Tariff Impact Tracker • 2Q-2025 Earnings Season

Analysis

AMD's financial performance was affected by U.S. government export controls impacting the shipment of AMD Instinct MI308 GPU products to China. In the second quarter of 2025, this resulted in $800M in inventory and related charges. These charges affected non-GAAP gross margin, which would have been approximately 54% without these charges, instead of the reported 43% for that quarter.

The third quarter 2025 financial results, the current reporting period, did not include any revenue from the shipment of MI308 GPU products to China. Similarly, the company's guidance for the fourth quarter of 2025 also excludes any revenue from MI308 shipments to China.

AMD has received some licenses for MI308 and is working with customers to understand the demand environment and overall opportunity. The company has existing work in process to support this market if it opens up.

Sources

• "Our third-quarter results do not include any revenue from shipment of the MI308 GPU products to China." (Jean Hu)

• "Second quarter of 2025 results included $800 million in inventory and related charges as a result of the U.S. Government's export control on AMD Instinct™ MI308 data center GPU products. Excluding these charges, non-GAAP gross margin for the second quarter of 2025 would have been approximately 54%." (Press Release)

• "It's still a pretty dynamic situation with MI308. So that's the reason that we did not include any MI308 revenue in the Q4 guide. We have received some licenses for MI308, so we're appreciative of the administration supporting some licenses for MI308." (Lisa Su)

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Analysis

Amgen's updated 2025 financial guidance incorporates the estimated impact of tariffs that have been implemented. The company's management has stated that its biomanufacturing network is predominantly based in the U.S. and that it is investing over $3B in manufacturing in the U.S. this year. The company emphasizes engaging with policymakers to support policies that improve access, protect innovation, and strengthen the biomanufacturing ecosystem, especially within the U.S.

Sources

• "We benefit from 45 years of experience in this space and from having a manufacturing network that's predominantly based here in the U.S., serving American patients and patients all around the world since our inception." (Company - CEO)

• "This guidance includes the estimated impact of implemented tariffs." (Analyst, Unknown Affiliation)

• "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' business is exposed to risks associated with tariffs and other trade protection measures. These measures are enacted by the United States and other countries, including those involved in U.S. international trade relations such as China, Canada, and the European Union.

In early 2025, the U.S. government implemented additional tariffs on specific goods imported into the U.S. from various countries. This action led to reciprocal tariffs and other responses from multiple nations. The company notes that the full scope and applicability of these measures to its operations remain uncertain. However, such actions could negatively affect demand and lead to increased product costs.

Zoetis is actively monitoring the evolving trade situation. The company is evaluating potential strategies and actions to moderate or minimize the effects of these tariffs. The full-year 2025 guidance incorporates the impact of currently enacted and assumed 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." (Filing)

• "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. We will continue to actively monitor the situation and evaluate actions that can be taken to moderate and/or minimize its effects." (Filing)

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Analysis

The company indicates that it has successfully mitigated the financial impact of tariff costs. While tariffs previously represented a cost, the company has implemented strategies to cover these expenses. As a result, tariff costs are no longer a drag on margins, and their dilutive effect has been neutralized. The company is recovering these costs on a dollar-for-dollar basis by the end of the year, which prevents margin dilution.

Sources

• "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, Company - CEO)

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Analysis

The company has secured a three-year grace period from certain U.S. tariffs. This grace period is tied to a commitment to increase investment in U.S. manufacturing. For currently imposed tariffs from China, Canada, and Mexico, the company's 2025 financial guidance already incorporates their impact. The company is evaluating and developing strategies to mitigate the potential long-term effects of tariffs on its business and operations.

Sources

• "we will have a three-year grace period from certain U.S. tariffs with our commitment to further invest in manufacturing in the U.S." (Company - CEO)

• "The agreement provides a three-year grace period during which time Pfizer products under a Section 232 investigation will not face tariffs, provided the company further invests in manufacturing in the United States." (Filing)

• "The company's guidance absorbs the impact of the currently imposed tariffs from China, Canada, and Mexico." (Press Release)

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Analysis

The company identified tariffs as a factor posing challenges to its Human Nutrition market. The provided information does not quantify the specific financial impact of these challenges on the company's revenue, margins, or costs, nor does it detail any specific mitigating strategies related to tariffs.

Sources

• "While tariffs and inflation continue to pose challenges to the Human Nutrition market, clean label and healthier categories are outpacing the broader industry." (Filing)

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Analysis

Simon Property Group noted that recent trade discussions between President Trump and President Xi regarding Chinese tariffs were positive for its retailers. Despite this, the company believes the full impact of tariffs has not yet been realized. Management anticipates that tariff costs will be distributed among suppliers, absorbed by retailers, and passed on to consumers.

Smaller retailers may face increased pressure from tariffs, while larger retailers might leverage the situation to expand market share. Despite these considerations, the company has observed no change in leasing activity or tenant behavior directly attributable to tariffs. Leasing demand remains strong from retailers looking to expand their footprint.

Sources

• "From the tariffs, right? So, look, I think the news that President Trump and President Xi had on the Chinese discussion is positive for our retailers, even though a number of them have moved some of their production out of China." (David Simon)

• "I continue to believe that tariffs will have an impact. We have not yet seen all of it. I think some of that will, as I said last time, I mean, it's a pretty consistent story. Some of that will be passed on to the supplier. Some of that will be eaten by the retailer, and some of that will be passed on to the consumer." (David Simon)

• "Let me just end by saying, from a supply and demand point of view, just from our leasing, we see absolutely unequivocally no change apart from the retailers that are looking to grow their footprint." (David Simon)

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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

IDEXX Laboratories acknowledges that changes in tariff and trade policies could negatively affect its business, financial condition, and operating results. These policies, including potential retaliatory tariffs, have contributed to volatility and uncertainty in global markets.

The company relies on third-party suppliers from various regions, including Europe and Asia Pacific, for certain components and raw materials. Tariffs could increase the cost of goods, reduce profit margins, or decrease the competitiveness and availability of products in affected regions. The company's sales to customers in China represent less than 1% of overall revenues, minimizing direct exposure to China-specific trade actions.

To mitigate potential impacts from tariff changes, IDEXX is optimizing operations and inventory management. The company maintains a largely U.S.-based manufacturing footprint, which helps to navigate the evolving trade landscape. Management remains focused on ensuring continuous supply to customers while actively managing cost impacts associated with these trade policies, which are anticipated to extend into 2026.

Sources

• "Accordingly, changes in tariff and trade policies may adversely affect our business, financial condition, and operating results." (Filing)

• "While we are working to optimize operations and inventory management to the extent feasible, to help mitigate and reduce the potential impact from changes in tariff and trade policies, any imposed tariffs (including retaliatory tariffs) and our mitigation activities may cause our cost of goods to increase, our profit margins to decrease, or our products to become less competitive or less available in the applicable region." (Filing)

• "As noted previously, IDEXX remains well-positioned to navigate the ongoing changes in the trade landscape with a largely U.S.-based manufacturing footprint. We remain focused on continuous supply to customers while actively managing cost impacts, which will continue to play out into 2026." (Andrew Emerson, Chief Financial Officer)

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Analysis

Colgate-Palmolive reported that tariffs are contributing to pressure on both sales and profit growth. This impact is part of a broader volatile operating environment, alongside consumer uncertainty, geopolitical factors, and high-cost inflation.

In the third quarter of 2025, tariffs were one of several factors, including raw materials inflation, lower volumes, and transactional foreign exchange, that contributed to a year-over-year decline in gross profit margin. The company did not specify the individual financial impact of tariffs on its overall gross profit margin for the period.

Looking ahead to the fourth quarter of 2025, the company anticipates a "slightly greater" negative impact from tariffs, which is expected to partially offset other planned sequential improvements in gross profit. For the full year 2025, the estimated impact of tariffs is included in the net sales guidance, which projects low single-digit growth, but this impact is aggregated with foreign exchange effects.

To navigate these challenges, Colgate-Palmolive is implementing its 2030 strategy. This strategy focuses on accelerating science-based innovation across various price tiers, enhancing omnichannel demand generation, and increasing investments in revenue growth management (RGM) and agentic AI. These efforts are intended to improve market share, drive category growth, and foster internal productivity to counteract external pressures such as tariffs.

Sources

• "consumer uncertainty, tariffs, geopolitics, high-cost inflation, and other factors are all pressuring sales and profit growth across the consumer sector." (Noel Wallace, Company - CEO)

• "The sequential improvement for Q4 versus Q3, we're confident in because we expect that there'll be less material inflation on a year-on-year basis. Transactional and Colgate Total impact will be partially offset by a slightly greater tariff impact." (Company - Other Officer)

• "Based on current spot rates and including the estimated impact of tariffs announced and finalized as of October 29, 2025: The Company still expects net sales to be up low single digits, including a flat to low-single-digit negative impact from foreign exchange." (Press Release)

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Analysis

Tariffs have led to increased costs for Dominion Energy's Coastal Virginia Offshore Wind (CVOW) Commercial Project, affecting the company's financial results. For the third quarter of 2025, Dominion Energy recorded an after-tax charge of $50 million. This charge accounts for costs associated with the CVOW project that are not expected to be recovered from customers, stemming from overall project cost increases, including those attributable to tariffs.

The total estimated cost for the CVOW Commercial Project, currently at approximately $11.2 billion, already incorporates an estimated $0.3 billion increase due to tariffs. These tariffs apply to equipment originating from specific countries and steel-containing components, with deliveries spanning from March 2025 through the end of 2026. The company also anticipates a potential additional increase of up to $0.2 billion in project costs if the current tariffs on offshore wind and onshore electrical interconnection equipment remain in effect through the end of 2026.

To mitigate the financial impact of these rising costs, Dominion Energy has implemented cost and risk-sharing arrangements. These include a settlement with Virginia regulators and a partnership agreement with Stonepeak, which are designed to protect both customers and shareholders from the full burden of such increases.

Sources

• "The updated costs this quarter reflect the accelerated recognition of steel tariffs through the end of 2026, whereas we were previously recognizing all tariff costs on a quarter-by-quarter basis." (Steven Ridge, Executive Vice President and Chief Financial Officer)

• "As a result of this project cost increase, we recorded a modest charge this quarter, about $50 million 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. These cost and risk-sharing arrangements continue to work as intended to protect customers and shareholders." (Bob Blue, Chair, President and Chief Executive Officer)

• "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." (Filing)

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Analysis

In the third quarter of 2025, tariffs had a mixed impact on Linde's performance in specific end markets and geographies. The U.S. metals and mining sector experienced new capacity opportunities, which were supported by recent tariffs. This contributed to the U.S. being identified as a positive area for metals production.

In the Americas manufacturing sector, the company observed a healthy uptick in activity. This was noted after the company had seemingly lapped previous tariff concerns, suggesting a stabilization and rebound in this market.

Despite the positive shifts related to tariffs, particularly in U.S. manufacturing, a degree of caution persists regarding larger expansion projects and capital expenditures. While tariff concerns have been addressed, customer sentiment indicates continued prudence in committing to significant new investments. The company expects the resilient volumes in broader manufacturing, linked to the dissipation of tariff concerns, to continue into Q4, with a potential pickup in actual projects during the first half or middle of next year.

Sources

• "Metals trends were region-specific and also impacted by tariffs. China is up, where Linde benefits from supplying tier-one customers. I believe the trends for tier-two and tier-three steel mills are considerably more stressed, but we do not supply them. 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)

• "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)

• "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

New U.S. tariffs, which began in the second quarter of fiscal year 2025, were levied on imports from various regions including China, India, Japan, South Korea, Taiwan, Vietnam, and the EU. These tariffs have had a material adverse impact on the company's operations by affecting its supply chain, the availability of raw materials and components, product pricing, and overall gross margin. Several countries have also imposed, or threatened to impose, reciprocal tariffs on U.S. imports. The ultimate impact of these trade measures remains uncertain and depends on potential future changes to tariff policies and retaliatory actions.

For the fourth fiscal quarter ended September 27, 2025, the company reported $1.1B in tariff-related costs, consistent with prior estimates. In the full fiscal year 2025, the Products gross margin percentage decreased compared to fiscal year 2024, a change attributed in part to these tariff costs, in addition to a different product mix.

Looking ahead to the first fiscal quarter of 2026, the company anticipates an estimated $1.4B in tariff-related costs. This guidance incorporates recent adjustments to tariff rates, including a reduction from 20% to 10% in China, which influences the projected cost impact relative to expected sales volume.

Sources

• "Beginning in the second quarter of 2025, new U.S. Tariffs were announced, including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the EU, among others." (2025 Form 10-K)

• "Company gross margin was 47.2%, above the high end of our guidance range and up 70 basis points sequentially, driven by favorable mix. This includes approximately $1.1 billion of tariff-related costs, which is in line with what we had estimated on our last call." (Kevin Parekh (CFO))

• "We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1.4 billion of tariff-related costs." (Kevin Parekh (CFO))

• "It does comprehend the change that was just made, which we're very encouraged to see with the tariffs moving from 20% to 10% in China. And so that is factored in. And that is one of the reasons why it's not linear to volume, if you will." (Tim Cook (CEO))

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Analysis

Stryker was affected by new tariffs imposed by the United States government beginning in 2025. These tariffs apply to goods imported from numerous countries, including China and the European Union member states. The company anticipates these tariffs will lead to increased product costs and may negatively influence product demand and supply chains.

During the third quarter of 2025, the impact from tariff headwinds increased significantly compared to the second quarter. The company's adjusted gross margin for this period still showed a 50 basis points improvement over the third quarter of 2024. This margin favorability was primarily driven by a beneficial business mix and ongoing cost reduction efforts in supply chain and manufacturing operations, which served to mitigate the adverse effects of the tariffs.

Tariffs are expected to be more pronounced in the second half of 2025 and will partially offset anticipated margin expansion in the fourth quarter. Stryker monitors and evaluates the evolving tariff situation and any retaliatory measures threatened or implemented by other governments.

Sources

• "Beginning in 2025, the United States government has announced new tariffs on goods imported into the United States from dozens of countries, including China and the European Union member states." (Filing)

• "Our adjusted gross margin of 65% was favorable by 50 basis points over the third quarter of 2024, despite tariff headwinds, which we now estimate will have a net impact of approximately $200 million for the full year 2025." (Preston Wells (CFO))

• "The big offset this year is tariffs. We look at the tariff impact. It's more second-half weighted." (Preston Wells (CFO))

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Analysis

Motorola Solutions experienced increased costs on materials and components due to tariffs. These tariffs partially offset the benefits of higher sales and improved operating leverage on the company's adjusted operating margin for the third quarter of 2025. Specifically, the Products and Systems Integration segment's gross margin as a percentage of net sales decreased by 0.2% in the third quarter of 2025 due to higher tariffs. For the first nine months of 2025, the gross margin in this segment increased despite the impact of these tariffs.

The company implemented several strategies to mitigate the impact of tariffs. These actions include inventory acceleration, dual sourcing with two electronic manufacturing services providers, load balancing, and leveraging USMCA (United States-Mexico-Canada Agreement) compliance for manufacturing. Management believes these proactive measures helped anticipate and address potential tariff scenarios.

Looking ahead to 2026, the company expects tariffs to create headwinds in the first and second quarters. This is because tariffs were not in effect during those periods in the prior year. However, the anticipated impact for these quarters is expected to be more moderate than the $70 million to $80 million in margin challenges observed in the second half of 2025. Despite these expected tariff headwinds, the company maintains its guidance for continued operating margin growth in 2026.

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." (Company - Other Officer)

• "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." (Company - CEO)

• "As we look forward to next year, of course, we'll face some headwinds in Q1 and Q2 because tariffs weren't in place last year at that time. They'll be more moderated than that $70 to $80 million." (Company - Other Officer)

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Analysis

Floor & Decor Holdings, Inc. continues to navigate an environment impacted by tariffs. The company acknowledges that the U.S. has imposed significant additional tariffs on products from most sourcing countries, which have led to increased inventory costs and associated cost of sales. These cost increases may result in higher retail prices and could negatively affect sales. Additionally, the broader economic impact of tariffs has the potential to reduce consumer demand.

In response to these challenges, the company has implemented mitigation strategies. These include negotiations with vendors, sourcing products from alternative countries, and making retail pricing adjustments when deemed appropriate. Management indicated that these efforts were successful in maintaining healthy merchandising price gaps compared to competitors, protecting profitability, and enabling product margin improvement.

Despite the ongoing tariff environment, the company's gross margin performance reflects the successful execution of these mitigation strategies. The company noted an 80 basis points increase in product margin year over year, which helped offset pressure from distribution center costs, resulting in only a 10 basis point decrease in the overall gross margin rate for the third quarter of fiscal year 2025.

Sources

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

• "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)

• "I don't feel like we're giving up gross margin because of that. I think we've done, in fact, I've done just the opposite, 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." (Company - Other Officer)

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Analysis

Tariffs have a limited impact on Gilead Sciences. This is attributed to the substantial portion of the company's intellectual property and operations, over 80% and 90% respectively, being located within the United States. The company maintains a strong operational footprint and R&D capital infrastructure in the U.S.

Management expects the impact of known tariffs in 2025 to be manageable. The company has committed to significant additional investments in the United States, totaling $32 billion, which reinforces its domestic presence.

Sources

• "I would remind you that as we have broader conversations with the agency that I'm sorry, with the administration, again, the vast majority of our IP is in the United States. As such, tariffs related to transfer pricing, they have more of a limited impact on Gilead versus our peers. We recognize more than 80% of our IP in the United States, 90% of our taxes are paid here. We have a strong footprint in the United States. We have almost 100% of our R&D capital infrastructure here. We've committed to significant additional investments in the United States of the magnitude of $32 billion." (Daniel O'Day)

• "Finally, we continue to expect the impact of known tariffs to be manageable in 2025." (Andrew Dickinson)

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Analysis

The Estee Lauder Companies Inc. is actively monitoring the potential effects of new and existing tariffs in the United States and other operating markets. The company notes that these tariffs have introduced volatility and uncertainty in global markets, affecting demand forecasting.

The impact of tariffs on the company's fiscal 2026 first quarter profitability and cash flows was not material. However, higher tariff rates are anticipated to adversely affect fiscal 2026 profitability and cash flows, with the potential for a material impact depending on actual rates and countries imposing tariffs.

To mitigate these effects, the company has implemented various strategies. These include utilizing available trade programs and optimizing its regional manufacturing footprint to bring production closer to the consumer, such as through its facility in Japan. These efforts, combined with increased supply chain agility, are expected to offset more than half of the anticipated impacts and enable the company to adapt to evolving trade policies. Further Profit Recovery and Growth Plan (PRGP) initiatives and potential pricing actions are being evaluated as additional strategies.

