Analysis
Air Products was affected by the supplemental tariffs introduced on April 2, 2025, which included a universal baseline tariff and differential reciprocal tariffs on major trading partners. Management identified the U.S. and China as the primary regions of concern regarding potential impact on equipment imports and project execution. The company noted that these tariffs posed a specific risk to large-scale capital projects, as duties are typically paid at the point of equipment importation.
Despite these risks, the company reported that its day-to-day operations were not significantly impacted by the external tariffs through the remainder of 2025. Air Products maintained its long-term guidance and focused on mitigating inflationary pressures through pricing actions and productivity improvements. For large clean energy projects, the company employed a strategy of de-risking by seeking partners to share regulatory and commercial risks. For instance, in its partnership with Yara International for the Louisiana blue hydrogen project, the company structured agreements such that the partner would bear the regulatory risk related to trade mechanisms like the EU Carbon Border Adjustment Mechanism (CBAM).
By early 2026, the focus of trade-related concerns shifted toward new regulations and ongoing global energy volatility. The universal emergency tariffs that were part of the 2025 announcement were largely overturned by a Supreme Court ruling in February 2026, leading to a complex process of issuing refunds to importers who had paid the duties. At the same time, Air Products began monitoring the implementation of the EU's CBAM, which came into effect on January 1, 2026, and could indirectly affect the economics of ammonia exports to the European market. Management continues to prioritize capital discipline and rigorous project evaluation to manage these dynamic regulatory and trade environments.
Data
($M, except per share data)
| Metric | FY24A | FY25A |
|---|---|---|
| Sales | $12,101 | $12,037 |
| (-) COGS | (8,168) | (8,255) |
| Gross Profit | 3,933 | 3,782 |
| Gross Margin | 32.5% | 31.4% |
| Adjusted Operating Income | $2,948 | $2,858 |
| Adjusted Operating Margin | 24.4% | 23.7% |
Source: Annual Report FY-2025, Marvin Labs
Sources
Really, the countries that we are more concerned that are being more affected are U.S. and China.
I have to say that it is a very difficult environment to predict right now, considering that you only pay the tariffs once the equipment is imported.
I would say that the day-to-day business is not so impacted by tariffs from the outside.