Corporate Tariff Communications
As trade policy uncertainty continues to dominate headlines, the frequency and intensity of analyst inquiries regarding tariffs is increasing. All public companies, regardless of size, should anticipate more direct questions about tariffs at upcoming industry conferences, investor meetings, and earnings.
With this in mind, we analyzed transcripts from recent sell-side conferences and earnings calls, as well as press releases, to glean insights into emerging communications trends in the corporate space. In addition to our findings, we’re also including selected strategic recommendations.
We hope you find this installment of our Thought Leadership series timely, insightful, and actionable. As an investor communication expert, we are here to serve as a sounding board and strategist in helping you navigate this fluid and dynamic situation to effectively communicate with the financial community globally, manage risk, and build credibility. Please do not hesitate to reach out.
Recent Investor Communication on Potential Tariff Impacts and Mitigation Efforts
Analyst Questions
Analyst questions center around geographic exposure, supplier diversification efforts and flexibility of existing chains, cost absorption and future mitigation strategies, customer sentiment and any indications of pull-forward demand, USMCA compliance, and impacts on guidance assumptions.
Selected Analyst Questions
- “To what extent have you embedded the impact of tariffs in your FY 2025 guide, and maybe remind us of your manufacturing and sourcing footprint and effected regions, how much capacity do you have to flex in the U.S.? How much of your Mexican capacity is subject to USMCA.”
- “Obviously, you’re going to get this question, but maybe size your exposure to announced tariffs. Is there a tariff impact embedded in 2025 guide? How much of it is covered by USMCA and what’s the action plan?”
- “You’ve already quantified the tariff risk, $50M from China, $35M from Mexico. Are you worried about potential indirect impact from tariffs? When we go into the meetings, what investors bring up, what managements bring up, it’s really the uncertainty potentially killing the animal spirits. That seems to be a broader concern because every company seems to have quantified what’s happening. But just maybe a) the impact; b) maybe explain what percent of your production falls under USMCA? And then…what are the conversations with the customers like?”
- “Your supply chain has been a strategic advantage. Could you take a moment to help us understand how a nimbler supply chain allows you to navigate the current tariff situation? And how exactly do you plan to mitigate tariffs?”
- “I think it wouldn’t be a 2025 conference without mentioning the word tariffs, but I don’t imagine this is a big deal to you. Does it affect…pricing, or is there any real impact?”
Executive Commentary
As for company communications, most continue to reiterate the fluidity of the situation, refraining from providing specificity or quantitative information. Thus far, executive commentary centers on:
Uncertainty and Fluidity
- Executives emphasize the unpredictability of the tariff environment, with frequent changes in policies making long-term planning difficult; some note delaying investments until further clarity is provided
- Many companies are engaging in scenario planning but acknowledge that they can only react as new developments unfold (more on scenario analysis in a moment)
Supply Chain Diversification and Resiliency
- Many point to progress with reshoring or diversifying supply chains, having already shifted production away from China and increased regional manufacturing (e.g., “in the market for the market”), underscoring supply chain flexibility as some level of offset to tariff-induced volatility
- Executives note, when applicable, the majority of imports are USMCA compliant
Pricing and Cost Pass-Through
- Most companies expect to pass additional tariff costs to customers through pricing actions, noting if those conversations have already occurred and emphasizing margin protection
- Some note contractual pass-through mechanisms already in place, while others highlight pricing power as a lever to offset rising input costs
- Notably, they underscore uncertainty still remains regarding potential demand impacts, shifts in consumer behavior, and unknown fallout from retaliatory tariffs
Selected Executive Commentary
- “We have built a lot of manufacturing and acquired a lot of manufacturing in the U.S. over the past couple of years because of the potential for some of these things to happen but there still will be an impact both from the initial tariffs as well as in terms of what happens with any sort of retaliatory tariffs, as we look at impact with Mexico or Canada. So, there will be an impact. We’re working on mitigation strategies. When we have greater clarity on what those numbers will be, we’ll get back to you with more specificity.” Colgate-Palmolive, $72.9B, Consumer Staples
- “We spent a lot of time on tariffs in the last couple of months. And now we’ve prepared ourselves as best we can. And then obviously things have changed quite rapidly, sometimes from day to day. And so, it’s difficult for me to give you a clear and coherent answer on tariffs, because I don’t know.The one thing that I feel certain about is that whatever they turn out to be, we will address them in the normal course of doing business, which we’ve always done.” Howmet Aerospace, $53.1B, Industrials
- “Currently what we import into the U.S. of finished goods from Mexico is about $350M. That’s both from our own manufacturing facilities as well as from other suppliers. And from Canada it’s about $100M. And from China, it’s about $100M. We are in a position that with the current tariff environment in the way that it’s been enacted, our expectation is that if we’re incurring the costs, we’re going to recover it. And when it’s enacted immediately, which is what we’ve seen in a lot of cases, then our expectation is that really the only lever we have to pull would be price.” Rockwell Automation, $29.4B, Industrials
- “The big risk for us is the EU.If we look at North American revenues in 2024, we were just around $2.8B in total revenues. 35% of the $2.8B was imported into the country. Of the $2.8B, 25% came from Western Europe. So, 25% of that North American revenue would be vulnerable to any sort of EU tariff. That would be one that would have a more meaningful effect on us and we’re working through different alternatives.” AGCO, $7.1B, Industrials
- “What we’ve been doing over the last several years is diversifying our manufacturing footprint, optimizing our supply chain. And today, we source product from seven different countries. And in 2025, less than 40% of our total production is expected to come from China. And that compares to an industry average of around 80%.And with half of our business in the U.S., our exposure is about 20% on a total production basis. And with respect to Canada and Mexico, we source nothing from Canada today and less than 10% of our product from Mexico. We also are looking at potential pricing actions to mitigate the impact of tariffs because it is our intent to protect our gross margins from tariffs in terms of profitability levels, and we have plans in place to do that. And as we look at our guidance for 2025, we have taken into account what we know of today.” Mattel, $6.7B, Consumer Discretionary
- “We have lots of novels on what we could do and might do, but we’re not going to make those investments until we understand what’s happening, because we want make sure we understand the ROI. We want to make sure the investment, the payback times. So, all that’s out there. So, we think we could substantially mitigate the impact of tariffs in the short- to mid-term just from our price activity and some of those other short-term things we’re doing. But long-term, there would be some investments required to really optimize the footprint, but that will be dependent upon what ultimately happens. And if anybody has any advice of what they think might happen, I’ve got a pool that we’re running, and we’ll see. But I think everybody is aware of the uncertainty that it causes and trying to operate in that environment.” Resideo Technologies, $2.7B, Industrials
For your convenience, we have provided a more in-depth sampling of recent commentary from the companies above and more following The Big So What®.