Sources

• "We are continuing to monitor and assess the potential effects of new and existing tariffs in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. 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)

• "Before I close, let me reaffirm our assumptions regarding evolving trade policies and enacted tariffs based on information available and net of our planned mitigation actions. Through October 24, we continue to expect tariff-related headwinds to impact profitability by approximately $100 million. This does not include any subsequent or future changes. We continue to evaluate additional strategies to further mitigate these impacts, including more PRGP initiatives and potential pricing actions." (Akhil Shrivastava, Executive Vice President and Chief Financial Officer)

• "The Company continues to closely monitor evolving trade policies and enacted tariffs, and its task force has been actively evaluating developments and mitigation strategies to reduce the potential impacts of tariffs. 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)

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Analysis

Tariffs introduced earlier in 2025 have steadily increased throughout the past several months, contributing to ongoing headwinds for discretionary spending and impacting consumer confidence. However, Altria has not observed a material impact on adult tobacco consumer purchasing behavior or its costs during 2025.

Altria continues to monitor these tariffs as a macroeconomic headwind that could exert additional pressure. This includes potential effects on the price, availability, and quality of raw materials, ingredients, and component parts for production. Tariffs could also increase the cost of purchasing tobacco leaf from international suppliers, potentially exacerbating reductions in demand for tobacco leaf.

The company's 2025 full-year guidance incorporates the current estimated impact of increased tariffs on costs, which is not expected to be material. Altria is exploring opportunities to improve operational efficiency in traditional tobacco through a collaboration with KT&G, which may offer potential benefits related to duty drawback in international markets.

Despite the current non-material impact, Altria acknowledges that the continued effects of current macroeconomic and geopolitical conditions, including tariffs, on prices, availability, and quality of such items may continue, which could have a material adverse effect on its business, results of operations, cash flows, or financial position in the future.

Sources

• "Tariffs introduced earlier in 2025 have steadily increased over the past several months, weighing on consumer confidence and contributing to ongoing headwinds for discretionary spending. While we have not observed a material impact on adult tobacco consumer purchasing behavior as a result of tariffs, we continue to closely monitor the additional pressure that tariff-related price increases may exert." ("Filing")

• "We do not expect higher tariffs to have a material impact on our costs in 2025 based on presently available information on tariffs." ("Filing")

• "Our guidance contemplates the current estimated impact of increased tariffs on our costs, based on presently available information." ("Press Release")

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Analysis

The company's full-year 2025 financial guidance incorporates an estimated impact from tariffs. The costs related to tariffs for full-year 2025 are projected to be less than $100 million. This revised estimate reflects a reduction in previously anticipated tariff-related expenses. The gross margin assumption of approximately 82% for full-year 2025 includes the impact of these tariff costs.

The lower estimated costs related to tariffs have contributed to an improved outlook for the company's non-GAAP earnings per share guidance for full-year 2025. This adjustment is one of several factors influencing the updated financial guidance.

Sources

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

• "This revised non-GAAP EPS outlook reflects several items not previously included, such as a benefit from... lower estimated costs related to the impact of tariffs" (News Release)

• "We now expect full-year revenue to be between $64.5 billion and $65 billion." (Caroline Litchfield)

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Analysis

Changes in U.S. trade policy, including increased tariffs, have introduced volatility and uncertainty into global markets. The company estimates that the incremental costs from new tariffs currently in effect in the U.S. and other operating markets will be approximately $100 million in 2025, with the majority impacting the North America segment.

These tariff impacts contributed to unfavorable pricing, net of cost inflation, which adversely affected gross profit and adjusted gross margin for both the three and nine months ended September 30, 2025. Specifically, the North America segment's operating profit for the nine months ended September 30, 2025, was negatively influenced by these factors.

The company is implementing strategies to mitigate these costs. It has also benefited from an exclusion for Brazilian eucalyptus from tariffs, which is an important factor for its operations. Furthermore, the company plans to leverage lower anticipated net tariff impacts in the fourth quarter to support investments.

Management reports that the gross element of tariffs has decreased from approximately $170 million to $100 million. The company expects to mitigate approximately $50 million of this tariff headwind in 2025 by activating various tools within its toolkit. This mitigation is expected to play out into early 2026.

Sources

• "We estimate that the incremental costs of the new tariffs that are currently in effect in the U.S., as well as in other markets in which we operate, to be approximately $100 in 2025, most of which will be incurred by the North America segment." (MD&A)

• "The decline in gross profit was primarily due to unfavorable pricing net of cost inflation, including tariff impacts, and supply chain related investments, partially offset by gross productivity savings from integrated margin management of approximately $125." (MD&A)

• "Including the net impact from tariffs, we now project total cost of goods sold inflation of approximately $250 million for the North American and IPC businesses combined." (Nelson Urdaneta, CFO, Earnings Call)

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Analysis

Trane Technologies is monitoring macroeconomic indicators and uncertainties related to tariffs. The United States announced and implemented tariffs in 2025, with other countries imposing reciprocal measures. These global trade policy changes are ongoing and dynamic.

The potential challenges from these tariffs include disruptions to supply chains, volatility in commodity costs, and broader consumer and economic uncertainty. These factors could negatively impact the company's business operations, end markets, and financial performance.

To navigate the potential risks associated with these events, Trane Technologies relies on its business operating system, an in-region for region strategy, and its strength in execution. These measures are intended to help mitigate the effects of changing trade policies.

Looking ahead to 2026, the company's business operating system is positioned to manage both tariff and inflationary pressures.

Sources

• "We continue to monitor macroeconomic indicators and uncertainties resulting from the tariffs announced and implemented by the United States in 2025, as well as the tariffs imposed by other countries in response." (Filing, page 25)

• "These global trade policy changes continue to be dynamic, and as a result, we may experience supply chain challenges, commodity cost volatility, and consumer and economic uncertainty." (Filing, page 25)

• "We believe our business operating system, our in-region for region strategy, and strength in execution will enable us to navigate potential risks stemming from these recent events." (Filing, page 25)

• "Our business operating system is primed to stay ahead of tariff and inflationary pressures." (Company - CEO)

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Analysis

Increased U.S. tariffs significantly impacted Volkswagen Group's financial results. In the third quarter of 2025, these tariffs accounted for a headwind of €800 million. Year-to-date through the first nine months of 2025, the increased U.S. tariffs resulted in a total impact of €2.1 billion, with a cash out of €1.9 billion. This negatively affected the operating margin, which stood at 4.5% for the nine-month period when including tariffs but excluding other non-recurring effects.

The tariffs primarily affected sales volumes and profitability in the North American market. The company originally planned for a sales increase in North America but experienced an 8% decrease. This decline was partly due to trade uncertainties and measures implemented to mitigate tariff effects. For instance, shipping entry-level models like the Jetta and Taos from Mexico to the U.S. became unfeasible under a 27.5% tariff regime, leading to lost sales and margin.

Volkswagen Group is implementing several mitigation strategies to counter the tariff impact. These include intensified cost reduction efforts, accelerating efficiency programs, and exploring greater localization. Discussions are ongoing regarding a potential Audi factory in the U.S. The company is also working to increase the production of USMCA-compliant parts and adjusting pricing strategies where feasible. The Scout project, with its localized production in South Carolina, is identified as a promising initiative to strengthen the U.S. footprint.

Sources

• "…results were significantly impacted by headwinds of €5.3 billion 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 €4.7 billion and the increased U.S. tariffs of about €800 million." (Company - CEO)

• "…the result after nine months includes special effects in a magnitude of €7.5 billion, mainly increased U.S. tariffs in a magnitude of €2.1 billion…" (Company - CEO)

• "Excluding the non-recurring effects, but including costs related to the U.S. tariffs, the group operating margin would have amounted to 4.5%." (Company - CEO)

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Analysis

During Q3 2025, tariff uncertainties contributed to weakness in Mexico's economy, impacting both Energy Management and Industrial Automation segments in the region. This resulted in Mexico's sharp decline in North America's overall performance. Previously, tariff uncertainty also led to project delays in process and hybrid industrial automation, affecting sales earlier in the year.

Schneider Electric implemented positive pricing adjustments in North America to counteract tariff headwinds. However, the benefits from these pricing actions were partially negated by the ongoing deflationary environment in China. This dynamic indicates that while specific regional responses were made, broader market conditions affected the net outcome.

The company does not expect to fully offset the combined impacts of inflation and tariffs within the 2025 calendar year. However, management anticipates that these impacts will be offset over the coming quarters, consistent with how the company has addressed similar situations in previous cycles.

The reaffirmed 2025 financial targets for adjusted EBITA growth and margin improvement already incorporate the anticipated effects of trade tariffs. These targets reflect the company's current outlook after considering the geopolitical environment and enacted tariffs.

Sources

• "Product 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." (CEO, Earnings Call)

• "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." (CEO, Earnings Call)

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Analysis

Georgia Power implemented a new tariff structure for large load customers, as established by the Georgia Public Service Commission in the spring. This new structure is described as instrumental in attracting and securing commitments from credit-quality counterparties.

The new contracts, operating under this tariff structure, incorporate provisions such as minimum bills designed to cover all costs, regardless of customer usage. This mechanism aims to protect both existing customers and investors by ensuring cost recovery for the incremental investments required to serve new customer demand.

The company noted an educational effort was necessary to help customers understand the structure and the need for these protective measures within long-term commitments. This approach supports balancing growth with affordability and has facilitated the execution of new large load contracts.

Sources

• "Like we've talked about, we've moved into a mode working underneath, at least at Georgia Power, working underneath the Georgia Public Service Commission new rules that came into place in the spring." (Company - CEO)

• "What these contracts, the ones that we've signed now, have brought to the table are great protections for customers and our investors. The minimum bills cover all of our costs, whether or not the meter spins." (Company - CEO)

• "Consistent with our approach across Southern Company, these contracts include pricing and terms that are designed to pay for the incremental cost to serve new customer demand while also benefiting and protecting existing customers, helping to ensure growth does not come at the expense of affordability." (Company - Other Officer)

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Analysis

Tariffs contributed to the acceleration of inflation into the mid-single-digit range. This inflationary pressure is primarily due to tariffs and rising beef costs, and it is anticipated to persist in 2026. This trend impacts the company's cost structure.

In the third quarter of 2025, tariffs specifically impacted the cost of sales by approximately 30 basis points. The company estimates an ongoing impact of about 50 basis points from tariffs. This figure does not include any impact from Mexican or Canadian imports that fall under the USMCA exemption.

The company does not plan to fully offset this incremental inflation, including the tariff impact, through pricing in the near term. This approach is expected to pressure margins but is considered necessary to maintain value for guests during the current economic climate. The company aims to work with partner suppliers to mitigate inflation, rather than passively accepting a 5% inflation rate in the upcoming year.

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." (Company - Other Officer)

• "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." (Company - Other Officer)

• "The benefit of our menu price increase from last year and cost of sales efficiency is more than offset inflation, primarily in beef and chicken, as well as the impact of tariffs." (Company - Other Officer)

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Analysis

Tariffs and trade restrictions have influenced the company's financial performance. Gross margin has been affected by a consistent tariff impact, estimated to be a reduction of approximately 50 to 100 basis points quarter to quarter. This factor contributes to changes in other service and manufacturing costs.

Separately, extended export controls from the U.S. Government are projected to result in a revenue impact for the company. This market access loss for certain customers in China is estimated to be between $300 million and $350 million for calendar year 2026. While the immediate impact on the December quarter (Q2 FY26) was considered immaterial due to the ability to reallocate product slots, the total revenue loss for the subsequent calendar year is expected to be distributed across both halves.

The company is implementing mitigating strategies to address the structural reality of higher tariffs. These include assessing operations to reduce exposure by optimizing how parts are moved globally and exploring ways to reduce leakage and drawback scenarios by tracking different part attributes.

Sources

• "As I've said over the last couple of quarters, there is a tariff impact that we're dealing with, which is more or less consistent quarter to quarter. That's roughly 50 to 100 basis points of the impact." (Bren Higgins)

• "We estimate the revenue impact on the December and calendar twenty twenty six to be approximately 300 million to $350 million for KLA." (Bren Higgins)

• "my hope is, given some of the things that we have going on in the company in terms of assessing how we can try to mitigate that exposure, that that becomes less of a headwind over time. I think structurally we're in a world where we'll be dealing with higher tariffs. But I do think there are things we do in terms of how we operate the company, where there's some ROI in terms of just how we move parts around the world and how we reduce the leakage and drawback scenarios as we—we understand and track different parts attributes that help reduce some of that. So I think there are a number of dynamics at play that will become less of a headwind over time." (Bren Higgins)

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Analysis

During the fourth quarter of fiscal year 2025, tariffs were identified as a contributing factor to the contraction of the consolidated operating margin. The company's consolidated operating margin decreased by 500 basis points compared to the prior year. This reduction was primarily influenced by inflation, notably from coffee prices and tariffs, in addition to investments made for the "Back to Starbucks" strategy, specifically in labor hours.

The company acknowledges that tariffs, along with coffee prices, continue to be dynamic elements within the current operating environment. Management's approach to these factors includes remaining adaptable. This indicates an ongoing assessment of the situation rather than a specific, quantifiable mitigation strategy.

Sources

• "Shifting to margin, our Q4 consolidated operating margin was 9.4%, contracting 500 basis points from the prior year. This was primarily driven by inflation, led by coffee prices and tariffs, as well as investments in support of Back to Starbucks, largely in labor hours." (Company - Other Officer)

• "We'll also stay nimble in navigating the current environment where tariffs and coffee prices remain dynamic." (Company - Other Officer)

• "inherent risks of operating a global business, including changing conditions in our markets, local factors affecting store openings, protectionist trade or foreign investment policies, such as tariffs and import/export regulations, economic or trade sanctions, compliance with local laws and other regulations, and local labor policies and conditions, including labor strikes and work stoppages;" (Filing)

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Analysis

MercadoLibre's financial performance during the nine-month period ended September 30, 2025, was impacted by increased expenses attributed to tax withholding related to export services. These duties are identified as a component of both product and technology development expenses and general and administrative expenses.

Specifically, the company reported a $53 million increase in product and technology development expenses and a $22 million increase in general and administrative expenses, primarily due to higher tax withholding in connection with intercompany export services billing duties. This indicates an elevated cost burden on the company's operations directly linked to these duties.

Sources

• "certain tax withholding related to export duties" (Filing)

• "$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)

• "$22 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties." (Filing)

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Analysis

Tariffs contributed to an increase in taxes other than income taxes for the nine months ended September 30, 2025. This increase was part of a larger $405 million rise in taxes other than income taxes, which also stemmed from the expiration of the Biodiesel Blender Tax Credit. The specific financial impact solely attributable to tariffs was not quantified.

The company's forward-looking statements acknowledge that economic, political, and regulatory conditions, including the imposition of tariffs, could impact its business. However, no specific future financial impacts or mitigation strategies related to tariffs were detailed.

Sources

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

• "Economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives." (Filing)

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Analysis

The global trade landscape exhibits volatility, marked by various countries implementing new or modified tariffs or eliminating previous ones. The U.S. enacted updated reciprocal tariff rates on August 7, 2025, affecting imports from nations without bilateral trade agreements. Furthermore, the U.S. and China extended a pause on reciprocal tariffs until November 10, 2025, pending ongoing trade negotiations.

As of September 30, 2025, the U.S. maintains tariffs on goods from China and on imports from Canada and Mexico that do not comply with the United States-Mexico-Canada Agreement. New and modified tariffs on aluminum, steel, and copper imports were also implemented during 2025. The company's year-to-date and third-quarter 2025 results reflect its assessment of these tariff impacts and any mitigating actions undertaken.

The company actively monitors the global trade environment for new or changing tariffs, retaliatory measures, trade agreements, and export restrictions. This monitoring aims to identify and address potential impacts on its business, supply chain, and customers, while ensuring compliance with government import and export control requirements. The U.S.-China trade relationship remains an ongoing concern due to tariffs, export restrictions, and supply chain constraints, with an unclear impact on future 737 and 787 aircraft deliveries to China.

Sources

• "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 and third quarter results reflect our best estimate of the impacts of the tariffs enacted as of September 30, 2025, and certain potential mitigating actions." (Filing)

• "We continually monitor the global trade environment for new and/or changing tariffs, retaliatory actions, trade agreements, export restrictions, sanctions or other restrictions that may impact us or our supply chain or customers, and work to mitigate impacts to our business." (Filing)

• "The current state of U.S.-China relations remains an ongoing watch item. China is a significant market for commercial aircraft, and we have long-standing relationships with our Chinese customers. Overall, the U.S.-China trade relationship is challenged due to tariffs, export restrictions and related supply chain constraints, and other economic and national security concerns." (Filing)

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Analysis

CVS Health identifies the potential for increased costs and supply chain disruptions due to the implementation of new tariffs or changes in existing tariffs. These tariff-related pressures could adversely affect consumer demand. Additionally, tariffs may hinder the company's capacity to deliver client savings, which could impact overall financial results.

Sources

• "Implementation of new tariffs or changes in tariffs, including the impact of tariffs on trade relations between the U.S. and foreign countries, create exposure for increased costs and supply chain disruptions that can adversely impact consumer demand, the ability to deliver client savings or the Company's financial results." (Filing)

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Analysis

During the third quarter of 2025, tariffs significantly impacted the company's financial performance, primarily increasing manufacturing costs across all three primary segments. Unfavorable manufacturing costs, largely attributable to higher tariffs, were a major factor in the decrease in overall operating profit. The net impact of these incremental tariffs approached the upper end of the company's estimated range for the quarter.

Management indicated that tariffs contributed to a reduction in adjusted operating profit margin. This impact was not confined to a single segment but was observed across Construction Industries, Resource Industries, and Energy & Transportation, with charges also recorded in corporate items.

The company is actively evaluating strategies to mitigate the ongoing and future effects of tariffs. These include short-term cost reductions and limited adjustments to sourcing. However, longer-term structural changes to the supply chain would necessitate significant investments and would only be implemented once there is greater certainty in trade negotiations and policy, reflecting a cautious approach to avoid potentially redundant expenditures.

For the full year 2025, the company expects a substantial financial impact from incremental tariffs, even after accounting for some mitigating actions and cost controls. The guidance suggests that the tariff headwind will be more pronounced in the fourth quarter of 2025 compared to the third quarter, largely due to the timing of tariff rate adjustments.

Sources

• "The net impact of incremental tariffs was near the top end of our estimated range of $500 million to $600 million." (Company - CEO, context earnings call)

• "Based on the incremental tariffs announced in 2025 and in place by November 1, 2025, we expect the impact from incremental tariffs for 2025 will be around $1.6 billion to $1.75 billion, net of some mitigating actions and cost controls." ("Filing")

• "In the fourth quarter of 2025, we anticipate a net incremental tariff impact of about $650 million to $800 million." ("Filing")

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Analysis

Verizon Communications Inc. has been actively monitoring tariff developments initiated by the U.S. government on goods imported from various countries during 2025. The company is also analyzing potential reciprocal or retaliatory tariffs from other nations.

To date, these tariff-related developments have not materially impacted Verizon's financial condition or results of operations for the nine months ended September 30, 2025. The company is collaborating with its strategic suppliers to manage any potential impacts.

While the direct financial impact has not been material thus far, Verizon acknowledges the evolving nature of these tariff policies. The company states it cannot predict with certainty the ultimate future impacts, but those impacts could become material.

