 2025, up from 2% in the prior quarter, partly driven by this surcharge. This reflects a strategic response to evolving international trade policies.

The company manages the dynamic international trade environment through a "local-for-local" production model. This model, combined with the trade surcharge, helps mitigate potential impacts on costs and demand.

While the trade surcharge positively impacted pricing, the company's objective for long-term value pricing remains in the 2% to 3% range. Future pricing strategies will continue to consider developments in tariffs and international trade dynamics, particularly those involving China.

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)

• "Pricing accelerated to 3% this quarter, driven by the full implementation of our trade surcharge and continued value pricing that's working really well." (Christophe Beck, earnings call)

• "You're right, on top of it, the tariff surcharge or trade surcharge, as we called it, is helping as well. That's why I feel that the 2%-3% value price for the long run seems to be the sweet spot for our company." (Christophe Beck, earnings call)

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Analysis

On April 2, 2025, new tariffs were announced by the United States government, with retaliatory counter-tariffs from other countries. These tariffs became effective on August 1, 2025, impacting the third quarter of 2025. The company stated it was positioned to minimize the effects due to its manufacturing strategy of producing products in the markets where they are sold. The company also anticipated recovering increased tariff costs through price adjustments.

In the third quarter of 2025, the company implemented pricing and supply chain actions to address the tariff-related cost increases. These mitigating efforts exceeded the tariff costs, resulting in a positive impact on both EPS and margins for the quarter. The company's management stated that the price/cost impact, reflecting these actions, was positive from both an earnings and margin perspective.

Despite the successful mitigation of direct costs, current tariff policies introduced additional uncertainty that could negatively affect overall customer demand. The company noted a potential slowdown in demand orders in the second quarter of 2025, potentially due to tariff uncertainty. However, management considers the direct tariff impact largely managed from both a cost and demand standpoint.

Sources

• "On April 2, 2025, the United States government announced additional tariffs on goods imported to the U.S. from numerous countries. In response, certain countries retaliated with additional counter-tariffs or are working to negotiate with the U.S government regarding tariffs. Tariffs on goods from many countries became effective on August 1, 2025. The Company believes it is well positioned to minimize the impact of these tariffs because its businesses generally manufacture products in the markets where they are sold and the Company expects to recover the increased cost of tariffs through price increases." (Filing)

• "Furthermore, our pricing and supply chain actions more than covered tariff costs and positively impacted both EPS and margins in Q3." (Company - CEO)

• "I think the impact on demand is probably something we talked about also on the last call, that it may have led to a little bit of a demand orders being frozen back in the April kind of Q2 timeframe. There's probably a little bit of overhang still from that." (Company - CEO)

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Analysis

Tariffs and trade policies serve as external factors that increase demand for Dassault Systèmes' artificial intelligence solutions, such as Aura. This AI-powered tool assists industries in managing related supply chain issues and adapting to new trade policies. This capability transforms the complexity introduced by tariffs into a business opportunity for the company.

Furthermore, the geopolitical environment, including potential tariff conflicts, can lead to increased regulatory complexity. Dassault Systèmes' solutions, particularly those involving model-based system engineering, are designed to manage such intricate compliance requirements. This increased need for complexity management can drive further adoption of the company's platforms.

The company also recognizes a general risk that stricter export compliance rules or the introduction of new customs barriers and controls on the exchange of goods and services could negatively affect its business. This includes potential impacts on revenue, net earnings, and cash flows. While this remains a potential headwind, specific financial impacts were not quantified.

Sources

• "Aura, in this case, is not only anticipating but reacting. She anticipated the turnaround, the uncertainty. She tried to manage with data-driven insights the consequences. This is important because for many industries, the margin is at stake." (Pascal Daloz, CEO)

• "One of the answers to the tariff war is to put more regulations. That's the way to protect, if you want, certain markets. The flip side of this, if you are an industrial company, you have to manage with this complexity." (Pascal Daloz, CEO)

• "The political, economic and monetary situation in certain geographic regions where Dassault Systèmes operates could become more volatile and negatively affect Dassault Systèmes’ business, and in particular its revenue, for example, due to stricter export compliance rules or the introduction of new customs barriers or controls on the exchange of goods and services;" (Press Release)

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Analysis

O'Reilly Automotive experienced significant acquisition cost pressure from tariffs during the third quarter of 2025. In response, the company made appropriate adjustments to its selling prices. This pricing strategy resulted in a contribution to same-SKU inflation of just over 4% in the third quarter.