Below, we outline our latest recommendations on corporate tariff communications:
Leverage Transparency as a Credibility-enhancing Enabler, and Consider Offering Scenario Analysis
In challenging times, do not make calls on the future; rather, offer scenario analyses that outline potential future developments and how the company is positioned for various outcomes. For example, this can come in the form of revenue assumptions as a result of anticipated moves in customer demand, or a shift in supply chain strategies and cost assumptions based on renewed onshoring priorities.
Develop a [Brief] Tariff Positioning Statement for Use in Prepared Remarks; Avoid Being Overly Prescriptive at This Point, and State Clearly When Impacts are Negligible
Develop bullets to position your message, leveraging ‘Trump 1.0’ tactics as the basis. These demonstrate how previously implemented mitigation strategies have successfully minimized risks while the historical context reassures investors about your company’s proactive stance and lessons learned. Further, highlight investments and adjustments made to your supply chain to enhance flexibility and reduce dependency on vulnerable areas (e.g., China, Canada, Mexico, and now the EU). If steps have already been taken, clearly articulate these changes and their benefits. Finally, remember, transparency is key, and what investors don’t know they will assume. If you have minimal or no exposure, make this explicitly clear to prevent misunderstandings. Remember, if you don’t know something, it’s always okay (and, in fact, best practice) to let the analyst/investor know that you will get back to them with an appropriate answer in a timely manner.
Be Clear about Guidance Assumptions and the Inclusion/Exclusion of Tariffs in Upcoming Conversations; If Material, Be Prepared for a Thoughtful Update to the Street
As the U.S. tariff posture becomes clearer over the next several weeks and months, run the impacts to guidance and assumptions. If the resulting actual impact becomes material, consider whether an updated outlook needs to be communicated ahead of the next earnings period, potentially through a carefully crafted press release that can be referenced during conversations. Remember, the goal is to be transparent, but not overly communicative — any disclosures should be based on on-the-ground realities that are resulting in material impacts to cost assumptions and need not expose metrics that have historically remained undisclosed, such as proprietary cost structures, internal performance benchmarks, or strategic sourcing details, depending on your company’s posture and IP.
Avoid Political Discussions and Name Dropping
Despite analyst questions to the contrary, avoid political commentary in Q&A, and steer clear of discussing specific individuals in the U.S. Administration. Keep communications tight and accurate — the last thing you want is to bring unwanted attention to the company, or to be caught in the crosshairs of some political debate or controversy. Focus solely on the economic and operational impacts of tariffs on your business, steering conversations back to factual and direct responses that reflect your company’s strategic planning and resilience.
Best-in-Class Communication Examples
Trump 1.0
October 22, 2019, Q3’19 Earnings Call — Polaris ($2.5B, Consumer Cyclical, Recreational Vehicles)
“Our approach to tariffs has always involved equal aggressive pursuit of two approaches: mitigation and relief. For the former, we use our talented sourcing and logistics teams to prudently move parts out of China, negotiate with suppliers to limit impact, manage the country of origin to our favor, and implement about 60 other mitigation initiatives. These efforts have been quite successful, and despite escalated tariff rates, allowing us to again reduce the expected full-year impact by $5M. Our relief approach is focused on educating and informing the Administration about the significant and disparate impact that Polaris and our employees suffer from 301 tariffs because of our heavy investment in U.S. manufacturing. This message has always been well-received, and we clearly see that the Administration is committed to righting the trade imbalance with China and protecting American workers. Their support for Polaris’ investment in America has culminated in assurance that our 301 exclusion requests are being processed and strongly considered. This takes time, but we expect to see our relief request adjudicated in the near future.”
April 20, 2018, Q1’18 Earnings Call — Stanley Black & Decker ($13.2B, Industrials, Tools & Accessories)
Trump 2.0
February 19, 2025, Q4’24 Earnings Call — Stanley Black & Decker ($13.2B, Industrials, Tools & Accessories)
“Our approach to any tariff scenario will be to offset the impacts with a mix of supply chain and pricing action, which might lag the formalization of tariffs by two to three months, therefore limiting P&L headwinds in the near term and maintaining our long-term margin objectives. If the current addition of 10% tariffs on China remains in place, we would expect an annualized unmitigated impact of approximately $90M to $100M. Based on how we would react, this would result in a 2025 net impact of $10M to $20M, accounting for the time needed to deploy countermeasures. We expect the current situation to remain dynamic. We expect to await greater clarity before enacting any new measures beyond the work of accelerating U.S. COGS out of China, which was underway and was accelerated during the second half of 2024.”
March 19, 2025, Q4’24 Earnings Call — Williams-Sonoma ($20.6B, Consumer Discretionary, Specialty Retail)
December 11, 2024, Investor Conference Presentation — Lowe’s ($126.8B, Consumer Discretionary, Home Improvement Retail)
Of note, while we have not observed many companies issuing formal statements due to aforementioned fluidity and in anticipation of reciprocal tariffs on April 2nd, Regal Rexnord ($7.9B, Industrials, Specialty Industrial Machinery) issued a press release on Mar. 19 ahead of their participation at the Bank of America Global Industrials Conference in London, outlining plans to mitigate ~$60M of the estimated annual cost impact from tariffs. We will continue to monitor this trend.
Comprehensive Analyst and Executive Commentary
J.P. Morgan Industrials Conference March 11 – 13, 2025
ATI, Inc. ($7.5B, Industrials, Metal Fabrication)
Question: “And so I’m sure you probably, like all of us, have spent more time than you would like learning about tariffs over the past few weeks and months. But maybe if you can share with us how you see the impact of tariffs on ATI, both what we know so far and then potential?”