Sources

• "During the course of 2025, the U.S. government announced tariffs on goods imported from various countries to the U.S." (Filing)

• "We continue to actively monitor the tariff developments and analyze their potential impacts on our business, cost structure, supply chain and broader economic environment." (Filing)

• "While these developments have not had a material impact on our financial condition or results of operations to date, due to their evolving nature, we cannot predict with certainty the ultimate impacts they may have on our business and results in the future but those impacts could be material." (Filing)

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Analysis

During the period, tariffs affected the company's profitability in certain business areas. The company's strategy involved passing on tariff pricing to customers. This resulted in revenue recognized without an associated profit margin, creating financial noise and causing some businesses to experience difficulty. This mechanism served as a recovery method for tariff costs.

The company also highlighted its global manufacturing strategy and investments in regional customer support as a way to enhance operational resilience.

Sources

• "I would say in certain pieces of the business that are passing on a little bit more tariff pricing, that tariff pricing, we, and the revenue that comes from that does not include any margin behind it. When we do see a spike in some of that tariff pricing, some of those businesses struggle a little bit because you might add, you know, revenue with no margin, but that's just more of a recovery mechanism. That can create noise." (Company - Other Officer)

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Analysis

GSK's full-year guidance for 2025 incorporates tariffs that have been enacted thus far. This implies that any current financial impact from these tariffs is already factored into the company's reported and projected figures.\n\nThe company's guidance also accounts for a potential 15% impact from European tariffs. This indicates a forward-looking consideration of tariff effects on future financial performance.\n\nGSK has identified mitigation actions to address the potential financial implications of these tariffs. This suggests the company has prepared strategies to manage and potentially offset adverse impacts.

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." (Press Release)

• "As a reminder, our guidance is inclusive of tariffs enacted and indicated thus far. We are positioned to respond to these with mitigation actions identified." (Julie Brown (CFO))

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Analysis

Tariffs and related uncertainty contributed to the macroeconomic volatility faced by the company, affecting overall consumer confidence. This was identified as one of the primary factors for the adjustment to the company's 2025 financial guidance, which now anticipates a decline of approximately 15% in adjusted EPS on a constant currency basis for the fiscal year.

The company is monitoring the potential implementation of proposed tariffs and other trade restrictions. Such actions are expected to adversely impact both revenue and cost of goods sold. If these proposed tariffs are enacted, or if new tariff actions are implemented, the company expects a significant adverse impact on its business operations and financial performance.

Mondelez International utilizes the U.S.-Mexico-Canada Agreement (USMCA) to avoid tariffs on most products and materials imported from Mexico and Canada. However, the company acknowledges the potential for the current trade environment to evolve, which could affect these exemptions. Further protectionist trade measures and retaliatory actions are noted as risks that could lead to increased costs, pricing pressures, disrupted consumer spending patterns, and adverse effects on market stability and consumer confidence.

Sources

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

• "If the provisions of certain proposed tariffs for which implementation is currently delayed are ultimately implemented as originally proposed, or if additional tariff actions are implemented, we would expect those adverse impacts on our business operations and financial performance to be significant." (Filing)

• "This outlook does not reflect any potential tariff changes to United States-Mexico-Canada Agreement (USMCA) compliant trade." (Press Release)

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Analysis

The company is subject to digital services taxes imposed by various international jurisdictions, primarily within the European Union. These taxes are levied on revenues generated from digital advertisements or the use of online platforms. Rates for these taxes typically range from 1.5% to 10% of revenues deemed generated in the respective jurisdiction. The company records these applicable digital services taxes within "Sales and other expenses" in its Unaudited Consolidated Statements of Operations.

For the nine months ended September 30, 2025, the company reported a positive financial impact from lower digital services taxes and other similar taxes. This reduction contributed to a decrease in "Sales and other expenses" as a percentage of total revenues, benefiting operating margins during this period.

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. Rates for these taxes range from 1.5% to 10% of revenues deemed generated in the jurisdiction. 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 acknowledges that the global operating environment remains unpredictable, with evolving international trade policies potentially impacting costs and demand. Management indicates preparedness for this dynamic trade environment.

To manage potential effects, the company employs a "local-for-local" production model. Additionally, a trade surcharge has been implemented.

The full implementation of this trade surcharge contributed to an acceleration in pricing to 3% during the third quarter of 2025. The company's objective is to maintain pricing closer to 3%, with tariffs and developments in China influencing this target.

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." (MD&A, page 43)

• "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." (MD&A, page 43)

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

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Analysis

Tariffs are expected to contribute to an increase in raw material costs for 2026. The company views raw material costs as increasing by a low single-digit percentage overall for that year, with tariffs being a factor in this projection.

To mitigate these and other cost increases, the company plans to implement efficiency and simplification initiatives. It also intends to take disciplined pricing actions, including a 7% price increase for the Paint Stores Group effective January 1, and targeted price increases in other segments.

Sources

• "Our initial view of raw material costs is that they will be up low single digits, inclusive of tariffs, with varying costs for individual commodities." (Company - CEO)

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Analysis

The company experienced significant shifts in trade policy during the third quarter of 2025, including changes in tariffs and the elimination of the de minimis exemption for U.S. imports. These changes led to a direct impact on the company's financial results.

The elimination of the de minimis exemption caused a substantial increase in customs entries, with a tenfold surge in daily customs entries. Previously, 13,000 packages daily required dutiable clearance in March, with 21% processed by technology. By September, this increased to 112,000 packages daily, 90% of which were processed using advanced technology. This enabled the company to manage the increased volume and complexity without adding uncompensated costs.

The changes in trade policy also resulted in a shift in export volume, where growth occurred in lower-margin lanes, while volume declined in higher-margin lanes. This mix change pressured the international operating margin and the forwarding business. Additionally, U.S. imports, particularly from China to the U.S., saw a decline of 27.1% in average daily volume during the third quarter.

The company is employing mitigating strategies, including leveraging its customs brokerage expertise and investing in next-gen brokerage capabilities with agentic AI to process cross-border transactions efficiently. For small-to-medium-sized businesses (SMBs) affected by these policy changes, the company is actively providing support and guidance on supply chain adjustments. The company expects the full brunt of tariffs on SMBs to be felt in 2026, and anticipates a permanent shift in trade patterns until a new equilibrium is established, which will be necessary for international margins to reach their target mid-to-high teens level.

Sources

• "The third quarter brought a wave of tariff changes, some expected, others unforeseen, and our team navigated these complexities with exceptional skill and resilience." (Carol B. Tomé, CEO)

• "Following the elimination of the de minimis exemption for U.S. imports, UPS experienced a tenfold surge in daily customs entries." (Carol B. Tomé, CEO)

• "In the third quarter, that had about a $60 million impact for us. We estimate in the fourth quarter the direct impact will be $50 million." (Company - CEO)

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Analysis

The company observed a reduction in finished steel imports, which were down nearly 11% year to date through August. This decline is attributed to Section 232 measures and ongoing trade enforcement. The company notes that imports have decreased since the implementation of comprehensive 50% steel tariffs, and this trend is expected to continue.

Tariffs are viewed by management as a necessary tool to counter global steel overcapacity. The company advocates for the continuation of tariffs without exceptions or loopholes until fundamental changes occur within the global steel industry.

Trade cases serve as a defense against unfairly traded imports. In September, the International Trade Commission (ITC) determined that American steel producers were materially injured by corrosion-resistant steel imports from ten countries. This decision facilitates the Department of Commerce issuing final anti-dumping and countervailing duty orders. Additionally, the Department of Commerce is investigating rebar imports from four countries, with preliminary determinations expected later in the current quarter. These actions are seen as helping to level the playing field for the domestic steel industry.

While tariffs are generally beneficial, the company acknowledges that the tariff impact has affected heavy equipment and agricultural suppliers, leading to softer conditions in those markets. This factor is incorporated into the stable demand outlook for the upcoming year, which accounts for some potentially weaker markets.

Sources

• "Section 232 measures and ongoing trade enforcement are curbing imports, with finished steel imports down nearly 11% year to date through August." (Leon Topalian)

• "We believe that tariffs must stay in place with no exceptions or loopholes until there are fundamental changes in the global steel industry." (Leon Topalian)

• "While we're seeing varying levels of demand across these products, we expect each will continue to benefit from further declines in imports as the effects of tariffs and trade cases are realized." (Steve Laxton)

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Analysis

During the period, Cadence Design Systems experienced specific impacts related to U.S. export control regulations concerning EDA Software and Technology for China. While these restrictions were in effect, the company observed a decrease in revenue in China, primarily due to reduced deliveries of software offerings to customers in that region.

The rescission of these license requirements by the Bureau of Industry and Security (BIS) in July 2025 positively impacted the company's performance. This change enabled restored access to EDA Software and Technology for affected customers and facilitated additional hardware deliveries that had been prevented in the prior quarter. This recovery contributed to a significant increase in China's revenue for the third quarter of fiscal 2025 and an increase in overall backlog.

The company monitors broader macroeconomic and geopolitical factors, including the imposition of new or higher tariffs. While acknowledging the potential for future restrictions, the current guidance assumes the existing export control regime will remain substantially similar. Management states that their business model provides some resilience against such factors and they will continue to monitor direct and indirect impacts.

Sources

• "During this period, our revenue in China decreased primarily due to reduced deliveries of software offerings to our customers in China due to these license requirements. Following the rescission, we have restored access to EDA Software and Technology for affected customers in accordance with these updated U.S. export regulations." (Filing)

• "China revenue also benefited from the rescission by BIS in July 2025 of certain license requirements applicable to the export, re-export, or in-country transfer of EDA Software and Technology, which enabled additional hardware deliveries that were prevented during the quarter ended June 30, 2025." (Filing)

• "Our backlog grew from $6.4 billion to $7 billion, so there's a growth of $600 million. I would say about 25% of that, about $150 million, is catch-up from Q2 to Q3." (Company - CEO, context earnings call)

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Analysis

The United States government announced additional tariffs on goods imported from numerous countries on April 2, 2025, with certain counter-tariffs by other countries. These tariffs became effective on August 1, 2025. Illinois Tool Works Inc. implemented strategies to mitigate the impact, primarily by manufacturing products in the markets where they are sold. The company also pursued price increases and supply chain actions to recover increased tariff-related costs.

For the third quarter of 2025, the company's pricing and supply chain actions more than covered tariff costs, resulting in a positive impact on both adjusted EPS and operating margins. Management indicated that the impact of tariffs, from a cost perspective, is largely behind the company and is easing as a demand headwind.

Despite the successful cost mitigation, current tariff policies have introduced additional uncertainty, which could negatively impact overall demand from the company's customers. The company continues to assess the overall impact and implement actions to moderate or minimize these effects.

Sources

• "On April 2, 2025, the United States government announced additional tariffs on goods imported to the U.S. from numerous countries." (Filing)

• "effective pricing and supply chain actions more than covered tariff costs and positively impacted both EPS and margins in the quarter." (Company - CEO)

• "Additionally, we expect that tariff-related pricing and supply chain actions will more than offset tariff costs and favorably impact both EPS and margins." (Company - CEO)

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Analysis

The company acknowledges tariffs as a potential external factor influencing its operations and future financial performance. Tariffs are cited as a risk that could lead to supply and pharmaceutical shortages and disruptions. The company’s HealthTrust team actively monitors and manages tariff risk. This involves strategic sourcing, negotiation with vendor partners on contracts, and making decisions regarding the countries of origin for products. These efforts are part of a broader resiliency plan designed to offset potential impacts from various external factors, including trade policies.

While tariffs are included in the considerations for the company’s forward-looking statements and guidance for 2025, no specific financial impact from tariffs was reported for the current period.

Sources

• "the other component that we're keeping a close watch on are tariffs, where our HealthTrust team continues to work through a very diligent effort to manage the tariff risk, both in terms of sourcing, the way that we negotiate with contracts, our vendor partners on contracts, and then also in terms of moving products and moving choices of products across countries of origin." (Company - CEO, Earnings Call)

• "potential impacts of changes to U.S. trade policy and tariff levels." (Form 10-Q, Recent Developments)

• "supply and pharmaceutical shortages and disruptions (including as a result of tariffs or geopolitical disruptions);" (Form 10-Q, Forward-Looking Statements)

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Analysis

The company experienced a negative impact from tariffs on its gross margin during the first quarter of fiscal year 2026. Higher costs from tariffs contributed 60 basis points to the overall 70 basis point decline in reported gross margin. This indicates that tariffs directly affected the profitability of products across various segments.

Several business segments were specifically affected by higher tariff costs. These include Beauty, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care, where tariff costs contributed to a decrease in gross margin. The Grooming segment also faced higher tariff costs, which partially offset the gross margin improvement from increased pricing.

For fiscal year 2026, the company expects higher costs from tariffs to be an after-tax headwind of approximately $400 million. The company noted that this figure is an improvement compared to prior isolated tariff impact estimates, primarily due to the exclusion of certain natural materials and ingredients from tariff structures and the rescinding of retaliatory tariffs, such as those by Canada. The company also indicated that related supply chain investments and pricing adjustments are assumed within its guidance to mitigate these tariff impacts.

Sources

• "Gross margin decreased 70 basis points to 51.4% of net sales for the quarter. The decrease in gross margin was due to: ... 60 basis points of higher costs from tariffs" (Filing)

• "P&G now expects a commodity cost headwind of approximately $100 million after tax and higher costs from tariffs of approximately $400 million after tax for fiscal 2026." (News Release)

• "The biggest help on tariffs has been exclusion of materials, natural materials, and ingredients that cannot be grown in the U.S. ... Retaliatory tariffs coming down. Canada rescinding retaliatory tariffs of 25%, which just happened before the last quarterly call. Those components in aggregate are representing the commodity and tariff headwinds." (Andre Schulten, Company - CEO)

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Analysis

The company observed that anticipated changes to tariffs influenced volumes in certain segments. Automotive volumes increased, partly due to shippers pulling forward shipments in expectation of tariff adjustments. Similarly, international intermodal volume for the first nine months increased, primarily driven by higher volumes in the first six months, also in anticipation of potential tariff changes. The third quarter's international intermodal volume remained flat.

Looking ahead, the company anticipates that ongoing tariff volatility and growing trade pressures will lead to softer import demand in intermodal markets in the near term. This economic backdrop contributes to a mixed outlook for overall manufacturing activity, although output is still expected to grow. The company maintains a cautious outlook for the remainder of 2025 due to these dynamics, along with competitive activity stemming from its merger announcement.

Sources

• "Automotive volumes increased in both periods, driven by shippers increasing volume in anticipation of potential changes to tariffs, growth with existing customers and the absence of customer production issues seen in the prior year." (Third Quarter 2025 Form 10-Q, page 33)

• "International volume was flat in the third quarter but increased for the first nine months primarily driven by increased volume during the first six months in anticipation of potential changes to tariffs." (Third Quarter 2025 Form 10-Q, page 33)

• "Looking into our intermodal markets, we expect softer import demand in the near term. This reflects the impact of tariff volatility and growing trade pressures." (Ed Elkins, Chief Commercial Officer, earnings call)

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Analysis

Tariffs have increased costs and introduced uncertainty within the automotive industry, affecting Ford, its suppliers, and dealers. The company recorded an adverse net EBIT impact of $700 million in the third quarter of 2025 directly attributable to tariffs. These costs influenced segment performance, with Ford Blue's EBIT reflecting higher costs, including tariffs, and Ford Model e experiencing increased tariff-related costs that partially offset other cost improvements.

Ford has a receivable of approximately $1 billion on its balance sheet as of September 30, 2025, for tariffs paid but not yet refunded, related to preferential tariff treatment and import adjustment offsets. The timing of these refunds is uncertain and depends on the tariff category. Recent policy changes by the U.S. administration have expanded opportunities for tariff offsets. Ford anticipates these changes will allow it to offset a greater portion of its parts tariffs.

The company's strategy includes leveraging its U.S. manufacturing volume to generate credits that offset tariffs on imported auto parts. Tariffs that create a more level playing field for imported medium and heavy-duty trucks are viewed positively, as Ford builds all its Super Duty trucks in the United States. Ford expects these factors to contribute to a reduced net tariff headwind for the full year.

Sources

• "In the third quarter of 2025, Ford's net EBIT impact related to tariffs implemented or revised in 2025 was about $700 million, including the impact of preferential tariff treatment and import adjustment offset amounts." (Filing)

• "Credit based on our large U.S. manufacturing volume will allow us to offset tariffs on imported auto parts we need for our strong American production and manufacturing base." (Jim Farley, context earnings call)

• "Given the recent announcements by the administration, we now expect tariffs will be $1 billion net headwind for 2025, down from $2 billion." (Sherry House, context earnings call)

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Analysis

During the year, tariffs, combined with policy downturns in the U.S., affected the company's Renewable Diesel segment. These factors contributed to challenges such as rising feedstock costs, which negatively impacted the segment's profitability for a portion of the year. However, recent market rationalization, including softening fat prices in the fourth quarter, has enabled Renewable Diesel margins to return to positive adjusted EBITDA.

Looking ahead, the company recognizes ongoing policy conflicts. Policies aiming for an increased Renewable Volume Obligation (RVO) are counterbalanced by measures that may decrease renewable fuel generation from foreign feedstocks. This dynamic is expected to lead to higher RIN prices in the future. The company highlights that predicting the exact impact of these policies and tariffs on profitability remains challenging.

No specific quantifiable financial impact of tariffs on the overall company's net income, revenue, or margins was provided in the reporting period.

Sources

• "We've seen throughout the year, there's just been a lot of impact from tariffs and policy downturns in the U.S." (Company - Other Officer)

• "On DGD, you're exactly right. We've seen throughout the year, there's just been a lot of impact from tariffs and policy downturns in the U.S. We've seen fat prices rising for the better part of the year. I think just most recently, we are seeing enough rationalization in both biodiesel and renewable diesel where fat prices are finally starting to soften. With that lower fat price, we've seen DGD margins return back to positive EBITDA. That's a good sign. That's a good sign for the fourth quarter." (Company - Other Officer)

• "We still have a lot of policy that appears to be in conflict of increased RVO but decreased generation because of foreign feedstocks. Those are all going to be things where you're trying to raise the number but make it more difficult to generate. That usually is going to mean higher RIN prices. I think that is the question that everyone's got to get settled on." (Company - Other Officer)

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Analysis

Trade policies and tariffs have created increased volatility in global markets, negatively impacting the company's results of operations and cash flows. The ultimate impact of these tariff policies and other evolving global trade measures remains uncertain. The company actively monitors global trade developments to identify necessary actions to maintain competitiveness and works with regulatory bodies to address anti-competitive behavior.

Anti-dumping duties have led to a significant reduction in Chinese MDI imports into the United States, which typically account for approximately 20% of the U.S. MDI market. This reduction in imports, down about 80%, has resulted in some additional volume for the company.

However, these anti-dumping duties have also led to Asian exporters redirecting volumes into other regions, specifically Europe, Middle East, Africa, and India (EMEAI). This redirection is expected to cause margin compression for the Industrial Intermediates & Infrastructure segment.