These tariff-driven price adjustments led to increases in average ticket values for both professional service provider and do-it-yourself customers. The company's supply chain teams managed the evolving tariff environment through prudent supply chain management and distribution operating efficiencies. This effort aimed to offset the gross margin headwind resulting from faster growth in the professional service provider segment, which typically yields a lower gross margin percentage compared to do-it-yourself sales.

Management indicated that the majority of the cost impacts from currently effective tariffs have already been reflected. The company's guidance for sales and gross margin does not anticipate substantial new impacts from tariffs beyond what is already incorporated into current product acquisition costs. The company maintains its preparedness to navigate any potential future acquisition cost increases that may arise from new tariff provisions.

The company employs supplier diversification as a strategy to manage tariff-related risks. Its exposure to China-sourced products is in the mid-20s percentage and is decreasing. The company also multi-sources products from various other countries, including Vietnam, Thailand, India, Mexico, and South American nations, where similar tariff rates may apply. The company asserts that its pricing adjustments within the industry have been rational and competitive.

Sources

• "As we've anticipated coming into the third quarter, we saw a significant ramp in tariff-driven acquisition cost increases and made appropriate adjustments to selling prices." (Brad Beckham (CEO))

• "The contribution to same-skew inflation during the third quarter, which was felt evenly on both sides of the business, was just over 4%." (Brad Beckham (CEO))

• "As Brad mentioned earlier, we have now seen the biggest impacts from the current tariff environment, and our guidance for sales and gross margin does not contemplate substantial impacts from further tariffs beyond what is reflected in our product acquisition cost today." (Brent Kirby (President))

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Analysis

Boston Scientific reported that increased levels of tariffs partially offset improvements in gross profit margin during the third quarter of 2025. Similarly, for the first nine months of 2025, increased tariffs were noted as a factor impacting gross profit margin, alongside other period expenses.

The company anticipates incurring incremental costs due to the existing tariff schedule on U.S. imports and China's tariffs on U.S.-manufactured products. For the full year 2025, Boston Scientific expects an approximate $100 million tariff headwind. The company continues to monitor the situation and explore mitigation opportunities, but there is no guarantee these efforts will fully offset the tariff impacts. Looking ahead to 2026, the annualization of tariffs is expected to present a further headwind to gross margin.

Sources

• "We continue to anticipate incurring incremental costs under the current schedule of tariffs on U.S. imports announced by the U.S. government, as well as the subsequent increase in tariffs introduced by China on U.S. manufactured products." (Filing)

• "In the third quarter of 2025, the primary factors that impacted gross profit margin were increased sales of higher margin products, partially offset by increased levels of tariffs and other period expenses." (Filing)

• "As a result of our Q3 performance, we now anticipate full-year adjusted gross margin to slightly improve versus 2024, inclusive of an approximate $100mn tariff headwind for the full year, unchanged versus previous expectations." (Jon Monson, EVP and CFO)

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Analysis

Tariffs negatively impacted 3M's operating margins and earnings per share in the third quarter of 2025. Gross tariff and foreign currency impacts partially offset benefits from growth and productivity for both GAAP and adjusted operating margins and EPS. Increases in the cost of sales for the third quarter and first nine months of 2025 were primarily due to foreign currency impacts, tariffs, and the exit of manufactured PFAS products, partially offset by procurement and logistics savings.

To mitigate the impact, 3M implemented pricing actions. The company generated an incremental 20 basis points of price specifically to cover a portion of the tariffs.

Looking ahead, the company anticipates continued tariff impacts. However, it plans to leverage productivity improvements across its supply chain and general and administrative expenses to more than offset these and other factors, including growth investments and stranded costs, to drive margin expansion in 2026.

Sources

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

• "The incremental 20 basis points is to cover a piece of the tariffs. Keep in mind the net tariff impact for the company is around $0.1. Gross is $0.2." (William Brown, Company - CEO)

• "Operating income grew by approximately $175 million in constant currency, including an approximately $325 million benefit from volume growth, broad-based productivity across supply chain and G&A, and lower restructuring costs, partially offset by about $50 million of growth investments as planned and $100 million from tariff impact and stranded costs." (Anurag Maheshwari, Company - Other Officer)

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Analysis

Nestlé's financial guidance for the full year 2025 incorporates the impact of tariffs. Specifically, the UTOP margin expectation of at or above 16% includes tariffs currently in place. This also accounts for higher tariffs implemented in Switzerland following the first half of the year. The company's guidance reflects these tariff conditions without providing specific financial quantification of their isolated impact.

