Colgate-Palmolive, a leading manufacturer of oral care, personal care, and pet nutrition products, is expecting to incur $200 million in increased costs due to tariffs imposed by the Trump administration in 2025. The tariffs will primarily affect raw materials and finished goods shipped between China and the US, with the impact split equally across quarters two to four. CEO Noel Wallace stated that the company has developed plans to mitigate the costs, including alternative sourcing, formula simplification, and shifting production.
Despite efforts to diversify its supply chain and reduce reliance on Chinese suppliers, Colgate-Palmolive has still been affected by the tariffs, which have led to higher costs and slowing customer demand. Over the past few years, the company has reduced its sourcing from China and increased its US manufacturing facilities by over 40%. However, these modifications have not been enough to entirely offset the impact of the new and increasing tariffs.
To address the issue, Colgate-Palmolive has invested $2 billion in its US supply chain since 2020, with a focus on its oral, personal, and home care businesses, as well as its pet food manufacturing capacity. The company has also opened a new facility in Kansas to increase production capacity for canned pet food. CFO Stan Sutula emphasized that the company is working to mitigate the incremental costs from tariffs through a combination of approaches, including productivity, revenue growth management, formulation, sourcing, and optimizing its supply chain.
The tariffs are expected to have a significant impact on Colgate-Palmolive’s operations, and the company is taking a multi-faceted approach to manage the costs. By diversifying its supply chain, investing in US manufacturing, and implementing cost-saving measures, Colgate-Palmolive aims to minimize the effects of the tariffs and maintain its competitiveness in the market. The company’s efforts to mitigate the impact of the tariffs will be closely watched, as it navigates the challenges of a complex and evolving global trade landscape.