Answer: “Sure. So tariffs, the headline of the day or the minute, I don’t know what it is. But, yeah, we of course, just like every business, have unpacked our tariff exposures. It’s not an area that we’ve been waiting to work on. Our legal team has been really proactive for years in making sure that our contracts have pass-through mechanisms that are built into them so that, if a tariff does hit, we’re able to push that through. And so we’ve significantly de-risked our position – in that case, titanium contracts would be a great example.
Material pass-through on titanium contracts are not, I would say, an industry standard, but the majority of our contracts, more than 70% of them have an ability to pass this through. Same thing, though, with nickel. And with nickel, we have surcharge mechanisms that are kind of industry standard, and we also have some contractual mechanisms that safeguard us further.
In addition to all that, what I would say is we’ve been very good at diversifying our supply stream. And so I’ll give you an example. Back in 2022, when the invasion of Ukraine happened, at that moment, we were buying 95% of our nickel from Russia, and that was non-rotative nickel we were buying from Russia. And within months, we were able to largely take that to zero. We were able to diversify to multiple suppliers, and we were able to do it at a lower price. So I’m very confident that we have de-risked and that we can continue to de-risk. So here’s the punch line, I don’t expect a material effect from tariffs on my business.”
Avery Dennison ($14.2B, Materials, Containers & Packaging)
Question: “I think the first question that’s probably on people’s minds these days are tariffs in that there seem to be tariffs on the Canadians, on people from Mexico, on China. And Avery is a global manufacturing organization. How do you begin to think about some of these issues?”
Answer: “So, we’ve been doing a lot of work around understanding how tariffs may play out. And I say that with a caveat, I don’t think anybody has a clear view yet as to what the finality of policy will be. But as a business globally, because we’re denominated in most regions around the world, we make, buy and sell in country. So to that extent, tariffs don’t really apply to us.
There’s three vectors where we see some potential tariff impact, but it’s on the very small side of things for us. So one is, if we’re having to source materials from one country to another, that may be tariff bound. One of the experiences we had in 2023 when we had the supply chain crisis, the significant stocking and destocking that happened into – or sorry, 2023 into 2024, was a real focus from us on ensuring that we had supply chain resilience across a number of sources. So to that extent, if we do see certain countries or certain commodities being tariff-orientated, we have an ability to switch sourcing. And so we see a de minimis impact in that regard.
I think if you think about the two areas where there is likely to be some degree of impact is, firstly, in China, I’ll talk about that. China for us is about 15% to 17% of our revenue, of which half of which is bought, made and sold in China domestically for domestic China consumption. So it’s not subject to tariffs as we understand them at the moment.
The other half is actually resilient in our apparel business. We make a lot of tags, labels and packaging for the apparel industry that go into garments manufactured in China, which are then exported predominantly to the United States and Europe, roughly about half in each proportion. And we actually see, in that regard, tariffs and implication of tariffs to China to be an advantage for us. We’ve been – we’re the largest provider to the apparel industry around the world.
And we’ve been helping brands in both North America and Europe and retailers for many years move sourcing around the world. So they move from China to Bangladesh or from India to Honduras. We have footprint in each one of those regions. And when that typically happens, we tend to disproportionately benefit because we have the largest scale and footprint. And we’ve been doing that with our brands and retailers for many years. So in some ways, a higher tariff policy on China has an opportunity for us to help those brands move further their volume into one of the other sourcing countries.
The only area I see some direct potential impact is probably what we see overall is if tariffs become to such an endpoint, for example, apparel, that the price point for apparel goes up fairly dramatically in any end market, then you’re likely to see some degree of volume decline or consumption decline. It’s a discretionary purchase at the end of the day.
Now switching to the other side of the hemispheres in Mexico and in Canada. Most of our business in Mexico is again largely denominated, bought, sold and made on our materials business in Mexico. We have a very large and recently built Intelligent Labels facility in Mexico itself. We use that to service this hemisphere, both North and South. And knowing or thinking that there may be some tariff implication, we know that we have enough resilience in our network in other manufacturing facilities to move volume around.
So overall, I’d say, my bigger concern for us is not so much the direct impact of tariffs. I think we planned enough workaround scenarios, the strength of our business is doing that, so we can address them over time. But more likely, is there going to be a broader consumption impact in certain markets that may drive volumes? And at the end of the day, I think our business is very anchored in consumer staples across most of our business, largely non-durable consumer staples. They tend to be more resilient, but they can be, at times, impact if tariffs drive further inflationary pressure as well.”
Reliance ($15.0B, Materials, Steel)
Question: “I don’t want to spend too much time on tariffs, but what are potential impacts? Here we are sitting on the day when the Section 232 really went into effect, even if there’s been movement ahead of that? Maybe more importantly, what potential impacts do you see, if we were to see more blanket tariffs in terms of Canada, Mexico? You kind of said maybe you’re okay since you have footprints in both sides, but what does that look like? What could be the potential impacts to your business?”
Answer: “Yeah. So, not knowing exactly what it’s going to end up looking like, it’s kind of hard to answer. But previously, like in 2018 when Section 232 was enacted, that was good for the whole industry and Reliance. That lifted domestic pricing. The less imports coming in, give the domestic producers a little more pricing power.
At Reliance, we like higher metal prices. We buy on the spot, sell on the spot. We’re able to pass through the higher prices to our customers. And if we’re getting 30% of metal that’s $1,000 a ton, that’s better for us than 30% of metal that’s $700 a ton. So, higher prices would have been better for our earnings profile. We would anticipate that with less import, more tariffs, more domestic pricing power, it will be a positive impact on Reliance.
We buy over 95% of our metal from domestic producers. That’s been our model for many years. So, we believe we’re well-positioned with the domestic producers to be able to continue to procure the metal, to be able to support our customers. So, if the tariffs were too high, and they restricted business activity or trade flows, that could be a negative. We think that would probably be temporary and we would work through that. But sitting here today, prices should be higher, should be positive for Reliance’s earnings profile.”