The company's global asset footprint and product portfolio are positioned to capitalize on purchasing trends that favor local products and materials. This strategy aims to mitigate potential tariff headwinds by aligning with customer preferences for regionally sourced goods.

Sources

• "At the time of this filing, the ultimate impact of tariff policies and other evolving global trade measures, coupled with existing macroeconomic challenges, is uncertain." (Filing)

• "As it relates to anti-competitive oversupply activities, our teams continue to be actively engaged in conversations with governments around the world to mitigate impact, aggressively defend local production, and to ensure a fair trade environment remains." (Jim Fitterling)

• "In September, the U.S. Department of Commerce made a preliminary finding concluding that MDI dumping was occurring by Chinese producers in the United States. Chinese imports account for about 20% of the MDI market here. Industry imports are reporting that on top of the pre-existing duties that were already there, the market for Chinese imports is dissipating quite quickly. We are seeing some starts of additional volume." (Karen S. Carter)

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Analysis

Roper Technologies' Technology Enabled Products (TEP) segment experienced a disruption due to a new copper tariff, which took effect on August 1. This tariff caused short-term operational issues for Neptune, a business within the TEP segment. The impact was primarily observed in the third quarter of 2025, contributing to organic revenue growth for the TEP segment of 6.1%.

In response to the new copper tariff, Neptune implemented surcharges to mitigate the increased costs. This strategy, however, led to temporary delays in order timing as the company engaged in renegotiations with customers regarding open orders. These adjustments to pricing and subsequent discussions temporarily slowed the sales process, but the company clarified that these orders are delayed rather than lost.

The tariff-related impact on Neptune, combined with other market factors such as a government shutdown affecting the Deltek business, contributed to a revision of the company's overall organic revenue guidance for the full year 2025. The guidance was adjusted from a range of 6% to 7% down to approximately 6%, reflecting the combined effects of these headwinds. For the fourth quarter of 2025, organic growth in the TEP segment is expected to be in the low single-digit area, partly attributed to the timing issues at Neptune.

Sources

• "The new copper tariff that took effect on August 1 caused some short term disruption. Neptune responded by implementing surcharges to offset the tariffs impact, which temporarily slowed order timing." (Neil Hunn, earnings call)

• "Looking ahead to the fourth quarter, we expect organic growth in the low single digit area given the very difficult prior year comp and the timing we discussed at Neptune." (Neil Hunn, earnings call)

• "I mean, the reason that was a little rough this quarter were the two reasons we talked about: the commercial activity at Deltek with the government shutdown, and then this tariff related impact at Neptune." (Neil Hunn, earnings call)

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Analysis

Tariffs emerged as a headwind impacting Honeywell's financial performance in 2025. These incremental tariffs contributed to cost inflation, which temporarily outpaced the company's pricing actions. This effect was particularly noted within the Aerospace Technologies segment.

Management has initiated actions to mitigate the ongoing impact of these tariffs. For 2026, the expectation is that pricing strategies will align more effectively with tariff-related costs, thereby reducing the negative influence observed in 2025.

Specifically for the Aerospace Technologies segment, tariff pressures on costs contributed to margin contraction in 2025. However, this pressure is projected to decrease in 2026 as pricing adjustments are implemented, and tariffs stabilize.

Sources

• "While 2025 was affected by a number of headwinds, including heightened economic uncertainty, incremental tariffs and significant cost inflation, we have already begun taking action to position our Aerospace and Automation businesses to return to underlying margin expansion in 2026." (Vimal Kapoor)

• "For the full year, margins are expected to be approximately 26% as volume leverage is more than offset by transitory integration headwinds from the Case acquisition and caused inflation from tariff pressures temporarily outpacing pricing." (Mike Stepieniak)

• "In 2026, as pricing aligns with tariff costs, OE shipments of electronic solutions recouple with build rates and integration costs from the Case acquisition subside, Aerospace margins are well positioned to increase from 2025 levels." (Mike Stepieniak)

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Analysis

Lam Research Corporation's financial performance has been affected by tariffs and trade restrictions, particularly those impacting shipments to China. In the September 2025 quarter, the company experienced higher tariff-related spend, which partially offset the increase in gross margin as a percentage of revenue.

Looking ahead, the recently announced 50% affiliate rule, which restricts shipments to certain domestic China customers, is projected to significantly impact future revenue. This rule is expected to reduce revenue by approximately $200 million in the December 2025 quarter and by approximately $600 million for calendar year 2026.

These trade restrictions are anticipated to shift the company's regional revenue mix, with China expected to account for less than 30% of overall revenues in calendar year 2026. Tariffs are also projected to continue acting as a headwind to gross margin in both the December 2025 quarter and throughout calendar year 2026.

Sources

• "The increase in gross margin as a percentage of revenue in the September 2025 quarter compared to the June 2025 quarter was primarily a result of favorable changes in customer mix, partially offset by reduced factory efficiencies, higher tariff-related spend, and increased material costs." (Lam Research Corporation 2025 Q3 10-Q 18)

• "Our December quarter guidance does contemplate roughly a $200 million revenue impact from the recently announced 50% affiliate rule, restricting shipments to certain domestic China customers." (Company - Other Officer, Earnings Call)

• "Currently, we expect this rule to impact our calendar year 2026 revenues by approximately $600 million." (Company - Other Officer, Earnings Call)

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Analysis

O'Reilly Automotive, Inc. experienced significant tariff-driven acquisition cost increases during the third quarter of 2025. In response to these pressures, the company implemented appropriate adjustments to its selling prices. This pricing action mirrored the product cost inflation observed in the quarter, contributing to an overall same-skew inflation of just over 4%.

Despite the headwinds from rising product acquisition costs and a shift in customer mix towards the professional segment, the company maintained its gross margins. This was attributed to supply chain management and distribution productivity. The broader industry also reacted to tariff pressures with rational pricing adjustments.

Management observed a modest pressure on DIY customer transaction counts, which they believe reflects an initial short-term reaction to rising price levels, potentially leading to deferral of larger ticket jobs. However, professional customers appeared less sensitive to these inflationary pressures.

To mitigate tariff impacts, O'Reilly Automotive employs strategies that include diversifying its supplier base globally, sourcing from various countries such as Vietnam, Thailand, India, Mexico, and South American nations. The company also utilizes its scale and negotiation power with suppliers and actively monitors the pricing environment to remain competitive.

Looking ahead, the company believes it has absorbed the majority of the cost impacts from currently enacted tariffs. Its current guidance for sales and gross margin does not account for substantial impacts from further tariffs beyond what is already reflected in product acquisition costs. While a mid-single-digit same-skew benefit is anticipated in the fourth quarter due to the existing pricing environment, the company also factors in continued pressure on DIY customers.

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." (Company - CEO)

• "As expected, we realized significant acquisition cost pressure from tariffs in the quarter. The impact from product cost inflation in the quarter closely mirrored in timing the adjustments we made in pricing." (Brent Kirby)

• "While the broader tariff landscape has the potential to remain fluid, at this stage we believe we have seen the lion's share of the cost impacts we are expecting as they relate to the tariffs currently in effect." (Company - CEO)

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Analysis

Tariffs continue to affect the company's financial performance, specifically impacting its global supply chain, cost structure, and profitability. The energy generation and storage business experienced a relatively larger impact from the current tariff regime compared to the automotive business.

In the three months ended September 30, 2025, increased tariffs contributed to a higher average cost per unit in automotive sales revenue. Similarly, in the energy generation and storage segment, higher tariffs contributed to increased cost of revenue despite lower raw material costs and manufacturing efficiencies from the Shanghai Megafactory ramp.

To mitigate these challenges, the company is implementing cost reduction efforts, production innovation, process improvements, logistics optimization, and is focusing on operating leverage, vertical integration, and supply chain localization. The ramp-up of the Shanghai Megafactory assists in avoiding tariffs for non-U.S. demand.

Looking forward, changes in trade policy are expected to impact the company's global supply chain cost structure and availability, potentially affecting vehicle production and facility expansions. Higher tariffs on imports and retaliatory tariffs could adversely affect consumer spending and demand for durable goods and related services. Additionally, import tariffs by the US government and provisions of the OBBBA may increase battery cell expenses and consumer costs, negatively impacting demand. These policy changes could also necessitate adjustments to project timelines, influencing cash flow and capital expenditure expectations.

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 increased $1.62 billion, or 10%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due a net increase in deliveries year over year as discussed above and a higher average cost per unit due to lower fixed cost absorption, an increase in tariffs and sales mix, partially offset by lower material costs." (Filing)

• "The total tariff impacts for Q3 for both businesses were in excess of $400 million, generally split evenly between them." (Company - Other Officer)

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Analysis

Tariffs negatively affected Boston Scientific's gross profit margin during the third quarter and first nine months of 2025, partially offsetting gains from higher margin products. The company anticipates incurring incremental costs due to tariffs on U.S. imports and increased tariffs by China on U.S. manufactured products.

For the full year 2025, the company expects an approximate $100 million tariff headwind to its adjusted gross margin. Boston Scientific plans to monitor the evolving tariff situation and explore mitigation opportunities, although there is no guarantee that these efforts will fully offset the impacts. The annualization of tariffs in 2026 is expected to be a further headwind.

Changes in trade and tariff policies also represent a general risk factor, potentially causing a material adverse impact on business operations and results due to further tariff increases or other trade restrictions.

Sources

• "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, page 47)

• "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. While some of the announced tariffs have been adjusted and the U.S. and other governments continue negotiations on such measures, these and any further tariff increases on our products by the U.S., China or any other country or region, as well as sanctions or other measures that restrict international trade, could have a material adverse impact on our business operations and results." (Filing, page 46)

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

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Analysis

The impact of tariffs, combined with related foreign currency effects, served as a partial offset to the increases in both GAAP operating income margin and adjusted operating income margin during the third quarter of 2025. This indicates a negative pressure on overall profitability.

Specifically, the Analytical Instruments segment experienced a decrease in its segment income margin. This decline was primarily attributed to the impacts of tariffs and associated foreign exchange fluctuations in the third quarter of 2025. The trend extended to the first nine months of 2025, where the decrease in segment income margin for Analytical Instruments also stemmed from tariffs, related foreign exchange, unfavorable volume mix, and strategic investments, although partially mitigated by strong pricing realization.

In the third quarter of 2025, the company's adjusted EPS showed a favorable deviation of $0.11 compared to prior expectations. This improvement was due to a lower actual impact from tariffs and related foreign exchange than had been previously assumed.

The company's guidance for the full year 2025 incorporates the tariffs currently in place, including recent increases in tariff rates between the U.S. and Europe. For the fourth quarter of 2025, the company expects the tariff assumptions to remain largely consistent with previous guidance, without anticipating a significant new increase in impact.

Management has noted that some pharma and biotech customers are engaged in reshoring activities within the U.S. to mitigate exposure to potential tariffs. This strategy involves establishing new facilities and expanding existing ones, which is expected to benefit the company's channel, bioproduction, and analytical instruments businesses. New construction impacts are largely projected for 2027-2028, while leveraging the company's pharma services network for increased U.S. volume offers a more immediate and cost-effective solution for customers.

Sources

• "GAAP operating income margin and adjusted operating income margin increased in the third quarter of 2025 due primarily to very strong productivity improvements, partially offset by strategic investments, the impact of tariffs and related foreign currency effects, and unfavorable business mix." (Filing)

• "The decrease in segment income margin was driven by the impacts of tariffs and related foreign exchange." (Filing)

• "$0.11 of that beat was from a lower impact of tariffs and related FX than had been assumed in the prior guide." (Stephen Williamson)

• "As we talk about the actual environment, which is a part of how they think about the world and the decisions they make, there's a quiet confidence actually that they're going to be able to navigate the government policies effectively. You're seeing that in some of the announcements that have been made on pricing, as well as on reshoring more activity in the U.S. in terms of not being exposed to potential tariffs." (Marc N. Casper)

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Analysis

Tariffs have increased the company's cost of revenues, impacting its gross profit margins. During the three months ended September 30, 2025, and the nine months ended September 30, 2025, these costs rose by $22 million and $37 million, respectively.

The company manufactures a significant majority of its instruments and accessories in Mexicali, Mexico. Most of these products qualify under USMCA and have not been subject to recently imposed tariffs. However, the majority of its endoscopes, manufactured in Germany, and certain raw materials and sub-assemblies imported from China, are subject to tariffs. These tariffs are expected to adversely affect the product cost of the da Vinci Xi surgical system in China.

Indirectly, some suppliers have incurred incremental tariffs and have passed these additional costs to the company. While direct impacts from specific tariff actions on steel, aluminum, critical minerals, and semiconductors have not been material to date, the long-term effects of current and future tariff actions are difficult to predict. The escalation in tariffs and new country-specific trade requirements could also lead to tariff-related inflation in raw material costs and potential supply shortages as the company navigates adjustments in logistics and transportation routes.

For the full year 2025, the company expects tariffs to impact its pro forma gross profit margin by approximately 70 basis points, with a range of plus or minus 10 basis points. The company anticipates that increases to its cost of revenues due to tariffs and other trade measures will continue into the fourth quarter of 2025.

Sources

• "During the three and nine months ended September 30, 2025, tariffs and other trade measures have increased our cost of revenues by approximately $22 million and $37 million, respectively." (Management's discussion and analysis)

• "The lower product gross profit margin for the three months ended September 30, 2025, was primarily driven by the impact of tariffs." (Management's discussion and analysis)

• "Based on the announced and implemented global tariffs as of the date of this report, and assuming such tariffs remain in place, we expect increases to our cost of revenues driven by tariffs and other trade measures to continue to increase into the fourth quarter of 2025." (Management's discussion and analysis)

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Analysis

The company incurred an increase in material and freight costs totaling $1.1 billion due to tariffs in the third quarter of 2025. This was a primary factor contributing to an unfavorable cost impact in GM North America's EBIT-adjusted results during the period.

For the full year ending December 31, 2025, the company estimates the gross impact of tariffs to EBIT-adjusted could range from $3.5 billion to $4.5 billion. However, the company expects to mitigate approximately 35% of this gross tariff impact through various initiatives, including go-to-market strategies, footprint adjustments, and cost reductions.

Mitigating strategies also include cash tariff offset reimbursements, with $300 million received in the third quarter of 2025, and these reimbursements are expected to continue into the fourth quarter. Further modifications to tariffs relevant to the automotive industry, announced in October 2025, are anticipated to result in a material positive benefit to the company's fourth quarter 2025 business results and in future quarters. These changes include an expansion and extension of the import adjustment offset program, which broadens the scope of eligible parts for import adjustments, making U.S.-produced vehicles more competitive.

The company is also undertaking actions to reduce its long-term tariff exposure through strategic investments aimed at increasing domestic sourcing and manufacturing. This includes investments to onshore production at plants in Tennessee, Kansas, and Michigan. Specifically, the company plans to more than double Chevrolet Equinox production at its Fairfax assembly plant in Kansas and is investing close to $1 billion to build new V8 engines in New York. The company expects its net tariff exposure in 2026 to be lower than in 2025, despite an additional quarter of tariff impact.

Sources

• "This included a gross tariff impact of $1.1 billion, which was a little less than we had expected due to lower import volumes from Korea. We were able to offset more than 30% of this amount through go-to-market, footprint, and cost initiatives." (Paul Jacobson, earnings call)

• "Based on the current tariff environment, we estimate that impacts to EBIT-adjusted could range from $3.5 billion to $4.5 billion for the year ending December 31, 2025." (Filing)

• "The administration's recently announced expansion of the MSRP tariff offset broadens the scope of parts eligibility for the program and will make U. S. vehicle production more competitive. Additionally, this supports tariff mitigation in 2026 and beyond while we work to adjust our supply chains." (Paul Jacobson, earnings call)

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Analysis

Tariffs imposed by the U.S. and other countries impacted the company's cash flows during the nine months ended September 28, 2025. The company experienced an approximate $350 million impact on its cash flows.

The company anticipates recovering a substantial portion of this impact over time. However, near-term cash flow volatility is expected due to the timing difference between tariff payments and when such costs may be refunded or recovered.

To mitigate the effects of current and future tariffs, the company is pursuing several strategies. These include seeking exclusions, utilizing drawbacks and refunds, recovering costs through product pricing adjustments, and securing alternative sources of materials or products. Additionally, the company aims to qualify for duty-free treatment where applicable. Despite these efforts, these actions may not fully mitigate the impact of tariffs.

Excluding the near-term cash flow impact, the company does not expect the tariffs to have a material adverse effect on its results of operations or financial condition over the long term. Tariffs have contributed to supply chain challenges, affecting the availability and cost of materials, including rare earth minerals.

Sources

• "Tariffs that have been enacted or expanded by the U.S. or other countries had an impact of approximately $350 million on our cash flows for the nine months ended September 28, 2025. However, we expect a substantial portion of this impact to be recoverable over time." (MD&A - Recent Developments in Trade and Regulatory Policies)

• "At this time, excluding the near-term cash flow impact, we do not believe that the tariffs announced by the U.S. or actions taken in response to these tariffs by other countries will have a material adverse effect upon our results of operation or financial condition over the long term." (MD&A - Recent Developments in Trade and Regulatory Policies)

• "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, securing alternative sources of materials or products, or, in certain cases, qualifying for duty-free treatment." (MD&A - Recent Developments in Trade and Regulatory Policies)

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Analysis

The company acknowledges the volatility in the global tariff environment, stemming from existing and potential changes in U.S. and international trade policies. Despite this, the impact of new tariffs on its financial performance was not material during the first nine months of 2025.

To manage potential supply chain challenges and mitigate the effects of the changing tariff environment, the company relies on its diversified production network, a global supplier base, and a U.S. manufacturing presence for nicotine pouches. Its supply chains are predominantly contained within their respective trade regions, which helps reduce exposure to external disruptions. The company continues to actively monitor global tariff developments, evaluate changes, and adapt its operations and compliance practices.

Sources

• "While the global tariff environment is volatile, as a global company with a broadly diversified production, a worldwide supplier network, including an established U.S. manufacturing base for nicotine pouches, and existing supply chains that are largely self-contained within their respective trade regions, we currently believe we are well-positioned to mitigate potential supply chain challenges and that the changing tariff environment will not have a material impact on our business." (Filing)

• "During the first nine months of 2025, the impact of new tariffs on our business was not material to our condensed consolidated financial statements." (Filing)

• "We expect the global tariff environment to remain volatile throughout 2025 and 2026. PMI is actively monitoring developments, evaluating all changes, and adapting operations and compliance practices accordingly." (Filing)

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Analysis

Tariffs impacted the company's financial results in the third quarter of 2025. Both the Collins Aerospace and Pratt & Whitney segments experienced headwinds to operating profit due to higher tariffs.

The company's consolidated free cash flow for the third quarter of 2025 included $220 million in tariff-related impacts.

Management is pursuing mitigation strategies to offset tariff impacts. These include utilizing available exemptions or exclusions, evaluating operational and supply chain changes, and increasing prices where feasible.

