What Shippers and Supply Chain Providers are Saying About Tariffs
This is a compilation of quotes from shippers and some supply chain providers taken from earnings transcripts (Seeking Alpha) for the first half of April. Links will take you to the individual company’s investor relations page.
I find it interesting and useful to read what folks are saying each quarter. For more on public companies’ earnings transcripts, I reccomend you give The Transcript a follow.
I’ll do another round of tariff quotes on May 5.
Bassett Furniture (Q1 ending March 2, Reported April 2)
Tariffs have been top-of-mind across the industry for several months, culminating with President Trump's Rose Garden announcement 17 hours ago. Although 79% of our wholesale shipments in the first quarter were manufactured or assembled in the US, many materials such as fabrics or plywood used in the manufacturing process will now be exposed to tariffs, as well the remaining 21% that we bring in fully assembled. While the reciprocal tariffs are now known, there are additional tariffs on certain materials used in the manufacture of some of our products. The entire industry is working with outside experts to gain clarity on this unusual situation. We will determine what this means for our pricing structure on goods that are affected over the next several days. We do firmly believe that the announced tariff policies will not positively influence the American consumer to invest in home furnishings until the effects of these policies are fully implemented and understood. Rob Spilman CEO
Levi Strauss & Co. (Q1 ending March 2, Reported April 7)
Today, almost 60% of our revenue is generated outside the U.S. We have scale with an agile global supply chain, deep vendor relationships, and a strong balance sheet, all of which position us well to navigate this time of uncertainty. Michelle Gass - President and CEO
We ended the quarter with reported inventory dollars up 7% to the prior year. We feel comfortable with the level and composition of our inventory and have secured the majority of inventory required to meet U.S. orders for quarter two. Harmit Singh - Chief Financial and Growth Officer
Fastenal (Q1 ending March 31, Reported April 11)
In some cases, that, when the tariff situation is changing daily, in fact, this was every week starting February 10th, Kevin Fitzgerald and our team that provides communication to the field and guidance to the field, we've been putting out an updated video. In fact, it was just a new one that came out this morning because it's been a moving target. And even during the course of our conversations, numbers were moving around, because the week started and ended in two different places. There's no way to cushion 145% tariffs. There's no math that you can make that work. The question is what optionality you have because on non-steel product, if we source it out of Taiwan, the math changes from 145% of new tariff [to 10] (ph). Or if we source it in other places in Asia or other places around the world, the number goes to 10, but it might be 30% more expensive or more, depending on their ability to produce it and to produce it in a chaotic environment where there's a lot of change going on. But there is no silver bullet that will cause something where you have a tariff that was declared on Wednesday or Thursday, Wednesday I guess it was, that's 145%. That's just math. Dan Florness – CEO
Inventory growth may remain elevated in 2025, as we continue to navigate tariffs and as more inflation builds in inventory. Holden Lewis – CFO
The problem is there's such scale in Asia with fastener production, with steel production and by extension fastener production. Such scale that's been created, because automotive took fastener manufacturing to Japan and South Korea post-World War II, in the [50s and 60s] (ph), long before we even existed. And so there's such scale over there. Part of the issue you have in North America, and this comment includes Mexico, there isn't the same scale that's been developed as far as competitive fasteners. And obviously, this changes the math. And the real question is, does the marketplace, do the producers or fasteners believe the investment is justified? There is no certainty in the world. There never has been. But if it's government mandated, that's a really weird thing for certainty because if the economics work because there's a 50% tariff or a 25% tariff or a 75% tariff. And that tariff can go away in a day as easy as it can be created in today. Are you going to make that investment in Mexico for scale manufacturing? You may or may not. My guess is you probably won't unless you have comfort that you can put a $0.5 billion into a plant and that 25% piece will be there for the next 15 years, 20 years. You're not going to do it if you think it could disappear in two. And that's the challenge. But we have not found scale manufacturing capabilities to satisfy our needs in North America. Dan Florness - CEO
JB Hunt (Q1 ending March 31, Reported April 15)
Our customers continue to plan for multiple what if scenarios, but most of them are waiting for the dust to settle to determine how tariffs might influence and change their short and long-term business strategies. As part of this scenario planning process, some customers are considering ways to alter supply chain freight flows and/or their country-of-origin sourcing, but these changes will be part of a much longer decision process. Spencer Frazier - EVP, Sales & Marketing
Rent the Runway (Q4 ending Jan 31, Reported April 15)
I want to briefly discuss tariffs. This is a rapidly evolving situation and it is too soon to provide any predictions. Our guidance does not factor in any potential impact from tariffs given all the uncertainties. We believe we are fortunate that we directly import a relatively small portion of inventory and have placed orders for the majority of our inventory receipts for fiscal year ‘25. Siddharth Thacker, CFO