Resideo Technologies ($2.7B, Industrials, Industrial Distribution)
Question: “So tariffs, the other hot topic, if you will, just could you walk through your exposure? I know it’s different for the two segments. And then also how you’re positioning yourself to mitigate potential impacts?”
Answer: “So if it’s a day that ends in ‘y’, the tariff conversation is going to change, right? So we’re trying to think about those things and how we’re going to operate. As you said, I think there are definitely different impacts on the two sides. I think we’ve said that about 50% of our manufacturing on the P&S side is performed in Mexico. So that’s – if you just take a 25% increase in tariffs, you could look at our COGS on the P&S side, you can do the math and see what an impact it would have, but it’s over a couple hundred million dollars. Everything else being equal just on the COGS piece. And then we have all the mitigation activities that we’ve been planning for and thinking about to offset that impact. That’s an annual impact, by the way, not an in year impact.
And who knows if that’s actually going to happen? And so in the short term, we’re doing things like positioning inventory, running the factories at a little bit different rate to…produce a little bit more inventory and position it.
So, I think there’s price, there’s inventory positioning, but we’re not making long-term investments right now, because ultimately, if the tariffs come into place and remain in place, and you think that’s long-term, you can make different decisions on how you optimize your manufacturing footprint.
So, we’ve got plans around that. We have lots of novels on what we could do and might do, but we’re not going to make those investments until we understand what’s happening, because we want make sure we understand the ROI. We want to make sure the investment, the payback times. So all that’s out there. So we think we could substantially mitigate the impact of tariffs in the short to mid-term just from our price activity and some of those other short-term things we’re doing.
But long-term, there would be some investments required to really optimize the footprint, but that will be dependent upon what ultimately happens. And if anybody has any advice of what they think might happen, I’ve got a pool that we’re running and we’ll see. But I think everybody is aware of the uncertainty that it causes and trying to operate in that environment.”
UBS Global Consumer & Retail Conference March 12 – 13, 2025
Colgate-Palmolive ($6.7B, Consumer Staples, Household Products)
Question: “Maybe pivoting tariffs, big topic today. It’s been a big topic for a few months now. But I know the company aims to have localized or regionalized manufacturing where possible. So I know this is a very fluid situation. I guess, maybe give us some perspective on how this all may impact Colgate.”
Answer:“Sure. So to your point, our supply chain tends to be more regional than global. We produce products that have liquid and transferring liquid over long distances that generally not efficient. So we have built – historically, we have built our supply chain regionally and to drive efficiency. I think one of the interesting lessons that came out of COVID was, we couldn’t just focus on efficiency. We also had to focus on flexibility.
So we have built more flexibility into our supply chain, and the best example of this is our one truly global category from a manufacturing standpoint is manual toothbrushes. And so during COVID, in the back half of 2021, when our capacity in China was kind of shut down, we realized, okay, in order to supply – in order to thrive in a more complicated supply chain world, we needed the ability to produce more products in more locations. So we have built more flexibility into our supply chain.
This also plays into our strategy in terms of dealing with tariffs, right? So over the last couple of years, we have focused on building a little more flexibility, sometimes at the expense of cost, which gives us some ability to mitigate the impact of tariffs. Now we won’t be able to fully mitigate that. As we’ve talked about, we do produce a meaningful amount of toothpaste for the U.S. in Mexico. We will work on mitigation strategies, whether that’s inventory related, whether that’s trying to shift some manufacturing in order to do that.
And look, we have built a lot of manufacturing and acquired a lot of manufacturing in the U.S. over the past couple of years because of the potential for some of these things happening but there still will be an impact both from the initial tariffs as well as in terms of what happens with any sort of retaliatory tariffs, as we look at impact with Mexico or Canada. So there will be an impact. We’re working on mitigation strategies, and we have – when we have greater clarity on what those numbers will be, we’ll get back to you with more specificity.”
Levi Strauss & Co ($6.3B, Consumer Discretionary, Apparel Manufacturing)
Question:“I want to ask you some topical stuff. I know people are interested. I want to ask you the tariff question. I guess what impact do you expect current and future tariffs have on the business?”
Answer: “Yeah. So first, let’s talk about our business and where we buy what from, right? So let’s put those facts in. So we cross-source from 25-odd different countries, primarily Asia, some North Africa. Very little is manufactured in the U.S. I mean, if you take the apparel sector, 98% of what is sold in the U.S. is manufactured outside the U.S. Beyond Yoga, which is an LA brand, that’s grown up in LA, has quite a bit of manufacturing in the U.S. and LA. But now, as we grow that, we’re taking that also overseas. So that’s fact number one.
And over the years, we have been able to cross-source from different countries. I mean, it’s not difficult to manufacture our product, right? You need to have our quality controls and you need to have the styles. But it’s not – I mean, there’s not a lot of fashion forward stuff that we have. So you can make those shifts over time. So China, for example, today that we’re importing into the U.S. from China is less than 1%. Mexico is about 5%. China used to be close to 15%, 16%. And so, over the years, it’s come down. And we have quantified the impact of, let’s say, the 25% tariffs in 2025 will be minimal. We’ll be able to withstand that from these two markets.
India has been in the news. We import very little from India right now. Most of the stuff in India is made for India. Most of the stuff in China is made for China, etc. So wherever we could do that, we’ve been able to localize.
And so, financially, that’s how we’re thinking about it from the company’s perspective, as an example. And where we need to take price, we will take price as long we have pricing power and it doesn’t hurt the consumer. So as an example, in December of last year, Mexico imposed tariffs on product that was imported into Mexico. And we’ve just taken pricing in Mexico to offset that. We have pricing power.”
Mattel ($6.7B, Consumer Discretionary, Leisure Products)
Question:“Your supply chain has been a strategic advantage. Could you take a moment maybe to help us understand how a more nimble supply chain allows you to navigate current tariff situation? And how exactly do you plan to mitigate tariffs?”