For the full year 2025, the company's updated outlook incorporates a previously discussed net tariff headwind of $600 million, with this expectation remaining unchanged. Based on current conditions, the company does not believe that the tariffs or counter-tariffs will have a material adverse effect on its overall results of operations, financial condition, or cash flows.

Sources

• "Our results for the quarter and nine months ended September 30, 2025, reflect our best estimate of the impact of the tariffs then in effect." (Filing)

• "During the quarter, Collins saw about $90 million of headwind from year-over-year tariffs, actually the same number that Pratt saw for the quarter." (Neil Mitchill)

• "Cash flow for the quarter also included approximately $275 million for powder metal related compensation and $220 million of tariff related impacts." (Neil Mitchill)

• "Within this updated outlook, there is no change to the net tariff headwind we discussed on our last earnings call." (Neil Mitchill)

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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

Geopolitical and policy-related pressures, including tariffs, have influenced Danaher's operating environment. The company noted these pressures required leveraging the Danaher Business System to drive productivity gains across its businesses.

In the bioprocessing segment, equipment order growth has been affected as customers awaited clarity on the policy environment before finalizing investment decisions. Despite healthy project pipelines, this uncertainty prevented translation into firm orders.

However, discussions with senior pharma leaders indicate increasing confidence regarding capital investment decisions. This confidence stems from most-favored-nation negotiations progressing to workable solutions and the tariff situation stabilizing to become more predictable. This shift suggests a potential improvement in capital investment decisions going forward.

Regarding China, a localization policy offers a 20% pricing rebate for locally manufactured products. Danaher anticipates having a substantial portion of its diagnostic businesses, including equipment and reagents, localized by the end of 2025. The company views this strategic localization as an advantageous position rather than a short-term challenge.

Sources

• "Our team is leveraging the Danaher Business System to mitigate ongoing geopolitical and policy related pressures and drive meaningful productivity gains across our businesses." (Rainer Blair)

• "What I've noted here in these discussions with some of the senior pharma leaders is that there's more confidence now in making these investment decisions as some of these most favored nation negotiations are becoming to workable solutions and the tariffs are starting to dial in and remain somewhat consistent." (Rainer Blair)

• "We think that we're very well positioned here as it relates to localization. By the end of the year, much of our diagnostic businesses, whether that's equipment or reagents, will be localized. That degree of localization plays well across the portfolio. While we don't talk about percentages of localization, we think that we're very well positioned here and view this actually as advantageous as opposed to a short term headwind." (Matt McGrew)

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Analysis

Tariffs, combined with broader market softness, have affected the company's forest product and chemical markets. This led to some customers rationalizing their production in these segments.

Volume for both the forest product and chemical markets decreased by 7% compared to the prior year. Despite these volume declines, positive core pricing in these segments helped to mitigate the overall revenue decreases.

Tariff impacts are a continuing watch item for the intermodal business. While intermodal volumes have softened in recent weeks, this trend also aligns with typical seasonality.

Uncertainty regarding future trade policies and the specific nature of tariffs is influencing investment decisions. This suggests an ongoing impact on overall business conditions.

Sources

• "Broader market softness and tariffs continue to impact our forest product and chemical markets, where we have some customers that have rationalized production." (Kevin Boone, EVP and Chief Commercial Officer)

• "For both, volume was down 7% compared to the prior year, but positive core pricing has mitigated revenue declines." (Kevin Boone, EVP and Chief Commercial Officer)

• "Tariff impacts and general consumer demand remain watch items." (Kevin Boone, EVP and Chief Commercial Officer)

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Analysis

The company's UTOP margin guidance for the full year 2025 incorporates the assumption of existing tariffs. This includes higher tariffs in Switzerland that were implemented following the half-year reporting period.

The company did not provide specific quantitative details on how these tariffs impacted revenue, costs, or overall profitability. The tariffs are factored into the maintained UTOP margin expectation of at or above 16%.

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 (CFO))

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Analysis

Abbott's gross profit margin has been affected by tariffs. For the first nine months of 2025, higher costs, including tariffs, partially offset the favorable impact of gross margin improvement initiatives, leading to an increase in the GAAP gross profit margin percentage. Specifically, in the third quarter of 2025, the adjusted gross margin profile decreased compared to the prior year, primarily due to the impact of tariffs.

Abbott has implemented mitigation strategies to address the impact of tariffs. These include dedicated teams across its businesses focused on driving constant ideation and execution throughout supply chains and operations to improve gross margin. Management notes progress in tariff mitigation efforts, with ideas also feeding into broader gross margin expansion initiatives.

Looking ahead, management anticipates that tariffs will continue to have a full-year effect in the next fiscal year. However, the company expects ongoing mitigation efforts to help maintain its gross margin profile.

Sources

• "The increase in the first nine months of 2025 reflects the favorable impact of gross margin improvement initiatives, partially offset by higher costs, including tariffs, and the unfavorable impact of foreign exchange." (Financial Review -- Results of Operations)

• "Regarding other aspects of the P&L, the adjusted gross margin profile was 55.8% of sales, which, as expected, reflects a decrease compared to the prior year due to the impact of tariffs." (Phil Boudreaux (Executive Vice President, Finance and Chief Financial Officer))

• "We've been able to work hard this year to be able to mitigate the impacts of tariffs as they have full year effect next year." (Robert Ford (Chairman and Chief Executive Officer))

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Analysis

The company reported that uncertainty regarding tariffs was a factor in a previous quarter, contributing to customer hesitation in making concrete capacity building plans. This uncertainty has since decreased, which the company indicates has positively influenced customer decision-making.

Looking forward to 2026, the company expects a significant decline in its total net sales from China. This reduction is attributed to the prevailing trade environment, including the impact of export controls, national security regulations, and tariff announcements. The business levels in China observed in 2024 and 2025 were characterized as unusually high, and the company expects a return to more normalized levels.

This anticipated decrease in China-related business is expected to have a dilutive effect on the company's gross margin. Products largely shipped to China, such as immersion systems, typically carry favorable gross margins. Consequently, a lower volume of these sales would negatively impact the overall margin profile. The company also anticipates that its Deep UV (DUV) business will be lower in 2026 due to these dynamics in China, while its EUV business is projected to increase.

Sources

• "One element of the uncertainties that we called out at that point in time was also the uncertainty around tariffs that was out there. I think there is more clarity on that front right now. But that's unclarity also prevented customers from being very concrete as to what exactly they were going to do and whether we're going to build their capacity." (Roger Dassen, context earnings call)

• "On the other hand, we expect China customer demand, and therefore our China total net sales in 2026 to decline significantly compared to our very strong business there in 2024 and 2025." (Christophe Fouquet, context earnings call)

• "So as you know, what we ship to China today to a very large extent is immersion. Immersion comes with a very good gross margin. So less China business would be dilutive on that front." (Roger Dassen, context earnings call)

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Analysis

During the third quarter, U.S. tariffs did not result in significant incremental pricing adjustments for the Fashion and Leather Goods division. The improvement in this segment was primarily attributed to increased traffic and volume, not tariff-related pricing changes. For the U.S. market, particularly Champagne distribution, there was a potential for some stocking in anticipation of tariffs. However, the company indicated that tariffs were not the primary factor driving overall progress in the U.S. market during the period. The company expects moderate price increases in the U.S. in upcoming periods to compensate for tariffs.

Sources

• "On your question regarding the U.S. and price, if we look at Fashion and Leather Goods overall, the improvement, the sequential improvement, was mostly made through improvement of traffic and volume. Price was not very different from Q2 and mix was around neutral." (Company - CEO)

• "Is there an anticipation of tariffs or not? There might be, as you said, in some cases in the stocking of the distribution of Champagne, but we also saw some real improvement in Champagne, which is not what we see in Cognac. Overall, I'm not sure tariff is the main explanation of the progress that we've been seeing in the U.S." (Company - CEO)

• "Probably in the U.S. there will be moderate price increase in order to compensate for tariffs." (Company - CEO)

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Analysis

Tariffs introduced during the reporting period contributed to general market nervousness. This factor impacted the booking window for the latter part of the summer. The main cabin revenue segment experienced some effects from this situation.

Sources

• "When the spring swoon was happening and everybody got a little nervous when tariffs were introduced, that was the booking window for the latter part of the summer. That had some impact on main cabin as well." (Company - CEO)

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Analysis

PepsiCo's third quarter 2025 results for PepsiCo Beverages North America (PBNA) were impacted by tariffs. This impact specifically affected the segment's margin expansion during the quarter.

The company anticipates an expansion of PBNA's margin in the fourth quarter, which is expected to result in a positive margin expansion for the full fiscal year. This indicates that the Q3 tariff impact was considered a temporary headwind, with a recovery expected in the subsequent period.

Sources

• "You know, the Q3 was impacted by tariffs." (Company - CEO)

• "We see already in Q4 an expansion of the margin again to complete a positive margin expansion for the full year." (Company - CEO)

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Analysis

Tariffs have increased the cost of product sold for the Beer segment and negatively affected shipment volumes in the Wine and Spirits segment. The company has identified tariffs on aluminum cans as a specific driver of increased costs.

The company noted that branded wine and spirits shipment volume was negatively impacted by both U.S. government-imposed tariffs and retaliatory tariffs from international markets. This was observed during both the second quarter and the first six months of Fiscal Year 2026.

The company attempts to mitigate rising costs, including those from tariffs, through efficiency and cost optimization initiatives, increased selling prices, and hedging programs. However, it cannot guarantee full mitigation of these costs.

Sources

• "The increase in cost of product sold is primarily due to (i) $22.6 million in tariffs on aluminum cans..." (Constellation Brands, Inc. Q2 FY 2026 Form 10-Q)

• "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." (Constellation Brands, Inc. Q2 FY 2026 Form 10-Q)

• "For Fiscal 2026, we expect an approximate $70 million impact from tariffs." (Constellation Brands, Inc. Q2 FY 2026 Form 10-Q)

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Analysis

New tariffs resulted in higher product costs, contributing to a 100 basis points decrease in gross margin for the first quarter of fiscal year 2026. This impact was particularly noted in North America, where new tariffs were a primary factor in the segment's gross margin contraction of 330 basis points. Overall product costs in North America were flat as higher tariffs were offset by product mix.

Looking forward, the company now estimates the gross incremental cost due to tariffs to be approximately $1.5 billion on an annualized basis, an increase from the previously stated $1 billion. These increased tariff rates are expected to elevate the net headwind on gross margin for fiscal year 2026 from approximately 75 basis points to 120 basis points. For the second quarter of fiscal year 2026, new incremental tariffs are expected to contribute a net headwind of 175 basis points to gross margin.

The company is implementing actions to mitigate these new costs over time. These mitigation efforts aim to address the financial impact, though the near-term pressure on gross margins is anticipated to continue.

Sources

• "Higher NIKE Brand product costs (decreasing gross margin approximately 100 basis points), primarily due to higher tariffs in North America;" (Filing)

• "With the new rates in effect today, we now estimate the gross incremental cost to Nike on an annualized basis to be approximately $1.5 billion, up from the $1 billion we shared 90 days ago." (Matt Friend, Earnings Call)

• "Given the magnitude and timing of the most recent rate increases, we now expect the net headwind in fiscal year 2026 to increase from approximately 75 basis points to 120 basis points to gross margin." (Matt Friend, Earnings Call)

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Analysis

Government actions related to tariffs impact the costs of some merchandise. The degree of this exposure depends on factors such as goods type, imposed rates, and timing. Higher tariffs are expected to adversely impact financial results.

The company's merchants have adjusted their plans to mitigate tariff impacts, focusing on sourcing items that meet member needs while maintaining competitive pricing. Mitigation strategies include increasing Kirkland Signature product penetration, moving product sourcing to the countries and regions where items are sold, and consolidating global buying efforts.

Inflation in imported non-food items, influenced by tariffs, contributed to a LIFO charge during the quarter. The company continues to collaborate with suppliers to find efficiencies and offsets, including exploring different countries for production. This multi-pronged approach aims to absorb costs, improve efficiency, and lower waste to protect members from price increases.

The company is adopting an offensive stance against tariff impacts, prioritizing all available tools to mitigate cost increases before passing them on to members. Management indicates that they largely addressed the tariff challenges observed to date but acknowledge that the tariff environment remains fluid, requiring continued agility.

Sources

• "Government actions in various countries relating to tariffs affect the costs of some of our merchandise." (Filing)

• "Our merchants adjusted their plans to mitigate tariff impacts and source items that our members need while delivering the lowest price at the best value." (Ron Vachris)

• "We continue to work closely with our suppliers to find ways to mitigate the impact of tariffs, including moving the country of production where it makes sense and consolidating our buying efforts globally to lower the cost of goods across all our markets." (Gary Millerchip)

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Analysis

The company indicates that the overall financial impact from US tariffs in the current financial year is expected to be limited. This is partly due to effective steps taken to diversify sourcing for its own brands and licensed products, as well as goods not for resale. The direct impact of tariffs on the company is estimated to be less than $10 million on an annualized basis.

Indirectly, the company observes that its brand partners are taking proactive measures across their supply chains to mitigate cost pressures. These partners primarily source from Southeast Asia. Where retail price increases have occurred due to tariffs, they have generally been targeted rather than uniformly applied, with consumers showing a broadly neutral reaction so far.

Looking beyond the current financial year, the company notes ongoing uncertainty regarding the broader effects of tariffs and US consumer sentiment. While a portion of tariff-related costs has been absorbed by manufacturers and the supply chain, the company anticipates that these costs will eventually be passed on to the consumer. The ultimate impact of this on overall consumption remains a consideration.

Sources

• "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." (Press Release)

• "Our own brand accounts for less than 10% of our U.S. sales, and we've already taken effective steps to diversify the sourcing base. As a result, the direct impact to JD Sports Fashion PLC of higher U.S. tariffs is not material, estimated at less than $10 million on an annualized basis." (Dominic Platt, Company - Other Officer)

• "Looking beyond FY2026, uncertainty remains over broader tariff as well as over U.S. consumer sentiment, as you might expect." (Dominic Platt, Company - Other Officer)

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Analysis

Tariffs have increased product costs, directly contributing to higher average ticket growth in both the Do-It-Yourself (DIY) and commercial segments. For the fourth quarter of fiscal year 2025, average DIY ticket growth was 3.9%, and commercial business average ticket growth was approximately 3.7%, both of which included contributions from tariff-related cost increases.

These increased costs have led to significant non-cash LIFO charges. For fiscal year 2025, the company incurred a $64M LIFO charge, resulting in a 55 basis point decrease in gross margin compared to the prior year. The fourth quarter of fiscal year 2025 also saw an $80M LIFO charge, contributing to a 128 basis point unfavorable LIFO comparison and negatively impacting gross margin, operating profit, and diluted earnings per share.

The company is implementing strategies to mitigate the impact of tariffs, including negotiating with vendors to absorb some costs and adjusting retail prices as necessary. Management expects the industry to remain disciplined in pricing to avoid significantly impacting unit demand, given the largely break-fix nature of the business.

Management anticipates continued pressure from tariffs, leading to further LIFO charges in upcoming quarters. They expect these charges to eventually reverse into gains if product costs experience deflation over time.

Sources

• "this year's gross margin, operating profit, and EPS were negatively impacted by a non-cash $80mn LIFO charge." (Phil Daniele, CEO, earnings call)

• "We're planning a LIFO charge of approximately $120mn for next quarter as we're continuing to experience higher costs due to tariffs that impact our LIFO layers." (Jamere Jackson, CFO, earnings call)

• "a portion of that ticket growth is very clearly driven by the cost increases that we're seeing associated with tariffs." (Phil Daniele, CEO, earnings call)

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Analysis

The global trade environment, including policy changes, negatively impacted FedEx's financial performance in the first quarter of fiscal 2026. This primarily manifested as a $150M headwind to adjusted operating income, largely due to reduced international export volumes, particularly from China to the U.S. lane, stemming from changes in de minimis exemption. International priority package volumes declined by 10% as a direct result of these global trade policies.

The company's full-year fiscal 2026 guidance anticipates a total adjusted operating income headwind of $1B from the global trade environment. This figure incorporates the Q1 impact and projects continued pressure. A component of this full-year headwind includes $300M in direct trade-related expenses, covering costs for additional customs clearances, staffing, and administrative efforts to adapt to the evolving trade landscape.

FedEx has implemented strategies to mitigate these challenges. The commercial team was redirected to capture demand from other regions, such as Southeast Asia and Europe, providing a partial offset to the reduced demand on the China to U.S. export lane. The company is also assisting customers, especially small exporters, in navigating complex clearance processes through digital tools and close partnership, using prior experience from earlier de minimis exemption changes.

Sources

• "Notably, we achieved this result despite continued headwinds from the trade environment and the U. S. Postal Service contract expiration." (Raj Subramaniam, earnings call)

• "As expected, due to the evolving trade environment in the quarter, we experienced a material headwind on our Asia to U. S. Lane, largely from China outbound, driving most of the $150,000,000 international export headwind to adjusted operating income." (John Dietrich, earnings call)

• "So to be really clear, $1,000,000,000 of headwind is predominantly an impact of top line revenue reduction because China to The U. S. Is a very profitable lane for us." (Brie Carreri, earnings call)

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Analysis

The company reported a positive impact on its international online business margin due to improved management of duty costs. This improvement stemmed from enhanced effectiveness in calculating and processing duty payments, rather than from a reduction in actual duty rates.

Previously, profits were understated by 0.7% in the first half of the prior year, attributed to an over-provisioning for duty in one territory where duty rules changed. This accounting adjustment was reversed in the second half of that year.

The company's strategy involves optimizing its processes for paying duties, as demonstrated in the Japanese market. By ensuring proper duty payment and efficient product delivery, alongside price adjustments, the company improved the net margin of its Japanese website from sub-6% to the mid-teens.

Sources

• "Bortie gross margin, up 0.4% underlying margin on Next Goods, up 0.2% and lower duty goods lower duty costs contributing 0.2% 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." (Company - CEO)

• "There is a slight wrinkle here in that last year, we understated profits by around 0.7% in the first half. That reversed out in the second half. This is all about over providing for duty in one of the territories where duty rules changed, we were overly conservative in that." (Company - CEO)

• "We've also made sure that we're paying the proper duty and getting the product into the country effectively, which is no mean feat. And we've increased our prices slightly. That's moved margin forward by 12%. Net margin has moved forward by 12% on that website. It was sub-six percent, and now it's in the mid teens." (Company - CEO)

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Analysis

General Mills reported that tariffs are expected to influence input costs for fiscal year 2026. The company specifically indicated that the gross impact of tariffs is anticipated to increase Cost of Goods Sold by 1% to 2% for the full fiscal year. No specific quantifiable impact of tariffs was reported for the first quarter of fiscal 2026.

To mitigate the anticipated impact of tariffs and other input cost inflation, the company plans to employ several strategies. These include product reformulation, ingredient substitution, and strategic revenue management actions. The goal of these measures is to reduce the overall financial effect of increased costs on the business.

