Analysis
Lockheed Martin experienced a measurable headwind from U.S. and international tariffs introduced or expanded in 2025, including those commonly referred to as the April 2025 "Liberation Day" tariffs. The primary impact was observed in the company's cash flows, which were reduced by approximately $485 million during FY2025 due to duties on imported materials and component parts. Management noted that the tariff environment remained dynamic throughout the year, with $100 million of this impact realized as early as the second quarter of 2025.
To mitigate these impacts, Lockheed Martin has pursued a multi-pronged strategy that includes seeking tariff exclusions, drawbacks, and refunds. Additionally, the company is working to recover tariff-related costs through product pricing and by securing alternative material sources. A critical factor in Lockheed Martin's ability to manage this pressure is its contract structure with the U.S. Government. Because a substantial portion of its business is conducted through cost-plus or fixed-price contracts with the Department of War, the company expects that a significant portion of the paid tariffs will be recoverable over time, though near-term cash flow volatility remains a risk due to the timing difference between duty payments and government reimbursement.
Looking forward, Lockheed Martin has incorporated its current assessment of tariff impacts and related recoveries into its 2026 financial outlook. While the company continues to monitor potential future developments, including legal challenges to tariffs and ongoing negotiations between the U.S. and its trade partners, it does not expect the current tariff regime to have a material adverse effect on its results of operations or long-term financial condition. The company's 2026 sales guidance of $77.5 billion to $80.0 billion assumes continued assessment of these trade policies within its operational framework.
Data
($M)
| Metric | 2Q25 | FY25 |
|---|---|---|
| Tariff Impact on Cash Flows | $100 | $485 |
Source: Annual Report FY-2025, Transcript 2Q-2025, Marvin Labs
Financial Impact
- Cost Impact (Historic): $485M
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.
The 2025 financial outlook incorporates the company's current assessment of the impact of tariffs and related recovery of tariffs on its contracts. However, the company cannot predict how tariffs will evolve and the actual impacts may differ from the company's expectations.
We realized quarter-to-date tariff impacts of approximately $100mn... we've updated our expectations for Lockheed Martin's 2025 financial outlook to incorporate... our current estimation of the tariff impacts.