Answer: “What we’ve been doing over the last several years is diversifying our manufacturing footprint, optimizing our supply chain. And today, we source product from seven different countries. So, fairly diversified geographically. And in 2025, less than 40% of our total production is expected to come from China. And that compares to an industry average of around 80%. And with half of our business in the U.S., our exposure is about 20% on a total production basis. And with respect to Canada and Mexico, we source nothing from Canada today and less than 10% of our product from Mexico.
We also are looking at potential pricing actions to offset the impact – to mitigate the impact of tariffs because it is our intent to protect our gross margins from tariffs in terms of profitability levels, and we have plans in place to do that. As we look at our guidance for 2025, we have taken into account what we know of today.
…I should add that all this work that started six years ago to diversify our supply chain was not about China or tariffs. It was about a business judgment that we took in terms of diversifying and rebalancing our supply chain to make sure that we have a flexible, modular, agile model that can respond and adjust to changes in market conditions.
We believe it will serve us well during the potential disruption around tariffs or other things down the road. But it wasn’t about China or tariffs, it just having a resilient, flexible supply chain that can respond and adjust to changes in market conditions.”
ROTH 37th Annual Conference March 16 – 18, 2025
Calix Inc ($2.4B, Technology, Software – Infrastructure)
Question: “Okay. Maybe let’s move on to supply chain. Certainly, a little bit of a confusing environment out there these days. Tariffs one day, no tariffs the next. Can you take us through your exposure on that front and how you’re planning for supply chain in this environment?”
Answer: “Yeah, there’s two ways to look at tariffs, one from a supply chain perspective and one from a customer perspective. So, let’s take the supply chain. Right now, as you know, Canada, Mexico, and China are the countries that are being targeted. We don’t manufacture in Mexico or Canada, so that doesn’t cause us a problem. And back in 2018, we moved our manufacturing out of China. So, as we stand here today, we’re in pretty good shape as it relates to tariffs. It’s not a big impact to us.
For those countries that are looking at buying our products and having tariffs put on them in terms of reciprocal tariffs, what have you, there’s talks about, for example, Canadian customers looking for non-US-based entities to buy from. So, the good news about that is over – about 90% of our revenues comes from the United States. So, in both sides, whether you’re looking at customers retaliating, giving tariffs, or you look at our supply chain, it has a very minimal impact to our business.”
Camping World Holdings ($1.1B, Consumer Discretionary, Auto & Truck Dealerships)
Question:“And probably the big yell from the room, tariffs. I think at a recent conference, you said even on your last conference call, maybe 2% to 3% pricing impact. Does that include everything to date that’s happened, whether it’s China at 20%, Mexico, Canada, and steel tariffs?”
Answer: “Our ‘Used’ business traditionally thrives in an inflationary type environment. So, tariffs obviously would have that impact to the extent they’re more modest. When we think about the direct impact of tariffs as we know it today, about anywhere from $30M to $40M of exposure on direct COGS that would come from either China, Mexico or Canada on a base of about $4B of COGS. So, directly, it’s not too much for us.”
Celsius Holdings ($7.5B, Consumer Staples, Beverages)
Question:“I think it wouldn’t be a 2025 conference without mentioning the word tariffs, but I don’t imagine this is a big deal to you guys. Does it affect, let’s say, pricing, or is there any real impact?”
Answer: “We have a best-in-class supply chain. Paul Storey came over, Head of Global Ops over at Monster, a few years ago for us. We feel like we’ve mitigated a lot of the potential, call them tariffs, or any other exposures that could be flowing through. And I had it explained to me. I should have taken notes from our chief of supply chain when he went through aluminum and how it’s actually sourced out of Australia, flows into Canada. I mean sorry, it was above my pay grade. So I will just say this. We don’t anticipate it having a significant impact. If it has any impact at all, we feel like we’re really well-positioned right now.”
Universal Display ($7.3B, Technology, Electronic Components)
Question: “Maybe shifting to the macro for a minute and maybe start with tariffs. Last time around when we saw tariffs go into effect on China, there was a big pre-buying, I think, that occurred ahead of that cycle. Didn’t seem like that happened this time. Can you clarify if there was any pre-buying? And then maybe what tariffs in general are kind of representing in terms of the impact to you? I know it’s not direct in many cases, it’s going to be indirect through some of your OEMs. But what are you seeing out there? What are you anticipating?”
Answer: “So in terms of the buying patterns and the inventory levels, we haven’t seen anything out of the ordinary at our customers. It’s been fairly consistent. That said, I’ll say that consistency has also been a little bit haphazard in the sense that some customers of ours have had a little bit more variable and lumpy ordering patterns. And I think that continues to be the case. Specifically, our customers in China have historically had a little bit of a lumpiness to their ordering patterns.
In terms of tariffs, I think that what we have been doing internally for a number of years now is making sure that we’re looking at our supply chain, both in terms of where we manufacture, but also how we source our raw materials to make sure we have diversity and we provide ourselves with optionality as best we can.
So, key to that was setting up manufacturing in Ireland, which we did starting in 2021. We have a manufacturing plant in Shannon, Ireland, where we can manufacture products and ship directly to our customers from. And that continues to be a great lever, not just from a tariff perspective, but also just making sure we have capacity in our network to meet the demand that we see in the next few years because we were running out of capacity in the U.S., and we knew we needed additional capacity and finding a non-U.S. source we thought was a great way of just diversifying our supply chain.”
Desjardins Montreal Conference March 17, 2025
TELUS Corp ($22.3B, Communication Services, Telecom Services)
Question: “One subject that I think is kind of impossible to avoid here today is the potential tariffs that everyone knows about. Obviously, if you can maybe talk a little about the exposure that you have to this topic or potential topic at this point and maybe talk about if you did incorporate the threat for the tariffs in the guidance that you have?”
Answer: “We’ve got a long-standing track record of dealing with exogenous events. We think some of the regulatory events we’ve had, COVID and other items that are our resiliency continues to be first class. What we’ve got set up right now through my treasurer is a prime, the tariff prime, within our organization, who’s looking at all of our, call it, vulnerabilities and opportunities and ensuring that we’re well positioned to be ready for either short-term or long-term impacts of the tariffs.