Sources

• "The UTOP margin is still expected to be at or above 16% as we invest for growth. And this assumes tariffs currently in place today, including the higher tariffs in Switzerland that came in after the half year." (Anna Manz)

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Analysis

JD Sports Fashion Plc reports that US tariffs have the potential to affect its business through direct sourcing, brand partners, and broader macroeconomic impacts on consumer sentiment. The company's direct exposure to tariffs, which includes its own brand and licensed products as well as goods not for resale, is estimated to be less than $10M on an annualized basis. The company has implemented mitigating strategies, such as diversifying its sourcing base, which it believes makes the direct impact not material.

Indirectly, the company notes that its brand partners, many of whom source from Southeast Asia, are taking proactive steps to mitigate cost pressures and maintain competitive pricing. Where retail price increases have occurred due to tariffs, they have been targeted, with minimal adverse customer reaction to date.

For the current financial year (FY2026), JD Sports anticipates a limited financial impact from US tariffs. This is partly attributed to inventory purchased before the implementation of tariffs. However, the company acknowledges ongoing uncertainty regarding broader tariff impacts and US consumer sentiment beyond FY2026, with a more detailed assessment for future years pending.

Sources

• "We continue to monitor the potential impact of US tariffs. However, based on current assessments, we anticipate the financial impact from US tariff exposure in the current financial year to be limited." (Régis Schultz, CEO & Director)

• "The direct exposure represents less than 10% of our sales in the US, and we have already taken effective steps to diversify sourcing. As a result, we do not consider the direct impact of tariffs on JD to be material, estimated at less than $10mn on an annualized basis." (Dominic Platt, CFO & Director)

• "Based on what we've seen to date, we therefore anticipate limited financial impact from U.S. tariffs in the current financial year. This is supported in part by inventory purchase prior to the implementation of tariffs. Looking beyond FY2026, uncertainty remains over broader tariff as well as over U.S. consumer sentiment, as you might expect." (Dominic Platt, CFO & Director)

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Analysis

The company reported a positive impact on its International Online business due to lower duty costs. This improvement in duty costs contributed to an increase in the segment's margin during the period.

The reduction in duty costs was attributed to enhanced internal processes, specifically the company's improved effectiveness in calculating the appropriate duty amounts and reducing associated administrative expenses. This indicates an operational efficiency gain rather than a change in tariff or duty rates themselves.

Sources

• "Underlying margin on NEXT goods up 0.2, and lower duty costs contributing 0.2x to margin. That's not because duties have come down. It's because we've become more effective at working out exactly what duty we should be paying and reducing admin costs." (Simon Wolfson (CEO))

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Analysis

Cisco acknowledges operating in an environment complex with tariffs and trade policy. The company indicated an exposure to new and proposed tariffs and other trade policies, noting the extent of this exposure is uncertain but could be significant if not mitigated.

For the fourth quarter of fiscal 2025, the total gross margin included a small impact from tariffs. This impact was reported as slightly favorable compared to the company's internal estimate.

For fiscal year 2026 guidance, Cisco assumes current tariffs and exemptions will remain in place. These assumptions include a 30% tariff for China, partially offset by an exemption for semiconductors and certain electronic components. Mexico is assumed at a 25% tariff, and Canada at 35% for components and products not eligible for USMCA exemptions. Other countries are assumed to revert to specific reciprocal rates, largely offset by exemptions for semiconductors and certain electronic components. Additionally, a small impact from tariffs on copper, steel, and aluminum, and retaliatory tariffs are included in the guidance.

To address the impact of tariffs, Cisco plans to continue leveraging its supply chain team for mitigation. The company also states that the flexibility and agility built into its operations, along with the size and scale of its supply chain, provide advantages in supporting customers globally.

