Procter & Gamble (P&G) is taking a cautious approach to responding to the Trump administration’s tariffs, with CFO Andre Schulten stating that the company will delay making supply chain changes until the impact of the tariffs on suppliers is clearer. This approach differs from other manufacturers, such as Pfizer and Eli Lilly, which are planning to increase US manufacturing to avoid tariffs. P&G’s rival, Colgate-Palmolive, is also diversifying its supply chain and reducing its reliance on China, which has been hit with the highest tariffs.
Schulten explained that P&G has already invested over $10 billion in the US over the past seven to eight years to bring production closer to consumers. However, the company still needs to make changes to its business operations to mitigate the impact of the tariffs. In the short term, P&G plans to focus on productivity, innovation, and pricing to offset the effects of the tariffs. The company has lowered its sales forecast for fiscal year 2025 to flat, down from an expected increase of 2-4%, due to the tariffs.
The tariffs have had a significant impact on P&G’s raw and packaging materials, as well as some finished products from China. Retaliatory tariffs have also affected the company’s finished US products exported to Canada. Schulten stated that the before-tax impact on growth during the current fiscal quarter is expected to be $100-160 million, and $1-1.5 billion for the next fiscal year.
Despite the financial impact, Schulten emphasized that it is still too soon to invest in major supply chain changes. He noted that such decisions have long lead times and are difficult to reverse, making it unwise to make any “knee-jerk reactions.” Instead, P&G is taking a wait-and-see approach, waiting for more clarity on the tariffs and their impact on suppliers before making any significant changes. The company’s spokesperson stated that it is “premature to try to quantify longer-term tariff impacts” and that P&G is looking for opportunities to mitigate potential impacts.