For example, we continue to hedge a lot of our U.S. dollars, so protecting us against volatility in the U.S. dollars. We’ve been looking at our supply chain to ensure we have diversified supply and so that will bring us or allow us to have an opportunity to not be impacted by the higher cost structure or limited supply in general. We look at all of our products that’s right across the world between all of our businesses to ensure, is there anything on that end as well that we should be prepared for on multiple vendor strategies. And then obviously then looking at opportunities. So within Canada, ensuring that our businesses and organizations in Canada that are going to need a little bit more efficiency or support from Canadian champions such as ourselves, we’re willing to step up and help those businesses and individuals as well.
I think the only thing that’s a little bit harder to predict would be what is the impact on the economy and will there be a slowdown on the consumer and business side? That would be, call it, abnormal. I think so far we’re seeing that our services are still obviously in very high demand and we haven’t seen the impact early stages to do that. But from that perspective, we think we’ve got a playbook in place. It’s got a very high profile within our organization, so it gets the priority it needs.”
Bank of America Global Industrials Conference March 18 – 19, 2025
AGCO ($7.1B, Industrials, Farm & Heavy Construction Machinery)
Question:“And talking about you guys being global, obviously, you’re a global manufacturer and every day there’s a new tariff headline. So, I just would love to help kind of get the context just as a manufacturer how you’re contending with these tariff headlines, what you’re seeing as a biggest risk write-down. When you think of Mexico, Canada and Europe, how to kind of contextualize that as – with your manufacturing footprint?”
Answer: “I think like many other companies, we’re doing a lot of scenario planning right now and it’s changing daily a lot of times. But I think, maybe I’ll start with what’s sort of been known, then we’ll go to the retaliatory tariffs, what’s the big risk, and then how does it affect the farmers, especially in North America, because, I think, that has the biggest question mark for us is how the farmers in North America are affected.
But if I start with what we’ve heard, Mexico tariff, China tariff, Canadian tariffs, those have a relatively small de minimis effect on AGCO. Given our U.S. manufacturing locations, given where we source materials, we don’t see those being a significant effect on us from an overall business standpoint. And the incremental costs we have, and layer on steel and aluminum on top of that, with those sort of tariffs, we don’t really see them having a significant effect to our current business. And if we had to, we would be able to raise prices that would probably really not be visible too much. There’s always the risk that, as tariffs increase the cost of imported products, there’s always the local producers who may take advantage of that and try to raise prices. But that’s where we got to make sure the sourcing team stays diligent in keeping prices low. So, current U.S. tariffs, relatively little effect.
Retaliatory tariffs. Again, you heard Canada has announced they would put a retaliatory tariff on to the U.S. That would have a little bit more meaningful effect on us because of the products we make in North America, our track tractors, our sprayers, some of our combines, hay equipment find their way into Canada. So, to the extent we were not able to offset that, that would have an effect on my 2025 outlook. As we, in the industry, are all planning to try to push this through to the end users to the extent that we can, we think we’d be able to mitigate that.
The big risk for us is the EU. If we look at North American revenues in 2024, we were just around $2.8 billion in total revenues. 35% of the $2.8 billion was imported into the country. Of the $2.8 billion, 25% came from Western Europe. So, that’s our Fendt tractors coming out of Germany. It’s our high-horsepower Massey Ferguson tractors coming out of France, our combines coming out of Italy. So, 25% of that North American revenue would be sort of vulnerable to any sort of EU tariff. That would be one that would have a more meaningful effect on us and we’re working through different alternatives.
So, how do we dampen that? Again, what would be sold in Canada, how do we ship that directly to Montreal instead of Baltimore and shipping it up? Do we do sort of kit assemblies here in North America? Do we buy certain products like tires, for example? Do we buy them here or buy them in the U.S. rather than buying them in Germany and shipping them over? So, we’re running a lot of iterations trying to figure out what we could do to dampen the costs.”
Baker Hughes ($44.0B, Energy, Oil & Gas Equipment)
Question:“One is on tariffs. So, maybe you can touch on that. What’s the impact? What are you seeing right now?”
Answer: “So we’ve got a very diversified supply chain. And again, we’ve modeled various scenarios. Also, the direct materials that we buy that are impacted from tariffs are very small. We’ve got buying and selling that takes place from different locations. We’ve also got a large international content of where our shipments go. So at this stage, we don’t see a material impact from tariffs. Clearly, we’re monitoring the situation, working with our customers. Also the contracts we have in place, the commercial agreements, different ways in which titles change all comes into a factor.
The good thing is we’ve got flexibility in our supply chain, and we’ve been through this before. Tariffs are not new to us, and we’ve seen them in prior administrations. And we’re navigating and working with our customers and partners and making sure that we manage the impact. At this stage, we don’t see an impact.”
Howmet Aerospace ($53.1B, Industrials, Aerospace & Defense)
Question: ”And given the strength or strengths of the demand, how do you think about the impact of tariffs?”
Answer: “We spent a lot of time on tariffs in the last couple of months. And now we’ve prepared ourselves as best we can. And then obviously things have changed quite rapidly, sometimes from day to day. And so, it’s difficult for me to give you a clear and coherent answer on tariffs, because I don’t know. But I feel that the one thing that I feel certain about is that whatever they turn out to be, we will address them in the normal course of doing business, which we’ve always done at Howmet.
We just say, those are the circumstances now, we’ll deal with it and the same as today, if we are facing additional input cost of aluminum from Canada, which really centers on our commercial wheel business, then we’ll pass those costs through with the current arrangements that we have with our customers. And if it goes to more generalized inflation, which nobody yet knows, then we’ll deal with it. Same as we dealt with it in 2022, when inflation went up substantially as a result of the invasion of Ukraine.”
ITT, Inc. ($11.1B, Industrials, Specialty Industrial Machinery)
Question: “You know, obviously, you’re going to get this question, but just maybe size your exposure to announced tariffs. You know, is there a tariff impact embedded in 2025 guide, the usual stuff. How much of it is covered by USMCA and what’s the action plan? I know you’re going to have this debate.”