Sources

• "Additionally, while we are exposed to new and proposed tariffs and other trade policies, the extent of such exposure is uncertain but could be significant if the exposure remains and we are unable to mitigate it." (Filing)

• "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))

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

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Analysis

During the first half of 2025, Glencore experienced economic uncertainty influenced by geopolitics and tariffs. Despite this environment, the company reported a pleasing financial result.

The marketing business, while operating in conditions affected by U.S. tariff policy uncertainty, maintained a solid performance. Management indicated that tariff-related

Sources

• "We all know this year it started off with weaker commodity markets, some economic uncertainty around geopolitics, around tariffs, and we've seen, despite that, a very pleasing financial result for Glencore." (Gary Nagle, CEO)

• "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. It would reflect the fact that there's been an unwinding of that trade." (Steven Kalmin, CFO)

• "Along those lines, even the U.S. tariffs across the commodities can create these dislocations. We now have a bit more certainty around the tariffs. Although 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." (Gary Nagle, CEO)

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Analysis

U.S. government export controls on AMD Instinct MI308 Data Center GPU products negatively impacted the company's financial performance in the second quarter of 2025. These restrictions resulted in approximately $800 million of inventory and related charges. Consequently, the gross margin decreased to 40% on a GAAP basis and 43% on a non-GAAP basis. The Data Center segment's operating income shifted to a $155 million loss from a $743 million income in the prior year period, primarily due to these charges. Diluted earnings per share were also reduced by approximately $0.43 due to these charges.

The company is actively working with the U.S. Department of Commerce to obtain license applications for exporting MI308 products to China. Management anticipates resuming shipments of MI308 once these licenses are approved. The third-quarter 2025 revenue guidance does not incorporate any revenue from MI308 shipments to China, reflecting the ongoing review process for these licenses.

Most of the inventory affected by the export controls was in work-in-process rather than finished goods. If licenses are granted, it will take a few quarters to convert this work-in-process inventory into revenue. The company supports the administration's focus on ensuring U.S. technology is utilized globally and views China as an important market for its MI308 products.

Sources

• "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)

• "Excluding the $800mn inventory write-down related to data center AI export controls, gross margin was 54%, marking our sixth consecutive quarter of year-over-year margin expansion led by a richer product mix." (Lisa Su (CEO and Chair))

• "Our current outlook does not include any revenue from AMD Instinct MI-308 shipments to China, as our license applications are currently under review by the U.S. government." (Jean Hu (CFO, EVP, and Treasurer))

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Analysis

The company recognized the pharmaceutical industry's exposure to a complex global trade environment and evolving tariff policies. Management has implemented strategies to mitigate the short-term impact of tariffs on its business.

Pfizer is developing plans to address the potential long-term implications of tariffs on its operations. The full-year 2025 adjusted diluted EPS guidance incorporates the impact of currently imposed tariffs from China, Canada, and Mexico. This guidance also accounts for potential price changes indicated by a letter from President Trump dated July 31, 2025.

Despite absorbing the impact of these tariffs, the company increased its full-year 2025 adjusted diluted EPS guidance. This revision was driven by strong operational performance, favorable foreign exchange rates, and ongoing cost improvement initiatives. Discussions with government officials regarding trade and tariff policies are active; specific details were not disclosed due to the nature of these ongoing negotiations.

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. And we continue to evaluate opportunities and develop plans which will help mitigate the potential long term impact of tariffs on our business and our operations. 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."

• "Yeah, I would just say that the underlying strength of our business is allowing us to raise our guidance in the back half of the year. And with, to Albert's point, with the work that's going on across the industry, we're able to come up with a range of scenarios, and we believe that those range of scenarios associated with potential timing of all of this would allow us to absorb any impact this year based, again, on the underlying strength of our business today and performance today."

• "risks and uncertainties related to issued or future executive orders or other new, or changes in, laws, regulations or policy regarding tariffs or other trade policy; the risk and impact of tariffs on our business, which is subject to a number of factors including, but not limited to, restrictions on trade, the effective date and duration of such tariffs, countries included in the scope of tariffs, changes to amounts of tariffs, and potential retaliatory tariffs or other retaliatory actions imposed by other countries."

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Analysis

Rio Tinto experienced varied impacts from tariffs during the first half of 2025. In the aluminum business, the company lost a 10% Section 232 tariff exemption for Canadian aluminum starting March 2025. This resulted in a total tariff cost of $321M. The US Midwest premium partially offset this, but did not fully compensate for the 50% tariff by the end of Q2 2025. Despite these challenges, the company's commercial team proactively managed the changing tariff environment, enabling aluminum unit revenue to increase by 14%, or approximately 6% when excluding the impact of tariffs.