Sources

• "As a reminder, we expected our price investments, the divestiture impact and trade expense timing would put significant pressure on sales and profit results in the first half of the year before favorable trade timing comparisons, a fifty third week and improved volume trends drive positive results in the second half." (Kofi Bruce)

• "And while there have been changes to our forecast on tariffs over the past three months, we continue to expect the gross impact of tariffs to add another 1% to 2% of COGS and we continue to work to mitigate as much of that impact as possible through product reformulation, ingredient substitution and strategic revenue management actions." (Kofi Bruce)

• "The company expects the combination of these growth investments, input cost inflation (including the impact of tariffs), and normalization of corporate incentive expense will outpace its expectation for Holistic Margin Management cost savings of 5 percent of cost of goods sold, $100 million in global transformation and other efficiency savings, and benefits from a 53rd week in fiscal 2026." (Press Release)

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Analysis

Chewy acknowledges the ongoing impact of evolving macroeconomic conditions, including tariffs, on its business and consumer behavior. In response to anticipated tariff-related cost increases, the company proactively incurred higher inbound inventory processing costs in the second quarter of fiscal year 2025. This investment aimed to ensure product assortment availability for customers during peak holiday periods and to mitigate future tariff impacts.

The company is positioned to address potential tariff pressures through a multi-faceted approach. This includes leveraging its product mix, particularly a higher proportion of consumables and health-related items, and making proactive investments in onshoring incremental discretionary inventory. These actions are intended to safeguard the customer experience by allowing for selective pricing evaluations while simultaneously protecting product margins.

Instead of passively absorbing tariff-related costs, Chewy plans to invest in growth initiatives. The company will focus on expanding programs such as Chewy Plus and its private brands. This strategy is designed to maintain a competitive position, accelerate market share gains, and drive long-term success despite the anticipated external cost pressures.

Sources

• "As many retailers prepare to pass tariff-related costs onto customers, we believe Chewy is well positioned to mitigate these pressures. Our higher mix of consumables and health and proactive investments in onshoring incremental discretionary inventory provide meaningful safeguards." (Company - CEO)

• "We also incurred higher inbound inventory processing costs, primarily within hardgoods, to ensure we have the right assortment for pet parents as we head into the peak holiday periods, while also allowing us to mitigate impact from tariffs in 2025." (Will Billing)

• "roughly we spent about $3 million to $5 million in this particular element in higher inbound processing cost, right?" (Company - CEO)

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Analysis

Uncertain tariff policies are contributing to a complex and challenging retail environment. These policies, along with other macroeconomic conditions, are impacting consumer spending on discretionary items and reducing direct-to-consumer traffic. This has negatively affected the company's operating results and liquidity during the first half of 2025.

The company has implemented mitigating actions, including aligning inventory with current demand, reducing expenses and capital expenditures, and accelerating sourcing diversification efforts. The primary concern is the indirect impact of tariffs on overall consumer sentiment, rather than the direct impact on the company's own imports, as the Brand Portfolio segment imports approximately 20% of its product. Price increases from brand partners, which are influenced by tariffs, have been selectively passed on, with the company largely maintaining its initial markup.

Topo Athletic, a brand within the portfolio, proactively raised prices when tariff risks emerged. This strategy helped mitigate a significant portion of these costs without negatively impacting sales or growth rates. The company continues to monitor macroeconomic conditions, including potential impacts from new tariffs or trade restrictions, which could adversely affect financial performance and asset valuations in future periods.

Sources

• "Macroeconomic conditions influenced by uncertain tariff policies, volatility in stock market indices, elevated interest rates, persistent inflationary pressures, changes in employment levels, and geopolitical unrest continue to create a complex and challenging retail environment." (Filing)

• "The overwhelming concern that we've had from the onset has not been the direct impact of tariff. Because when you look at it in the grand scheme of things, like our brand's portfolio, only import about 20% of product. The rest of it, we land domestically. At DSW, obviously, we're largely reliant on our brand partners. We have always been most concerned about the indirect impact of tariff." (Company - CEO)

• "Topo was early in raising prices as we saw tariff risks materialize, and they have helped to mitigate a significant portion of these costs. We have seen no impact on sales or growth rates by doing so." (Company - CEO)

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Analysis

Broadcom acknowledges exposure to risks from trade tensions and related tariffs with U.S. trading partners. The company identifies these macroeconomic factors as potentially causing its net revenue to fluctuate significantly. Additionally, these risks may disrupt supply chain operations.

The company states that the impacts of these risks and exposures are difficult to isolate and quantify. Broadcom indicates it continuously monitors the broader impacts of these circumstances on its business, supply chain, and results of operations.

Sources

• "We are subject to risks and exposures from the evolving macroeconomic environment, including uncertainty and volatility in financial markets, efforts of governments to stimulate or stabilize the economy and other unfavorable changes in economic conditions, as well as an increase in trade tensions and related tariffs with U.S. trading partners." (Filing)

• "While difficult to isolate and quantify, these risks and exposures may cause our net revenue to fluctuate significantly and disrupt supply chain operations, and we continuously monitor the broader impacts of these circumstances on our business, our supply chain and our results of operations." (Filing)

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Analysis

International tariffs have contributed to heightened global trade uncertainty and led to higher prices for components and end products and services. These factors, alongside other global trade tensions and geopolitical uncertainty, were primary drivers of a rapid macroeconomic deterioration observed during the second quarter of fiscal 2025. The macroeconomic environment, which included the impact of tariffs, notably contributed to the $1.4 billion goodwill impairment charge recorded for the Hybrid Cloud reporting unit in the second quarter of fiscal 2025. To mitigate adverse effects, the company has implemented strategies such as leveraging its global supply chain, implementing pricing measures, disciplined cost management, and diversifying its supply chain. These actions aim to offset the increased input component costs and potential limitations on revenue and margin growth. Despite these mitigation efforts, the company estimates an impact on diluted net earnings per share of $0.02 due to tariffs in the second half of fiscal year 2025. The company expects to continue experiencing rising input component costs and potential increases in logistics costs.

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." (Filing)

• "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." (Filing)

• "We are reaffirming our estimate of a $0.02 impact from tariffs in the second half of the year." (Marie Myers, Chief Financial Officer)

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Analysis

Gross margin rate in the second quarter of 2025 declined by 80 basis points compared to the second quarter of 2024. This decrease was attributed in part to the flow-through of products purchased under 145% China tariffs, in addition to proactive markdowns on early Spring assortments.

The company has adjusted its full-year 2025 guidance to reflect an increased tariff impact. The estimated tariff impact on gross margin for the full year is now 40 to 60 basis points, an increase from the prior expectation of 20 to 40 basis points. This revised expectation for tariffs is projected to impact adjusted EPS by $0.25 to $0.40, up from the previous estimate of $0.10 to $0.25. The additional tariff impact is anticipated to primarily manifest in the fourth quarter due to the timing of product receipts.

Macy's, Inc. is implementing several mitigation strategies to counter the effects of tariffs. These actions include shared cost negotiations, vendor discounts, diversifying countries of origin, and making strategic price adjustments on merchandise. The company states that its multi-brand, multi-category, multi-channel, and multi-price point business model offers flexibility in navigating the tariff environment, allowing for competitive positioning without reducing business volume.

Sources

• "Gross margin rate declined 80 basis points in the second quarter of 2025 compared to the second quarter of 2024. The decrease in gross margin was driven by proactive markdowns on remaining early Spring assortments and product to maintain inventory health and the flow-through of product bought under the 145% China tariffs." (Press Release)

• "full-year guidance now incorporates a 40 to 60 basis point tariff impact to gross margin. This compares to our prior expectation of 20 to 40 basis points and equates to roughly $0.25 to $0.40 of EPS versus our prior expectation of $0.10 to $0.25." (Tony Spring, CEO)

• "Our teams are working diligently to offset tariffs through mitigation actions that include shared cost negotiations, vendor discounts, and strategically raising tickets." (Tony Spring, CEO)

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Analysis

New tariffs were announced starting in the first quarter of fiscal 2025 on imports to the U.S. from China, Mexico, Canada, and other countries. These tariffs resulted in higher tariff costs, which partially offset gross profit margin expansion during the 13 and 26 weeks ended August 2, 2025.

In the second quarter of fiscal 2025, adjusted diluted EPS included a positive impact of $0.20, attributed to the timing of inventory mark-on and tariffs. This benefit is related to the deferral of cost recognition rather than a reduction in tariff expenses.

The company is implementing mitigation strategies to counter the impact of these tariffs and cost inflation. These strategies include negotiating lower product costs, seeking rebates or invoice deductions, shifting supply sources to other countries, altering product assortment, or discontinuing certain items, and increasing prices. The company believes these efforts will help protect margins and maintain competitiveness over the long term, but notes that implementation costs may precede the realization of benefits.

Looking forward, the company expects results to be impacted by higher costs due to volatility in effective tariffs in the second half of fiscal 2025. The positive timing impact on adjusted diluted EPS experienced in the second quarter is expected to reverse in the third quarter of fiscal 2025. The ultimate financial effect of tariffs remains uncertain, contingent on further tariff measures, retaliatory actions, and the effectiveness of mitigation strategies.

Sources

• "Beginning in the first quarter of 2025, new tariffs were announced on imports to the U.S. ("U.S. Tariffs"), including additional tariffs on imports from China, Mexico, Canada and other countries from which we import goods." (Filing)

• "Gross profit increased 12.9% to $1.6 billion and gross margin expanded 20 basis points to 34.4%. The expansion in gross margin was driven primarily by improved mark-on from pricing initiatives, lower domestic freight costs, lower occupancy costs due to sales leverage, and favorable mix, partially offset by higher tariff costs, markdowns, distribution costs, and shrink." (Press Release)

• "Adjusted Diluted EPS from Continuing Operations of $0.77, Including $0.20 of Positive Impact, Relative to Expectations, Related to Tariff Timing" (Press Release)

• "We are actively implementing mitigation strategies to offset the impact of cost inflation including tariffs as noted above, by negotiating lower product costs, rebates or invoice deductions with our suppliers, shifting supply sources to alternate countries, changing our product assortment or discontinuing certain items, or increasing our prices." (Filing)

• "We believe that the positive timing impact of approximately $0.20 on adjusted diluted EPS from continuing operations will reverse in the third quarter 2025." (Press Release)

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Analysis

During the first six months of Fiscal 2026, various countries, including the United States, imposed or proposed tariffs on imports. These trade protection measures, along with other geopolitical and macroeconomic factors, were noted as potential influences on the company's results of operations in certain markets.

The company implemented mitigating strategies in response to these tariffs. Management stated that its supply chain's agility and scale were leveraged to address the complexities arising from these trade measures.

As a result of these efforts, the company indicated that customers were not impacted, and prices were not raised due to the tariffs. No specific financial impact on revenue, margins, or net income directly attributable to tariffs was disclosed for the current period or expected in future periods.

Sources

• "During the first six months of Fiscal 2026, a number of countries, including the United States, imposed or proposed tariffs on imports, and may continue to do so." (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)

• "We believe we have managed through the complexities of tariffs quite well and have not impacted our customers. We did not raise price." (Jeff Clarke (Chief Operating Officer))

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Analysis

Tariffs increased costs for the company during the second quarter of 2025, contributing to a decrease in operating income and impacting the gross profit rate. Specifically, tariffs represented approximately 40 basis points of pressure on the gross margin rate, which was one of the factors offsetting the increase in gross profit dollars. The company also faced increased transportation costs during this period.

To mitigate the ongoing impact of tariffs, the company is identifying and executing several strategies. These include optimizing costs with vendors, further diversifying sourcing, and managing the air versus ocean freight mix to be more efficient. The company also plans to implement select pricing adjustments through targeted promotional modifications.

For fiscal year 2026, the company expects to increase its mitigation efforts, specifically by shifting towards more ocean freight and less air freight, and by actively exploring resourcing products from different countries. However, these longer-term strategies require time to implement.

Sources

• "Operating income in the second quarter of 2025 decreased $21 million, to $41 million, compared to the second quarter of 2024... The decrease in operating income compared to the second quarter of 2024 was primarily driven by an increase in tariff costs and transportation costs..." (Filing)

• "Meanwhile, as expected, higher air freight rates and tariffs resulted in approximately 80 basis points of pressure in total in the quarter versus last year evenly split between the two." (Scott Bakula, Chief Financial and Operating Officer)

• "Our guidance for the full year 2025 now assumes net tariff impact of approximately $100 million which reflects tariff mitigation of approximately $70 million. Our projected net tariff impact of $100 million in 2025 is up $50 million versus our assumption embedded in our previous guidance. With approximately $10 million of net tariff impact already recognized in the first half of the year, our guidance assumes approximately $20 million of net tariff pressure in the third quarter with $70 million impacting Q4." (Scott Bakula, Chief Financial and Operating Officer)

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Analysis

The company has experienced minimal impact from tariffs in the second quarter of 2025. Despite an uncertain tariff environment, the company's gross margin expanded during this period.

To mitigate the effects of tariffs, the company and its brand partners have implemented selective and surgical price increases. These adjustments are made carefully, considering consumer affordability while aiming to offset tariff-related costs.

The updated full-year 2025 guidance incorporates the expected impact from all tariffs currently in effect. The company anticipates a small impact from tariffs in the second half of the year, which has been factored into its outlook for margin and full-year profitability. This approach reflects a balance between business momentum and the dynamic macroeconomic landscape.

Sources

• "As you look to the back half, we just did take up our our top line and bottom line guidance, and that includes all of the impact of tariffs that we see. We did also just come off of a Q2 where our gross margin expanded and we are navigating very well through an uncertain tariff environment." (Lauren Hobart, CEO)

• "John, minimal impact from, tariffs in q two. There is small impact in the second half that has been contemplated into our outlook that we shared, for the for the margin as well as the full year profitability." (Navdeep Gupta, CFO)

• "There have been some selective price increases, but we and our brand partners are very surgical about when, where, and how much we can bring in some minor price increases that, you know, to offset some of the tariffs." (Lauren Hobart, CEO)

Next Steps

Analysis

The company's financial performance was affected by global trade policies, specifically U.S. government export controls related to China. In April 2025, a license requirement for H20 product exports to China led to a $4.5 billion charge in the first quarter of fiscal year 2026 for excess inventory and purchase obligations. This occurred as demand for H20 diminished following the new requirements.

In the second quarter of fiscal year 2026, licenses were granted for certain H20 product sales to China-based customers. However, the company did not ship any H20 products or generate revenue under these licenses during the quarter. The U.S. government expressed an expectation to receive 15% of the revenue from licensed H20 sales, but a regulation codifying this requirement has not been published.

During the second quarter, the company recognized approximately $650 million in H20 revenue from sales to an unrestricted customer outside of China. This transaction resulted in a $180 million benefit from the release of previously reserved H20 inventory, positively impacting gross margins. The company is actively advocating for the U.S. government to approve its Blackwell platform for the China market.

Looking ahead, the third-quarter guidance does not include any H20 shipments to China. However, if geopolitical issues are resolved, the company anticipates shipping $2 billion to $5 billion in H20 revenue during the third quarter. The company also plans to increase U.S.-based manufacturing and invest in specialized equipment and processes to enhance supply chain resilience and meet demand for AI infrastructure, mitigating broader challenges from evolving trade policies and tariffs.

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)

• "In August 2025, the USG granted licenses that would allow us to ship certain H20 products to certain China-based customers, but to date, we have not generated any revenue or shipped any H20 products under those licenses." (Filing)

• "We have not included H20 in our Q3 outlook as we continue to work through geopolitical issues. If geopolitical issues reside, we should ship $2 billion to $5 billion in H20 revenue in Q3." (Colette Kress)

• "The China market, I've estimated to be about $50 billion of opportunity for us this year. If we were able to address it with competitive products and if it's $50 billion this year, you would expect it to grow, say, 50% per year as the rest of the world's AI market is growing as well." (Jensen Huang)

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Analysis

HP Inc. has been affected by tariffs, which have led to higher trade-related costs. The company has implemented mitigation strategies to address these expenses, including manufacturing diversification, cost reduction initiatives, and pricing adjustments. A significant step in this effort was taken in the third quarter of fiscal year 2025, where nearly all products sold in North America were manufactured outside of China, reducing trade-related costs. Production is being expanded across Vietnam, Thailand, Mexico, and the U.S.

Despite the increased trade-related costs, HP Inc. successfully mitigated the majority of these tariff impacts in Q3 FY2025. The company's gross margin saw a year-over-year decline, partially due to these increased trade-related costs, along with changes in product mix and unfavorable currency effects. However, the Personal Systems operating margin returned to its target range, and the Print segment's operating margin remained within its target range, as increased trade-related costs were offset by pricing actions and cost reductions.

Looking ahead, HP Inc.'s fourth quarter guidance factors in current global tariff rates. The company recognizes the ongoing uncertainty in the global trade environment and has planned for this landscape, focusing on maintaining operational agility to respond to future changes. Mitigation efforts, including the relocation of manufacturing, are expected to continue as the company works to manage these evolving conditions.

Sources

• "At the same time, we are making solid progress on our actions to mitigate higher trade related costs, including manufacturing diversification, cost reduction and pricing adjustments. This quarter as planned, nearly all products sold in North America are now built outside of China, helping to further reduce trade related costs." (Enrique Loris)

• "In Print and PS, we executed decisively on the actions we laid out to mitigate trade related headwinds and are pleased with the meaningful progress we made in the quarter, including accelerating supply chain resiliency, cost reduction and pricing actions. As a result, we were able to mitigate the majority of tariff costs in Q3, while delivering operating margins within our expected ranges for both businesses and non GAAP EPS slightly above the midpoint of our guidance range." (Karen Parkhill)

• "Our Q4 guide takes into account current global tariff rates, as well as the market growth expectations that Enrique just covered." (Karen Parkhill)

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Analysis

Recent changes to tariffs and trade policies increased risk and uncertainty for future results. In the first half of fiscal year 2025, tariffs did not materially impact results. However, in the second half of fiscal year 2025, additional measures, including tariff increases, exemptions, and pauses, along with retaliatory actions from other countries, led to an adverse impact.

Tariffs and related logistics costs significantly impacted the company's gross margin and overall operating margin in the third quarter of fiscal year 2025. This impact was particularly pronounced due to higher tariff expenses driven by increased shipment volumes and inventory buildup to support fourth-quarter growth. Furthermore, a 50% tariff increase on imports from Europe and strong demand for European-produced LC products amplified these costs.

The company anticipates that the headwind from tariffs will peak in the fourth quarter of fiscal year 2025. It expects to substantially mitigate the tariff impact during fiscal year 2026. Mitigation strategies include reorganizing supply chains, shifting production across the global footprint, implementing targeted pricing actions, and pursuing supply chain optimization and other cost-efficiency initiatives. These mitigation efforts are expected to be largely implemented by the end of fiscal year 2025 and will ramp through fiscal year 2026.