Answer: “Yeah. So, when you look at tariffs, I would say our – first thing, our strategy has always been to be in the market for the market. So, for instance, our plants in Europe are serving the European plants. Our plants in China are serving…China and Asia, and our plant in North America is serving North America. So, that is overall our strategy. On top of that…in 2024, we divested our Wolverine business, which was the one that was impacted the most from tariffs in the past. That was a portfolio strategy, but that was also good…because [with] what’s happening, [that] would have impacted us heavily in 2025.
So, with the portfolio that we have today, how have we been impacted? So, different for the different businesses. So, if we start with IP, for example, IP will be exposed mainly to the tariffs from China, because what is happening in the floor is you tend to import castings from China or India. These are the best quality castings and machine, the best quality supplier, and the best service that you can have. So that will continue to be that way. Now, there will be a tariff, and the action to ensure that we mitigate the impact is really a commercial action. So, that would be a pass-through. We have already taken action, and we already communicated with our customers and with our distributors. And it’s now going to modify our supply chain strategies because those are the best supplier and the best service.
When you look at the Motion Technologies, the impact could be on the Mexico plant because we have a plant in Mexico that serves in North America. Now, the majority of our contracts are Ex Works. So, the customer will pick up our shipping, so we will not be exposed to that, and the few contracts that are not Ex Works, we are certified USMCA. So, with the tariff that are – the way that it’s structured today, no impact there. But in order to be ahead of the game, we’ve already talked to some of our customers just in case that it will change in terms of these will be a pass-through as well.
When you look at CCT, we have our connector business and our major plant is in Nogales, Mexico, just across the border, and together with many of the other connectors company. And in these cases as well, we got the majority of our product USMCA approved, and we’ve already spoken to all our customers in terms of if the regulations will change, there will be commercial actions to take place. So, I think that when you look at overall the impact of tariffs, we have action in place to cover and to mitigate if things deteriorate from what they are today.”
Rockwell Automation ($29.4B, Industrials, Specialty Industrial Machinery)
Question: “To what extent have you embedded the impact of tariffs in your FY 2025 guide, and maybe remind us of your manufacturing and sourcing footprint and effected regions, how much capacity do you have to flex in the U.S.? How much of your Mexican capacity is subject to USMCA…”
Answer: “So, our manufacturing footprint…currently what we import into the U.S. of finished goods from Mexico is about $350M. That’s both from our own manufacturing facilities as well as from other suppliers. And from Canada it’s about $100M. And from China, it’s about $100M. We are in a position with the current tariff environment in the way that it’s been enacted. Our expectation is that if we’re incurring the costs, we’re going to recover it.
And when it’s enacted immediately, which is what we’ve seen in a lot of cases, then our expectation is that really the only lever we have to pull would be price. And so, we have been running through price changes to reflect whatever the changes have been on tariffs, including rolling them back, and in cases where it was, it was put on and take it off again. So, we now have a little bit different cadence where we’re doing it in a more gradual way, at least taking it kind of almost every week where we’re taking a look at what’s happening with the tariff environment.
Longer-term…I think Rockwell is not any different from a lot of our customers, which is we put in place a number of initiatives around resiliency to try to make sure that we were in a position to manufacture the same product in multiple locations, in some cases closer to our customers, and in other cases, trying to just ensure that we have a really strong backup in place.
And so, that resiliency is allowing us to…ramp up in areas where it makes financial sense, of course, to bring some production back into the United States. At the moment, it’s really probably more about leveraging the existing lines that we have and putting in third shifts for those, you know, for some of those products we’re making in a couple of different locations. So, we’re allowing or we’re using that resiliency to do that in the United States now.”
Snap-on Inc. ($17.3B, Industrials, Tools & Accessories)
Question: “How should we think about [tariff] impact to Snap-On, if any?”
Answer: “The more vertically integrated one is, the more I believe you’re resistant, not immune, but resistant to the effects of tariffs and trade. We do have 36 factories, 15 in the United States, the remainder 21 outside the US. And we try to manufacture close to where we sell. There’s national pride everywhere in the world. U.S. technicians love buying U.S. stuff. Italian technicians love buying Italian stuff. But the practicality is we sell 80,000 SKUs. You try to get them proximate to your major market because it cost a lot of money to transport things across oceans and then the freight time and coordinating the deliveries. So, there’s a certain practicality to being vertically integrated, and I think that helps with respect to tariffs.
Now having said that, the thing that no one can predict in this room, I suggest, is what’s going to be the fallout? Is there going to be, as you’ve seen in the newspapers, don’t buy American whiskey or that the Canadians, you saw that hockey teams got into a fight. Is that going to be enduring and permanent? Will that have a negative effect? Because we sell products in Canada, as do others, and there’s not a lot of manufacturing of tools in Canada.
So, it’s not like there’s an immediate exposure there. But then how do I know a Canadian customer might not be thrown in to say, well, I’ll get something from Europe, I’ll get something from Asia. These are all risks that are unquantifiable at this point in time. Now, we don’t think that’s going to be the case. We think people are looking at Snap-On as a product that they’re married to, to a point in time. But you never know what happens when emotions run high.
So, tariffs, a concern, unpredictable, uncodified until you get more direction. I mean, are we stocking up on champagne that comes from France right now? Not me. But some people might say I want to avoid a 20% tariff. We try to position inventories creatively to try to mitigate, but you don’t know the full rules yet. So, it’s hard to really predict with accuracy. But I’m not a fan of tariffs.”
Vontier ($5.1B, Technology, Scientific & Technical Instruments)
Question:“You’ve already quantified the tariff risk, $50M from China, $35M from Mexico. Are you worried about potential indirect impact from tariffs? When we go into the meetings, what investors bring up, what managements bring up, it’s really the uncertainty potentially killing the animal spirits. That seems to be a broader concern because every company seems to have quantified what’s happening. But just maybe a) the impact; b) maybe explain like what percent of your production falls under USMCA? And then, as I said, just this uncertainty and what are the conversations with the customers are like?”
Answer: “As you mentioned, we’ve quantified a direct impact from Tier 1 supply chain. We buy about $50M from China, which, by the way, used to be well north of $300M in the first Trump administration. We have been systematically moving production and supply chain out of China to de-risk what we’ve been doing.