Prologis (Q1 ending March 31, Reported April 16)
A disconnected world will require more warehouse space, not less. Dan Letter – President
While the instability created in the last two weeks may disrupt logistics and supply chains, it will certainly slow decision making. Many companies now question where to source, manufacture or even sell their goods. In speaking with customers, they echo this sentiment, while at the same time, revealing the need for flexible inventory positioning in the evolving landscape. Dan Letter – President
What was ultimately announced on April 2 clearly went beyond our early predictions, making the environment less certain. Even with the pause in some tariffs or resolution of others, customers simply lack a steady backdrop upon which to plan their businesses. We've now dialogued with more than 300 customers, including two impromptu customer advisory boards representing over 20% of our rent roll. This is what we've heard. Our customers are moving quickly to manage tariff volatility with many accelerating shipments where possible. They're also re-routing volumes and have urgent demand for overflow space. Accordingly, they are looking for short-term flexibility and 3PLs are typically where they turn. Dan Letter – President
Looking ahead, here are some things we expect. Inventory levels will increase as businesses stockpile and build resiliency. E-commerce is likely to take more share in an environment where product availability becomes an important factor to consumers in choosing how to shop. Global markets will become more important, with Canada, India and Brazil among those in our portfolio that we expect to benefit. Mexico will be another and it has stood out in terms of a growing level of interest pre and post April 2. Port markets may benefit from an immediate buildup of inventories. From there, we will need time to know how or if trade flows ultimately adjust. Nevertheless, we still believe in the long-term outlook for such markets with large population centers and significant supply constraints, a topic we'll be sharing further research on in the coming days. Finally, we believe that the inflationary effects of tariffs will only serve to increase the value of hard assets, replacement costs and rents. Dan Letter
Alcoa (Q1 ending March 31, Reported April 16)
Let me take the opportunity to speak to the current status of U.S. tariffs applicable to the aluminum industry from Alcoa's perspective. While the U.S. Section 232 tariff structure has been in place for some time, in March, the tariff increased from 10% to 25%, and the exemption for Canadian metal imported into the U.S. was removed. This is the most material impact to Alcoa as approximately 70% of our aluminum produced in Canada is destined for U.S. customers and is now subject to 25% tariff cost, which totals an estimated $400 million to $425 million annually. Of course, there is a higher Midwest premium, which offset some of this cost and certainly benefits our U.S. smelters, but currently, the net annual result is approximately $100 million negative for our business. William Oplinger - President & CEO
Next are the IEEPA tariffs on imports from Canada, Mexico and China. Since our aluminum products and the majority of our input materials from Canada and Mexico qualify under the USMCA provisions, Alcoa does not have a significant impact from this tariff at this time. The reciprocal tariffs specifically exclude Canada and Mexico, as well as aluminum products already subject to Section 232 tariffs, so no impact on Alcoa's aluminum sales. William Oplinger - President & CEO
While alumina and other raw materials are excluded from the reciprocal tariffs, there is a portion of our input materials provided by Chinese suppliers that is now subject to the high reciprocal tariff. We expect these tariffs will increase our input costs by $10 million to $15 million annually as there are no suitable replacement suppliers. William Oplinger - President & CEO
It takes many years to build a new smelter and at least five to six smelters would be required to address the U.S. demand for primary aluminum. These new smelters would require additional energy production equivalent to almost seven new nuclear reactors or more than 10 Hoover dams. Until additional smelting capacity is built in the U.S., the most efficient aluminum supply chain is Canadian aluminum going into the U.S. William Oplinger - President & CEO
Snap-On (Q1 ending March 29, Reported April 17)
Let's briefly address the issue of the day, tariffs. A word that was mentioned last Friday in the Wall Street Journal, 254 times. Yesterday, it was down to a mere 163 mentions. Paraphrasing CloudSwitch, the world is in a fog of tariffs. A time in which there are so many changing variables that it's difficult to see the way forward. It's an environment that will require urgent action to adjust to optimize and to take advantage, and we're confident in that fog. Nick Pinchuk – CEO
Our major product lines are already made in America, using American steel and our U.S. plants already produce some version of almost all our product lines. What that means is no extended ramp-ups for relocated products. We already have the resident know-how right here in the USA. Nick Pinchuk – CEO
And for the select freight placed in America, where we use some high tariff components, we have 21 factories outside the U.S. sourcing activities in several locations, and that gives us access to a myriad of alternative sources. Nick Pinchuk – CEO
- Cathy
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