Sources

• "While the recent tariff changes adversely impacted our costs of revenue in the third quarter, we expect to substantially mitigate the impact during our fiscal year 2026." (Form 10-Q)

• "Tariff expenses were higher than our prior expectations as we saw a meaningful increase in shipment volumes and increased inventory to support Q4 growth." (Padraig McDonnell, Company - CEO)

• "Based on the rates currently in place, we are now anticipating $20,000,000 net costs for the year, up from the minimal impact we guided in May. This increase is due to our better than expected revenue performance across the second half as well as the 50% tariff increase on imports from Europe announced at the beginning of the month." (Rodney Gonzalez, Analyst, Unknown Affiliation)

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Analysis

The company reported an adverse tariff impact on cost of sales in the second quarter of Fiscal 2025. This impact amounted to approximately $5 million, resulting in a 40 basis point increase in cost of sales as a percentage of net sales for the quarter compared to the prior year. For the year-to-date period of Fiscal 2025, tariffs contributed an approximate 20 basis point adverse impact to cost of sales as a percentage of net sales.

The company expects a net tariff expense of approximately $90 million for the full Fiscal 2025. This is projected to negatively impact operating profit by 170 basis points as a percentage of net sales. This full-year guidance incorporates trade policies as of August 25, 2025, and includes the anticipated effects of planned mitigation strategies. The expected tariff impact for the third quarter of Fiscal 2025 is $25 million, with the remaining $60 million forecast for the fourth quarter of Fiscal 2025.

Management is implementing several strategies to mitigate tariff effects. These include evaluating potential changes to the supply chain footprint, engaging in negotiations with supply chain vendors, and identifying operating expense reductions. The company also aims to increase average unit retail (AUR) through targeted reductions in promotions and clearance selling rather than broad-based ticket price increases. The company noted that significant mitigation actions are expected to largely materialize in Fiscal 2026, as adjustments to global production and supplier relationships require time. The company's diversified sourcing base, spanning 16 countries, is viewed as an advantage in managing these risks.

Sources

• "For the second quarter of Fiscal 2025, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales increased by approximately 230 basis points, as compared to the second quarter of Fiscal 2024. The percentage increase was primarily attributable to cost of sales deleverage from single-digit AUR decreases driven by volume mix and targeted promotions, and higher average unit cost ("AUC") partially due to an approximate 40 basis point adverse tariff impact compared to the second quarter of Fiscal 2024." (Filing)

• "Assuming the estimated impact from the tariffs on goods imported into the U.S. based on with trade policies as of August 25, 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." (Filing)

• "On tariffs, we intend to bring our proven playbook built on years of experience to mitigate as much of the increased cost as possible over time as rates become more certain. As our teams have demonstrated before, we have a variety of options in our playbook including shifting global production, enhancing supplier contracts and relationships, managing operating expenses and determining ways to increase AUR through lower promotions and lower clearance selling." (Fran Horowitz, context earnings call)

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Analysis

Tariffs are identified as one of several macroeconomic factors contributing to uncertainty in demand for the company's subscription services. These factors, which also include geopolitical conflicts, inflationary pressures, interest rate fluctuations, and foreign currency exchange rate volatility, are noted to create pressure on consumer and business behavior. This leads to elongated sales cycles and increased scrutiny of IT budgets among both existing and potential customers.

The company is monitoring the potential effects of intensifying trade tensions and global market volatility on its business and financial results. The overall implications of these macroeconomic conditions, including tariffs, on the company's financial position, particularly in the long term, remain uncertain.

Tariffs and trade tensions are also cited as risks that could impact the timing of cash collections from customers, potentially affecting cash from operations.

Sources

• "The macroeconomic environment, including geopolitical conflicts, tariffs and escalating trade tensions, inflationary pressures, interest rate fluctuations, and the global market and foreign currency exchange rate volatility, continues to create uncertainty in demand for subscriptions to our open work platform." (Filing)

• "In recent months, intensifying trade tensions and global market volatility have impacted the macroeconomic environment, and we continue to monitor the potential effects of these circumstances as well as the overall global economy and geopolitical landscape on our business and financial results." (Filing)

• "Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, macroeconomic factors, such as geopolitical conflicts, tariffs and trade tensions, inflationary pressures, interest rate fluctuations, and the fluctuations in foreign currency exchange rates." (Filing)

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Analysis

Walmart acknowledges ongoing uncertainty from tariffs and trade restrictions. The company implemented strategies to mitigate tariff impacts by maintaining competitive prices for customers and managing inventory.

In the second quarter, the impact of tariffs on margins was less pronounced than initially anticipated. This was partly attributed to the effective management of inventory and pricing by the company's merchants. Walmart's diversified business model, with growth in higher-margin segments such as advertising and membership, also provided flexibility to absorb some tariff-related cost increases.

Customer behavior has shown some adjustments in response to price increases in discretionary categories, leading to a moderation in unit sales for those items. The company anticipates that costs will continue to increase in the third and fourth quarters as inventory is replenished at post-tariff price levels.

Less than one-third of products sold in the U.S. are imported. The primary import markets include China, Mexico, Vietnam, India, and Canada. The company's guidance for full-year adjusted operating income growth remains unchanged, but the wide range of Q3 operating income growth reflects ongoing trade policy discussions and the need for operational flexibility.

Sources

• "With regard to our U.S. pricing decisions given tariff related cost pressures, we're doing what we said we would do. We're keeping our prices as low as we can for as long as we can." (Doug McMillon)

• "But as we replenish inventory at post tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters." (Doug McMillon)

• "Based upon our experience in Q2, we believe the impacts on margins and earnings from higher cost of goods and how they flow through our inventory accounting method will be less pronounced than previously anticipated." (John David Rainey)

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Analysis

Tariffs have introduced significant volatility within the global economy. TJX has reported consistent success in mitigating tariff pressures and anticipates this ability to continue.

The company's buying organization employs its merchandise sourcing model to offset tariff effects. Mitigation strategies include capitalizing on market excess inventory, efficiently managing markdowns, and leveraging its flexible business model to diversify sourcing. This flexibility allows the company to reduce reliance on highly tariffed categories and utilize its global network of over 1,300 buyers across 100 countries and satellite buying offices in Europe and the Far East for alternative sourcing and negotiation.

For the second quarter of fiscal 2026, merchandise margin remained flat despite higher tariff costs compared to the prior year, indicating successful mitigation of these costs. The company's pretax profit margin for the second quarter exceeded its plan by 0.9 percentage points, partly attributed to lower-than-expected tariff costs.

The company's guidance for the third quarter, fourth quarter, and full fiscal year 2026 assumes that current tariff levels on imports into the U.S. will persist. This guidance also assumes that TJX will continue to successfully offset the incremental tariff pressure throughout fiscal 2026. However, uncertainties remain regarding trade negotiations, responses from other countries, potential exceptions, alternative merchandise sources, and the impact on pricing, demand, and retaliatory tariffs.

Sources

• "While we have been, and believe we can continue to be, successful in mitigating tariff pressures, tariffs have led to significant volatility in the global economy." (Filing)

• "Merchandise margin was flat despite higher tariff costs versus last year." (Filing)

• "The Company's guidance assumes that it can offset the significant pressure it expects from tariffs throughout Fiscal 2026." (Press Release)

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Analysis

Tariffs did not materially affect the company's profitability and cash flows in fiscal 2025. However, higher tariff rates are anticipated to adversely impact fiscal 2026 profitability and cash flows.

The company expects tariff-related headwinds to reduce fiscal 2026 profitability by approximately $100 million, after accounting for planned mitigation strategies. Mitigation efforts include leveraging available trade programs and optimizing the regional manufacturing footprint, such as through a facility in Japan. These actions are intended to offset more than half of the expected impacts and enhance adaptability to evolving trade policies.

Additional strategies under consideration to further mitigate tariff impacts include Profit Recovery and Growth Plan (PRGP) initiatives and potential pricing adjustments.

Sources

• "The impact was not material to fiscal 2025 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)

• "Based on current information and net of planned mitigation actions, the Company expects tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million." (Press Release)

• "These efforts, along with the agility we have built into our supply chain, are helping to offset more than half of the expected impacts and better position us to adapt quickly to address the evolving trade policies." (Akhil Srivastava, Earnings Call)

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Analysis

Tariffs and trade fluctuations contribute to general market uncertainty. Management observes continued uncertainty among customers with respect to tariffs. This uncertainty, coupled with the risk that tariffs could curtail automotive production, has influenced a conservative view for the automotive sector's guidance in the near term. The company is monitoring these potential impacts.

Sources

• "While tariffs and trade fluctuations are creating market uncertainty, the demand for ADI's products remains robust." (Vincent Roche)

• "However, we are mindful of the continued uncertainty facing customers with respect to tariffs and are monitoring the impacts closely." (Richard Puccio)

• "But we do think that given the behavior we've seen from our auto customers, EV credits expiring and the risk that tariffs could curtail production, We are taking a bit of a more conservative view to automotive in the near term." (Richard Puccio)

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Analysis

The U.S. imposed tariffs in April 2025, impacting the company, as approximately half of its merchandise is sourced from outside the U.S., with China being the largest source. The tariff-related pressures, along with inventory adjustment costs, contributed to a decline in the gross margin rate and negatively affected GAAP and adjusted EPS in the second quarter of 2025. Specifically, these combined pressures accounted for a 210 basis point impact within merchandising, which was a primary factor in the overall 100 basis point decrease in the gross margin rate.

The company has implemented various mitigating strategies to address the tariff impact. These include vendor negotiations, changes in merchandise assortment, adjustments to country of production, modifications to order unit quantities and timing, and strategic pricing. The objective is to minimize the tariffs' financial impact on the company's profitability and to limit their effect on consumer pricing, focusing on value.

While the tariff environment is expected to remain challenging and uncertain, management indicates that the bulk of the one-time tariff costs, primarily related to order cancellation, were incurred in the second quarter of 2025 and are mostly behind the company. However, the direct cost impact of tariffs will persist as long as the tariffs remain in effect, leading to some short-term pressure on the P&L for the remainder of 2025, although the company anticipates ending the year in a healthy position.

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, and indicated that the U.S. is actively negotiating country-specific agreements that it expects will result in changes to imposed tariff rates." (Q2 2025 Form 10-Q)

• "Our second quarter gross margin rate was 1% point lower than a year ago. This decline was primarily the result of about two ten basis points of pressure within merchandising, reflecting inventory adjustment costs related to the slowdown in our first quarter sales, combined with the tariff related pressures, including purchase order cancellation costs." (Jim Lee)

• "And while we expect this year's P&L will reflect some short term pressure from tariffs, we expect to end the year in a healthy position and move beyond this period of uncertainty in 2026." (Brian Cornell)

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Analysis

New trade policies, including additional tariffs on imported goods, are anticipated to impact the company's financial performance. The pre-tax net tariff impact for fiscal year 2026 is estimated at $185 million. This figure is lower than previous scenarios, indicating some success in mitigation efforts.

For the three months ended July 25, 2025, the financial impact of tariffs was not material. However, an approximate $21.6 million negative impact from tariffs is expected for the second fiscal quarter of 2026.

Management is taking proactive steps to mitigate the effects of these tariffs. The evolving nature of international trade policy, however, continues to present a risk to the company's cost structure and financial performance. Further escalation or expansion of trade barriers could materially affect operations.

Sources

• "Based on current rates as of August 19, 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. The actual amount could vary based on changes in tariff rates, duration of tariffs, scope of tariffs, and potential countermeasures or mitigation actions." (Filing)

• "The impact of the tariffs on the financial results for the three months ended July 25, 2025 was not material." (Filing)

• "Regarding tariffs, you'll recall we outlined two scenarios when we gave our annual guidance last quarter. Given where we are in the year, we can take the worst case three fifty million scenario off the table for this year. And the two hundred million scenario has modestly improved driven by our execution on mitigation efforts. As a result, tariffs are now expected to be approximately €185,000,000 for fiscal twenty twenty six." (Thierry Pieton, Company - CFO)

• "For Q2, we would expect EPS of $1.3 to $1.32 which includes an approximate 1% benefit from foreign currency based on recent rates as well as an approximate EUR 18,000,000 negative impact coming from tariffs." (Thierry Pieton, Company - CFO)

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Analysis

The company notes an increase in tariff rates since May. More than 50% of its products are sourced domestically, which means they are not subject to tariffs.

Tariffs on certain imported goods are anticipated to lead to modest price adjustments in specific categories, rather than widespread price increases. The company maintains a portfolio approach to pricing, with the objective of preserving the overall value of projects for customers.

To counter tariff pressures, the company implemented a reduction in promotional activities within certain garden product categories during the second quarter. This action contributed to a decrease in comparable transactions in those specific areas.

The company's guidance for the remainder of the fiscal year includes the anticipated impact of these increased tariffs. Previous efforts to diversify product sourcing have enhanced supply chain flexibility.

Sources

• "First, it's super important to remember that over 50% of our products are sourced domestically and wouldn't be subject to any tariffs. Now, some of the important goods, obviously tariff rates are significantly higher today than they were when we spoke in May. So, as you'd expect, there'll be some modest price movement in some categories, but it won't be broad based." (Billy Bastek, Executive Vice President of Merchandising)

• "If you think about our job, which is to help impact some of the tariff pressure, being a little less promotional in a couple of those garden areas was just the nature of what we did in Q2." (Billy Bastek, Executive Vice President of Merchandising)

• "And so anything that we can do to continue to drive value for our customers in this marketplace and going forward—and you're right, the tariffs have been increased since we met in May—that's all in our go-forward guidance." (Billy Bastek, Executive Vice President of Merchandising)

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Analysis

The company operates within a dynamic macroeconomic and policy environment, including trade and tariffs, which introduces uncertainty and reduces near-term visibility. These factors impact the semiconductor industry broadly.

Export regulations from the U.S. government, particularly concerning semiconductor technology sold to customers in China, have limited the company's ability to provide certain products and services. New export licensing requirements and updates have further restricted sales to customers outside the U.S., including in China. The recent changes in U.S. trade policy, such as increased tariffs on imports, have led to retaliatory measures, including new tariffs on U.S. goods from China and other countries.

For the third fiscal quarter, tariffs acted as a headwind. However, the company mitigated this impact through a combination of favorable product and segment mix and pricing adjustments, which contributed to an increase in gross margin for the period.

The company's outlook for the fourth quarter reflects these uncertainties, particularly in its China business. Factors include the digestion of capacity in China and a large backlog of pending export license applications. The guidance for the fourth quarter conservatively assumes no approvals for these pending export licenses. The company anticipates China's revenue to decrease to approximately 29% of total revenue in the fourth quarter. Management expects the lower business levels in China, compared to 2024, to continue for several more quarters due to these restrictions.

Sources

• "The dynamic macroeconomic and policy environment, including trade and tariffs, has wide ranging implications for the semiconductor industry, increasing uncertainty and lowering visibility in the near term. For Applied's business, there are three main factors that mute our outlook for the quarter ahead. First is digestion of capacity in China. Second is our large backlog of pending export license applications where we have taken a conservative position and assumed none of these licenses will be issued in the next quarter." (Gary Dickerson, Earnings Call)

• "The strong margin in Q3 was driven by the combination of product and segment mix and pricing as we work to offset tariff related headwinds." (Bryce Hill, Earnings Call)

• "First, our customers in China are moderating spending following several periods of increased investments in equipment, and we expect China as a percentage of our revenue in Q4 to decrease to approximately 29% including display. This assumes that we do not receive any approvals of our pending export license applications." (Bryce Hill, Earnings Call)

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Analysis

Tariffs represented a significant additional cost for the company, contributing to higher decremental margins. Total tariff costs for the third quarter of fiscal year 2025 were approximately $200M, bringing the year-to-date expense to roughly $300M. The forecast for the full fiscal year 2025 pretax tariff impact has been adjusted upward to nearly $600M from the previous quarter's expectation of $500M.

The increase in the fiscal year 2025 tariff guidance is primarily due to higher tariff rates applied to products from Europe, India, and steel and aluminum imports. Europe and steel tariffs account for about 50% of the total projected impact, while India and Japan combined contribute approximately two-thirds of the total.

The impact of tariffs was observed across various segments. In Small Agriculture & Turf, operating profit declined year-over-year, with tariffs identified as a primary factor. Similarly, the Construction & Forestry segment experienced a decrease in operating profit, attributed in part to tariffs and unfavorable price realization. For the Construction & Forestry segment, higher tariff costs are expected to influence the operating margin, projected to be between 8.5% and 10% for the full fiscal year.

The company is implementing mitigation strategies to address these tariff impacts. Efforts include securing USMCA certification for operations in Mexico to reduce exposure on complete goods and components. The company is also making

Sources

• "Starting with tariffs, that's obviously additional cost this year, which is contributing to the higher decremental margins. Tariff costs in the quarter were approximately $200,000,000 which brings us to roughly $300,000,000 in tariff expense year to date." (Company - CEO)

• "Based on tariff rates in effect as of today, our forecast for the pretax impact of tariffs in fiscal twenty twenty five is now adjusted to nearly $600,000,000 The primary drivers for the change from last quarter are increased tariff rates on Europe, India and steel and aluminum." (Company - CEO)

• "From a mitigation standpoint, a number of things happening. First and foremost, we've talked previously about doing a lot of work on USMCA certification, particularly in Mexico, where we do have quite a few both complete goods and components flowing over the border. Made a lot of progress there and significantly reduced that exposure with the certification. In addition, we are making some no regret sourcing decisions where we can on components to move things around as we work to mitigate the exposures." (Company - CEO)

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Analysis

The company's total gross margin in the fourth quarter of fiscal 2025 experienced a small impact from tariffs. This impact was slightly favorable when compared to the company's internal estimate.

Looking ahead, the guidance for the first quarter of fiscal 2026 and the full fiscal year 2026 incorporates specific assumptions regarding tariffs. These assumptions include a 30% tariff rate for China, with an offset for semiconductors and certain electronic components, a 25% tariff rate for Mexico, and a 35% tariff rate for Canada on components and products not covered by current USMCA exemptions. Other countries are expected to revert to country-specific reciprocal rates, largely offset by exemptions for semiconductors and electronic components. Additionally, a small impact from tariffs on copper, steel, and aluminum, along with retaliatory tariffs, is assumed.

The company plans to use its supply chain team to mitigate the impact of tariffs where feasible. The flexibility and agility within its operations and the scale of its supply chain are considered advantages in supporting global customers.

Sources

• "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)

• "Our Q1 and fiscal year twenty twenty-six guide assumes current tariffs and exemptions remain in place through the end of fiscal 2026. These include the following: China at 30%, partially offset by an exemption for semiconductors and certain electronic components; Mexico at 25%; and Canada at 35% for the components and products that are not eligible for the current USMCA exemptions." (Mark Patterson)

• "We will continue to leverage our world-class supply chain team to help mitigate the impact of tariffs where appropriate." (Mark Patterson)

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Analysis

Gilead Sciences acknowledges tariffs as a component of the broader policy environment. The company has stated that the impact of known tariffs is expected to be manageable for the fiscal year 2025. No specific quantitative financial impact related to tariffs was detailed for the current reporting period.

Sources

• "And finally, we have not updated our expectations for the impact tariffs or other changes to the broader policy environment. We continue to expect the impact of known tariffs to be manageable in 2025." (Andy Dickinson, earnings call)

• "These risks and uncertainties include those relating to: ...changes in U.S. trade policies, including tariffs;" (Filing)

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Analysis

The Products and Systems Integration segment experienced additional tariff costs during the second quarter of 2025. Despite these higher tariffs, the segment's gross margin as a percentage of net sales increased by 0.3%. This improvement was primarily driven by lower direct material costs, which mitigated the impact of the tariff-related cost increases.