On Mexico, we have about $35M that we buy directly from Mexico. Over 90% of that is already dual sourced, so we can move that around in short order. So, we feel that a Tier 1 supply chain risk has been managed and mitigated.
Overall, obviously, we are watching the macro and our order trends. There is a lot of uncertainty in the macro, but also the markets we compete in, we feel we have pricing power and we can price – pass any cost inflation into the markets. We did that the last time around. And again, what we can’t mitigate through supply chain moves, etc, we would pass on through the market.
We also have significant part of our manufacturing in the U.S. for the US, and we have our largest factory for our dispensers in the U.S. in Greensboro, North Carolina. We do the underground manufacturing in Altoona, Pennsylvania. So, we are manufacturing regionally. We have regional manufacturing in Latin America and Brazil for Latin America, Germany for Europe, India for Asia. So we are somewhat decentralized from a manufacturing perspective in region for region.”
Wolfe Research Virtual Autos Summit March 18, 2025
Lear Corp ($5.2B, Consumer Discretionary, Auto Parts)
Question: “Can you please remind us what your exposure to Mexico and Canada is and quantify the potential impact of tariffs if they were to be instated? And then, what would be your strategy to mitigate the risk or the impact?”
Answer: “Yeah. Just to reiterate what we said on the fourth quarter earnings call. We had estimated our imports from Mexico into the U.S. for $2.9B. Our latest estimates are about $2.8B. So, pretty darn close to that, less than $100M from Canada and about $20M from China.
In terms of the important delineation between USMCA and non-USMCA qualifying material, the vast majority of what we import from Mexico and Canada into the U.S. is USMCA qualifying material. And the portion that is not USMCA qualifying material, the bulk of that is directed by our customers. And so, we don’t see under the current configuration of the tariff rules any significant direct impact at this stage. But obviously, we’re concerned if that were to reverse course here after April 2 and the exposure would be something beyond that and include the USMCA qualifying material… Our view is that, and we’ve said this previously, that the auto supply space and the margin profile of this business is not such that we can absorb any of the tariff costs as we look at the business going forward.
I think we’ve done a really nice job of understanding what the risks are relative to being exposed. We do have optionality within each one of the different areas depending on which scenario is announced on April 2. But we’re within the mindset of looking at each one of those scenarios and how do we offset 100% of those potential tariffs. And some of that, obviously in the majority of it’s going to be a pass through to our customers. We’ve been in constant contact with them.
We’ve explained where those areas are at, making sure if we’re qualifying with the USMCA components, if we’re not, quickly getting all of our components qualified. In some cases, we have optional construction where we can source alternative suppliers where it makes sense and continue to work on engineering changes that will allow us the flexibility to make changes.
We’ve continued to mitigate and move in different countries. I think we’ve done a nice job both in North Africa and then what we’re doing in Central America out of Mexico. So, about 40% of our business in our E-Systems wiring has already been moved. And then, our target, as we’ve announced, is 60% of our total business will be moved out of Mexico.”
Stellantis ($5.2B, Consumer Discretionary, Auto Manufacturers)
Question: “Shifting to the tariffs discussion, with this ongoing uncertainty here in the U.S., what mitigating actions could you take in case of tariffs on Mexico and Canada? And more broadly, do you expect a broader shift towards reshoring capacity for Mexico and Canada to the U.S. in the coming years?”
Answer: “Yeah, I mean, tariffs is definitely kind of the hot topic of the day. So appreciate that you waited until the third question to ask it. So that’s good. Didn’t hit me with it, first question. But look, tariffs are an issue that we’ve been giving a lot of thought to. There were a couple of different parts to your question, so I’ll try and answer each of them. But please circle back if there’s anything I missed. In the short-term, we, of course, have been working upstream with kind of our supply chain to look at our tier ones that might be impacted by the tariffs, some stock level, safety stock, etc., that we normally would keep at a supplier.
We’ve been moving across the border into our plants. That’s not the way we normally operate. But in order to kind of mitigate any short-term impact, we’ve been taking some steps. We’ve been also working kind of downstream with our dealers to collect orders of units that could be impacted to try and produce them over the last kind of month hiatus that we’ve had. And really, when you look at the vehicles that we produce in Canada and in Mexico, we have pretty good supply on the ground right now with our dealers, probably 70 to 80 days of most of those units. And so we’re doing some near-term actions.
Now, importantly, we also have been dialoguing with the administration at various levels. And, of course, we really appreciate the opportunity to provide that input to kind of help them understand the issues within our industry specifically and ways in which maybe they could help us help them achieve their policy objectives, right. And so I think as we think about seeing the administration’s support for U.S. manufacturing, that’s of course, very exciting for us to have the administration so focused on trying to support U.S. manufacturing. So we obviously want to see that through. We want to help them understand our needs and obviously try to help the administration achieve those goals, which they’re going to be putting out there. So I think it’s an ongoing situation. Of course, just like we adapted after USMCA was put in place in the first Trump administration, I’m sure we’ll adapt to whatever changes come about on April 2 or thereafter.
Of course, as you probably know from our fourth quarter earnings call, we’ve also been trying to focus the administration on the roughly 4M units that come into the U.S. market that are not USMCA compliant. Because even the products that are assembled in Mexico and Canada, many of them have very high U.S. content, right, to meet the USMCA regulations, as opposed to these kind of 4M vehicles that we’ve been talking about that come in from places like Korea, from Japan, from Germany, that oftentimes have little to no U.S. content. And so we feel that if the administration wants to focus on supporting U.S. manufacturing, that’s a place for them to also take a look at.”
In Closing
With heightened uncertainty around global trade policy bringing tariff concerns to the forefront of investor conversations, companies that communicate with clarity and candor have an opportunity to bolster credibility and build trust. While the situation remains highly fluid, investors value transparency, measured positioning, and a thoughtful acknowledgment of what’s known, what’s not, and how your company is preparing for various scenarios.
By proactively acknowledging investor concerns, clarifying your exposure, and reinforcing the strategic levers within your control, you can instill confidence and demonstrate resilience.
We’ll be off next week, returning the following week with our Q1’25 “Commencing the Quarter” — stay tuned!