Tariff Impact Analysis for Sempra

Analysis

Sempra (SRE) maintains that the U.S. tariffs introduced in April 2025 have not significantly altered its long-term financial trajectory or capital deployment strategy. Management's primary assessment is that cross-border energy deliveries, including both electricity and natural gas, are USMCA-compliant goods and therefore remain unaffected by the new trade restrictions. This classification effectively shielded Sempra's extensive cross-border infrastructure in Mexico and its LNG export operations from direct duties on energy commodities.

At the utility level, which represents approximately 95% of Sempra's earnings composition, the company estimated direct tariff exposure at roughly 2%-3% of its planned capital expenditures. For FY2025, with a utility-focused capital budget of approximately $10.6B, this translated to a potential headwind of $212M to $318M. Sempra proactively mitigated these risks by stocking higher levels of critical materials, shifting to domestic suppliers for the majority of its equipment, and diversifying its global supply chain. By the end of FY2025, the company reported adjusted EPS at the high end of its guidance range, indicating that these mitigation efforts were successful in absorbing realized costs within existing financial targets.

Sempra Infrastructure also utilized strategic measures to protect its major LNG projects. For the Port Arthur LNG Phase I project, management estimated remaining tariff exposure at only 1% of total capital costs, supported by the fact that 90% of project spending is directed toward U.S. suppliers and contractors. Furthermore, the company utilized foreign trade zones (FTZs) to preemptively admit materials and equipment into the U.S. prior to the tariff's implementation, thereby avoiding higher duty costs. For future projects like Port Arthur Phase II, which reached a positive Final Investment Decision (FID) in July 2025, the company secured firm pricing and incorporated anticipated trade costs into its $12B+ project budget to ensure target returns remain intact.

Despite the broader trade environment, Sempra's capital allocation continues to shift toward Texas, where it launched a record $65B five-year capital plan. Management remains confident that the company's focus on regulated utility investments and its success in fortressing its balance sheet through capital recycling—such as the $10B sale of a 45% stake in Sempra Infrastructure Partners—provides sufficient flexibility to navigate any residual trade-related inflationary pressures without requiring new common equity issuances through 2030.

Data

Estimated Tariff Exposure and Mitigation Impact

The following table outlines the estimated gross tariff exposure across Sempra's primary business segments as identified by management during the initial rollout of the April 2025 trade measures.

Source: 1Q-2025 Transcript, Annual Report FY-2025, Marvin Labs

Financial Impact

• Cost Impact (Historic): $330M–$430M
• Cost Impact (Forward-Looking): $350M–$450M

Sources

Our current understanding is that energy, as defined as a cross-border electric and natural gas deliveries, is a USMCA-compliant good and is therefore unaffected by tariffs. As a result, we do not currently anticipate significant impacts from cross-border energy transactions.

I would say right from the top, I think this remains a fluid environment for all industries, but I think we're in good shape here, and any type of impact from tariffs, I think, falls well within our established guidance.

At Port Arthur LNG, approximately 90% of our spend is with U.S. suppliers and contractors. [...] we're also using foreign trade zones to mitigate tariff impacts, and Train 1 steel was fully sourced domestically.