Conversely, new copper tariffs, specifically a 50% premium expected to kick in, are viewed as an opportunity for the Kennecott smelter in the US. Historically, this smelter has not been highly profitable, but it is expected to become much more profitable due to these tariffs. Market concerns regarding Section 232 tariffs on copper contributed to the Chicago Mercantile Exchange (CME) cash price trading at a premium of $1,016 per tonne over the London Metal Exchange (LME) average during H1 2025, leading to cathode rerouting into the US.

Considering both the negative impact on aluminum and the positive opportunity for copper, the overall impact of tariffs on the company's financials for the period is stated as not very significant. The company has demonstrated its ability to manage the aluminum situation and pass on costs to the final consumer.

Sources

• "Our commercial team were able to proactively flex the business to optimize our position in the wake of the changing tariff environment. Today, the Midwest premium is substantially offsetting the tariff. The main impact on our financials is the cancellation of the 10% Section 232 exemption Canada previously enjoyed." (Peter Cunningham)

• "You are right. Copper tariffs represent an opportunity for us. Because, for reasons I do not entirely know from before my time, we have actually had a smelter that we have not made a lot of money on for a long period of time at Kennecott. It is the U.S. biggest and only one out of two. As I said, we barely have made money, but it should become much more profitable from the tariffs immediately. That is one positive thing." (Jakob Stausholm)

• "The aluminum unit price or unit revenue is up 14%. But if you deduct the impact of tariffs, it's still up around 6%. So. How have we doubled the profitability in aluminum? Great operational experience, good pricing in bauxite, and actually retaining the margin in the aluminum business as well. Pretty good. Now, that doesn't guarantee you that there couldn't come up something tomorrow. I cannot promise you anything. But the reality is, when we started the year, we had absolutely no experience. We have now learned a lot over the first six months and conclude that we can actually manage the aluminum situation. And if you then take the copper that's positive and aluminum is slightly negative, then overall, the impact is actually not very significant." (Jakob Stausholm)

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Analysis

The threat of tariffs on US copper imports influenced the global copper market during the second half of FY2025. This resulted in US COMEX prices trading at a significant premium to the London Metal Exchange (LME), which incentivized the shipment of available copper cathode to the United States. This market dynamic contributed to a decline in copper inventories elsewhere, indirectly helping to lift LME copper prices.

Following the period, in July 2025, the US announced that copper cathode would be excluded from tariffs. This decision largely closed the price differential that had been observed between COMEX and LME.

Broader business operations are subject to risks from the imposition of tariffs across various jurisdictions and other international trade developments. These factors carry the potential to adversely affect costs, investments, demand for, and prices of the company's products, as well as those of its customers.

New tariffs are expected to moderate China's economic growth in the second half of the year. The market anticipates ongoing risks from future tariffs, which could continue to influence global trade flows, particularly for commodities like iron ore and steel.

Sources

• "Copper was heavily influenced by the threat of tariffs on US copper imports for much of the second half of FY2025. US prices on COMEX traded at a significant premium to the London Metal Exchange (LME), which incentivised much of the world’s available cathode to be shipped to the United States. Declining copper inventories elsewhere helped lift LME copper prices above US$10,000/t (US$4.54/lb) at the end of FY2025. Average prices for the second half of FY2025 were around US$9,400/t (US4.28/lb), up against the prior half, as well as year-on-year. 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, p. 72)

• "The imposition of tariffs across various jurisdictions in CY2025 and other developments in international trade may also adversely impact our business. As a supplier of iron ore, copper, coal and other commodities to end users globally, particularly in China, we are subject to additional risk from the imposition of duties, tariffs, import and export controls and other trade barriers impacting our products and the products our customers produce. The overall impact of these developments is difficult to predict, but could adversely impact our costs, our investments, the demand for and price of our products and the products of our customers." (BHP Annual Report 2025, p. 68)

• "China's economic growth is expected to remain resilient, even as the pace moderates slightly in the second half as the boost from pulled-forward exports unwinds and new tariffs take effect." (Mike Henry, CEO, Earnings Call)

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