For the full year 2025, the company expects a tariff headwind of $80M. This figure represents a reduction from an earlier estimate of $100M due to ongoing mitigation efforts. The majority of this anticipated $80M impact is projected to occur in the second half of the year. The company expects increased costs on materials and components in 2025 due to tariffs, which it intends to substantially mitigate.

Sources

• "inclusive of additional tariff costs and continued investments in video during the current year, offset by lower material costs." (Jason Winkler)

• "a 0.3% increase in gross margin as a percentage of net sales in the Products and Systems Integration segment, primarily driven by lower direct material costs, despite higher tariffs." (Filing)

• "We are estimating that this year's tariff impact will be about 80,000,000 down from the 100,000,000. That's in part due to mitigation exercise, medic mitigations and other things that have changed. We began seeing the tariff impact in late q two. Most of that 80,000,000 is in front of us in the second half." (Jason Winkler)

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Analysis

The company reported a limited impact from tariffs on its net sales in the June 2025 quarter (Q1-2026). Selective acceleration of orders from Asia, attributed to tariff-related activities, amounted to mid to high single-digit millions. This represents a minor portion of the total net sales for the quarter, which were $1,075.5M. The company's analysis indicated that these pull-ins were not a result of borrowing from future quarters but represented underlying demand due to depleted customer inventory levels.

The company conducts a forensic analysis each quarter with its distributors to identify significant fluctuations in customer sales due to tariffs. This process identified a small number of customers citing tariffs as a reason for sequential revenue changes. Extrapolating this data, the estimated impact on revenue was in the $7M to $9M range. No direct customers attributed their revenue increase to tariffs.

Microchip maintains a significant portion of its direct customer exposure in China through manufacturing in free trade zones, which are not impacted by tariffs. The company also states that its substantial manufacturing investments in the United States may qualify it for exemption from future tariffs, according to its interpretation of recent statements. However, the company also expressed uncertainty regarding the specific rules and potential advantages over competitors.

Sources

• "While we have not seen any material tariff related pull ins in April and May, we saw some selective acceleration of orders from Asia which appear to be tariff related. We believe that such pull ins amounted to only mid to high single digit millions." (CEO Steve Sanghi)

• "When we extrapolated this data, we believe the impact came out to be only mid to high single digit, $7.08, $9,000,000 range. We have no direct customers that indicated that tariffs were the reason for their increase in revenue." (CEO Steve Sanghi)

• "Now as a company, we make large amount of manufacturing in US, and then we also buy wafers from foundries outside. So because we make so many investments in US, and large amount of our manufacturing in US, our interpretation is that we will qualify to be exempt from tariffs." (CEO Steve Sanghi)

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Analysis

The company actively monitors global trade policies, including tariffs. Management states that tariffs have not impacted earnings per share due to effective mitigation strategies.

These strategies include pricing adjustments, leveraging a global manufacturing footprint, employing a "local for local" supply chain model, and creative dual sourcing. The company's global capacity is cited as a factor in managing these challenges.

Tariffs, alongside interest rates, contribute to overall market uncertainty. This uncertainty may delay customer purchasing decisions and projects, impacting industrial segment activity. The company has not observed any pull-forward of demand specifically attributable to tariffs.

Sources

• "So we didn't talk about it because we feel like we have it covered, and it's going to continue to evolve and change, but we're going to make sure that doesn't impact EPS." (Company - CEO)

• "Pricing is one of the levers we're able to flex, but it's also our global footprint. It's our local for local model that we've had for years. It's really our supply chain team being pretty creative with dual sourcing and the ability to ship from multiple regions. So pricing is a big piece of it, but it's not the only tool." (Todd Liambruno)

• "I think one of the things a couple of the things. I think it's uncertainty, right, on tariffs and interest rates, right? I think those two things are what may be holding up projects, holding up purchasing decisions." (Company - CEO)

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Analysis

The company recognizes tariffs as a dynamic factor potentially affecting its financial performance. While pharmaceutical products are currently exempt from certain existing tariffs, there is a risk that these exemptions could be terminated or new sector-specific tariffs on pharmaceuticals and ingredients could be imposed following investigations by the U.S. government.

If additional restrictions are enacted, they could lead to supply disruptions, increased costs, or other negative impacts on the business. The company may also be unable to fully absorb the burden of increased costs resulting from tariffs and related impacts due to the nature of pharmaceutical regulation and commercialization.

For the full year 2025, the company anticipates a modest impact from currently announced tariffs, and this expectation has been incorporated into its financial guidance.

Sources

• "The potential effect of tariffs remains dynamic, and we will continue to update our estimate as the situation changes." (Analyst, Unknown Affiliation)

• "We expect the 2025 impact of currently announced tariffs to be modest, and this has been factored into our 2025 guidance range." (Analyst, Unknown Affiliation)

• "This guidance is based on the existing tariffs as of August 7, 2025, and does not reflect any policy shifts, including pharmaceutical sector tariffs, that could impact business." (Press Release)

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Analysis

Tariffs are impacting the company's financial results by increasing operating expenses. For fiscal year 2025, the estimated impact on operating expense is $90 million, which is predominantly weighted to the fourth quarter. This tariff impact also affects adjusted EPS growth for the full fiscal year 2025 by 2%.

Looking ahead to fiscal year 2026, the company expects the tariff impact to increase to approximately $275 million. This figure reflects ongoing active mitigation efforts and a moderation of tariff rates on a net basis compared to previous expectations.

The company is implementing several strategies to mitigate the effects of tariffs. These include sourcing optimization and seeking tariff exemptions for qualifying products. Specific actions involve changing sourcing flows, such as for Vacutainer and flush products for China, to markets outside the U.S. Additionally, the company is modifying components and kits to incorporate more U.S.-made parts to comply with USMCA and tariff exemptions. Work with suppliers to optimize sourcing locations is also ongoing.

Sources

• "Based upon the latest published tariffs that are currently in effect, we expect an estimated impact of $90 million from tariffs to our fiscal year 2025 operating expense, primarily relating to any products (or components) imported from countries across our global supply chain which have no exemption opportunities." (Filing)

• "Our EPS guidance continues to include an estimated tariff impact of about $90,000,000 or 2% to EPS growth for the full year, which as a reminder is predominantly weighted to Q4." (Chris Dvorafis)

• "As you think about the full year impact of tariffs in fiscal twenty twenty six, the landscape remains fluid, but based on policies in place today, we currently anticipate a full year 2026 tariff impact of around $275,000,000 This is a notable improvement compared to initial expectations and reflects the results of our team's ongoing active mitigation efforts and tariff rates that moderated on a net basis since our last update." (Chris Dvorafis)

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Analysis

Geopolitical tensions and volatility in the tariff environment have become a consistent factor affecting business operations. The company notes that sudden changes in trade restrictions contribute to this new normal.

This environment of tariff uncertainty and ongoing trade disputes has dampened the recovery of orders, leading to less dynamic growth than anticipated. It has also impacted business confidence in several core industries, such as automotive and machine building, resulting in extended sales cycles and longer decision-making processes for investments. Specifically, temporary trade restrictions related to Electronic Design Automation (EDA) in China affected revenue and profit in the Digital Industries segment.

To address these challenges, the company is implementing mitigating strategies. These include expanding its supplier network and continuing to localize value chains to strengthen resilience and reduce tariff-related risks.

Sources

• "Geopolitical tensions, high volatility in the tariff environment as well as sudden changes in trade restrictions seem to have become the new normal." (Roland Busch, CEO)

• "The recovery of orders was less dynamic than anticipated due to a high continuing uncertainty about the future tariff environment and ongoing trade disputes. This climate of volatility is weighing on business confidence in several of our core industries such as automotive and machine building, where sales cycles are extended and investment decisions are taking longer." (Roland Busch, CEO)

• "temporary trade restrictions on EDA with regard to China impacted revenue and profit in this business." (Ralf Thomas, CFO)

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Analysis

Tariffs are recognized as a potential factor influencing tenant health. The company's 4.6% credit watch list of annualized base rent incorporates various potential outcomes from tariffs.

The company has minimal exposure within its U.S. portfolio to industries typically most affected by tariffs, such as furnishings, apparel, and electronics. The bankruptcy of one tenant, At Home, was partly attributed to its substantial reliance (70%) on imported products from China, indicating a past impact that has already materialized.

The 2025 guidance includes approximately 75 basis points of potential rent loss. This figure is a comprehensive estimate that accounts for various credit-related issues, including those that could arise from tariffs.

Sources

• "the 4.6% watch list that we've shared with the market has basically taken into account all of the various outcomes that could come out of these tariffs that are being discussed in the market today." (Company - CEO)

• "some of the more susceptible industries, i.e., furnishing, apparel, electronics...those are the industries that are going to be most impacted by tariffs. And thankfully, we have very little to zero exposure to these types of industries in our U.S. portfolio." (Company - CEO)

• "Our 2025 outlook contemplates approximately 75 basis points of potential rent loss, which is slightly higher than our historical experience, but consistent with our expectations going into the year." (Company - Other Officer)

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Analysis

The company observes volatility and uncertainty regarding tariffs within the pharmaceutical industry. The current guidance provided by the company reflects the known impacts of these tariffs. Management indicated that the pharmaceutical supply chain typically holds sufficient inventory to manage through such periods, suggesting that any economic effects from tariffs would materialize gradually.

Sources

• "As to your question on the tariffs as it relates to the pharmaceutical industry, I mean, it's been obviously a little bit volatile, and I would say we're still in a bit of an uncertain time where this all settles down. But but what we know about tariffs is represented in the guidance that we have, we have provided to you. And I would remind everybody that, you know, I think COVID highlighted this quite well that despite all the challenges the external world had, the pharmaceutical supply chain in totality tends to have, enough inventory to get you through these periods. So I would think that tariffs would would take a little while to play into the economics." (Company - CEO)

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Analysis

Tariffs are recognized as a factor influencing the company's financial outlook, specifically affecting the full year 2025 adjusted operating margin guidance. The company noted that the expected impact from tariffs is included in its guidance for adjusted operating margin to be in the mid-to-high 40% range for the full year 2025.

Beyond this, general business risk factors include that disruptions in operations or price volatility in a market can result from governmental actions such as trade-related tariffs or controls. Supply chain interruptions and associated price increases, which can be caused by tariffs, have the potential to adversely affect the company, its suppliers, and franchisees.

Sources

• "This includes the expected impact from tariffs that are currently in place." (Ian Borden, Chief Financial Officer)

• "Supply chain interruptions and related price increases have in the past and may in the future adversely affect us as well as our suppliers and franchisees, whose performance may have a significant impact on our results. Such interruptions and price increases could be caused by shortages, inflationary pressures, tariffs, unexpected increases in demand, transportation-related issues, labor-related issues, technology-related issues, weather-related events, natural disasters, acts of war, terrorism or other hostilities, or other factors beyond our control or that of our suppliers or franchisees." (Filing)

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Analysis

The tariff environment in the third quarter of fiscal 2025 was dynamic, with the company experiencing less exposure than anticipated. This improvement in the tariff landscape, characterized by paused tariffs and new trade agreements, allowed Emerson to ease some of the surcharges previously implemented.

These adjustments, while benefiting customers, resulted in sales falling short of guidance for the quarter. Tariffs negatively impacted the adjusted segment EBITDA margin by 40 basis points, primarily affecting the Intelligent Devices segment. Operating leverage was also impacted, reported at 25% with tariffs versus 38% excluding their effect.

For the full fiscal year 2025, the company has revised its guidance for gross tariff impact, expecting $130,000,000, a decrease from the prior estimate of $245,000,000. Correspondingly, expected price actions (surcharges) for the fiscal year have been reduced to $115,000,000, representing 50 basis points of incremental price. The company has implemented price actions and supply chain mitigations to fully offset the revised tariff exposure.

Sources

• "The dynamic tariff environment persisted and our exposure was less than expected in the quarter." (Company - CEO)

• "As the quarter progressed, we decided to ease the scope of surcharges, which meaningfully impacted our third quarter sales growth." (Company - CEO)

• "Adjusted segment EBITDA margin of 27.1% met expectations and was negatively impacted by 40 basis points due to tariffs, which primarily affected profitability in Intelligent Devices." (Analyst, Unknown Affiliation)

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Analysis

Glencore noted that the year started with economic uncertainty influenced by geopolitics and tariffs. Initially, highly volatile tariff environments, characterized by frequent changes, were not conducive for the company's marketing division to capitalize on long-term arbitrage opportunities.

However, the company now perceives a greater degree of certainty regarding the current tariff landscape. This stability allows for a reassessment of trade flows and commodity routing, which Glencore believes will create new arbitrage opportunities. The company intends to leverage its marketing business to capitalize on these situations.

The macroeconomic backdrop, including US tariff policy uncertainty, influenced the marketing Adjusted EBIT for the first half of 2025. Despite this, any specific

Sources

• "We will know this year started off with a weaker commodity markets, some economic uncertainty around geopolitics, around tariffs." (Gary Nagle)

• "things like tariffs are being announced on Monday, changing on Tuesday and being scrapped on Wednesday. So these are not areas where one can be positioned yourself for an expected arbitrage in the long term." (Gary Nagle)

• "Even The US tariffs across the commodities can create these dislocations. We now have a bit more certainty around the tariffs or they're 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)

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Analysis

U.S. government export controls on AMD Instinct MI308 Data Center GPU products resulted in approximately $800 million in inventory and related charges during the second quarter of 2025. This charge was the primary factor in the decrease in gross margin, which fell to 40% from 49% in the prior year period. Operating loss was $134 million compared to an operating income of $269 million in the prior year period, also influenced by the lower gross margin.

The export restrictions effectively eliminated sales of MI-308 products to China. The company is actively working with the Department of Commerce to obtain licenses for these exports. While progress has been made with the administration, current guidance for the third quarter of 2025 does not incorporate any revenue from MI-308 shipments to China, as license applications are still under review. Should licenses be approved, it would take approximately two quarters to convert work-in-process inventory into finished goods and ramp shipments.

Sources

• "Gross margin for the three months ended June 28, 2025 was 40% compared to gross margin of 49% for the prior year period. The decrease in gross margin was primarily due to approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products." (Filing)

• "Operating loss for the three months ended June 28, 2025 was $134 million compared to operating income of $269 million for the prior year period. The decrease in operating income was due to lower gross margin and higher operating expenses." (Filing)

• "Our current outlook does not include any revenue from AMD Instinct MI-three zero eight shipment to China, as our license applications are currently under review by U. S. Government." (Jean Hu, Analyst, Unknown Affiliation)

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Analysis

The company acknowledges the industry-wide focus on pricing and tariffs. It is engaged in discussions with government officials regarding these matters, with objectives including improving patient access, affordability, and expanding biopharmaceutical manufacturing within the U.S. The company seeks to find a path that balances these objectives with preserving an innovative ecosystem.

Amgen's full-year 2025 guidance incorporates the estimated impact of tariffs that have already been implemented. The company's guidance does not include the potential effects of any tariffs or pricing actions that have been announced or described but not yet put into effect.

Sources

• "As you're all aware, there's a focus on pricing and tariffs in our industry and I would just say that we are actively engaged in discussions with our government officials and share the objectives of improving patient access, affordability and expanding biopharma manufacturing in The U. S." (Bob Bradway)

• "We welcome the government's focus on the role that foreign countries can play in trying to preserve that innovative ecosystem by rewarding innovation fairly. And we expect to work with this administration to try and find a path forward that helps to achieve their objectives." (Bob Bradway)

• "This guidance includes the estimated impact of implemented tariffs. It does not account for tariffs or pricing actions announced or described but not implemented." (Peter Griffith)

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Analysis

In the second quarter of 2025, trade policy uncertainty negatively impacted Archer-Daniels-Midland's Ag Services and Oilseeds segment. This uncertainty contributed to compressed margins and limited forward commitments from customers. Lower trading volumes in Global Trade were partially attributed to this uncertainty, as were decreased North American export volumes, specifically noting the absence of a milo export program with China. Additionally, North American soy and canola crush margins experienced negative pressure, with canola crush margins decreasing by approximately $50 per metric ton due to trade policy headwinds. Biodiesel margins in Europe and North America were also negatively affected by biofuel and trade policy uncertainty.

The company implemented targeted organizational realignment and network consolidations within its Ag Services and Oilseeds segment. These actions were aimed at offsetting the lower margins experienced during the quarter.

For the latter half of 2025, Archer-Daniels-Midland anticipates increasing clarity regarding biofuels and trade policy. This clarity is expected to generate positive economic opportunities and drive further investments. The company projects improved Ag Services and Oilseeds margins, primarily benefiting fourth-quarter results, supported by increased trade policy clarity. Specifically, expectations are for global soybean crush margins to be in the range of $60 to $70 per metric ton and global canola crush margins to be in the range of $55 to $65 per metric ton in the fourth quarter. The company also noted that Germany's decision to abolish double counting is expected to benefit rapeseed oil in Europe.

Sources

• "In the Ag Services sub segment, operating profit was $113,000,000 down 7% versus the prior quarter driven primarily by lower global trade and South American origination results. Global trade results were lower relative to the same quarter last year largely due to the lower trading volumes partially related to the trade policy uncertainty as well as lower margins due to lower commodity prices, negative freight timing and currency impacts." (Manish Padalawala)

• "North America canola crush margins were approximately $50 per ton lower due to headwinds from trade policy and lower canola oil demand for biofuel production." (Manish Padalawala)

• "As we look to the back half of 2025 from an external perspective, we anticipate increasing biofuels and trade policy clarity that accelerate our ability to create positive economic opportunities and drive additional investments such as these throughout our business and the agriculture sector." (Juan Luciano)

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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

The company recognizes risks associated with tariffs and other trade protection measures, particularly those implemented by the United States government and reciprocal actions from other nations starting in early 2025. These measures may negatively affect product demand and increase product costs.

The company is actively monitoring the evolving tariff environment and evaluating strategies to moderate or minimize its effects. Despite the dynamic nature of these trade measures, the company believes it can absorb the incremental impact for the full year. Its strategy includes leveraging its scale, diversified portfolio, and robust supply chain to manage these challenges.

The company has noted that the impact of currently enacted and announced tariffs on its business is slightly higher than previously estimated. This increased impact of tariffs partially offsets improvements in adjusted net income guidance, indicating that tariffs represent a headwind to profitability.

Sources

• "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." (Form 10-Q)

• "The impact of currently enacted and assumptions on announced tariffs on our business is slightly higher than our estimate as of our May guidance update. However, we feel we can absorb the incremental impact." (Wetteny Joseph, Company - CEO)

• "The increase in our expected adjusted net income is driven by improved margin expectations due primarily to lower manufacturing costs, the higher revenue outlook, and expense management, partially offset by the increased impact of tariffs." (Wetteny Joseph, Company - CEO)

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