Tariffs’ impact on supply chain is no longer theoretical. It’s costing Procter & Gamble $1 billion in FY 2026.
That’s not a typo.
In its latest earnings call, P&G revealed that new and retaliatory tariffs will have a $1B before-tax impact on its cost structure. According to Supply Chain Dive’s analysis of P&G’s tariff strategy, the company is taking a cautious approach to restructuring its supply chain amid trade uncertainty. The breakdown:
- $200M from U.S. imports from China
- $200M from Canadian retaliatory tariffs
- $600M from other global sources to the U.S.
This sharp increase highlights a critical reality: the impact on supply chain from tariffs is global, not just a China story. P&G’s tariff exposure spans Canada, Europe, and other regions, creating a 5-point headwind to core EPS growth.
While only 25% of SKUs are directly affected, the company still plans mid-single-digit price increases in targeted categories. But this is about more than prices.
Tariffs’ Impact on Supply Chain Strategy
Tariffs aren’t just a line-item cost, they’re reshaping supply chain strategies. P&G made it clear: tariffs now influence sourcing decisions, retailer inventory levels, and working capital strategies across the value chain.
Retailers, in response, are adjusting their behaviors:
- Reducing inventory
- Reallocating cash
- Changing margin structures
How P&G Is Responding to Tariff Pressure
To manage the impact on supply chain, P&G is taking a multi-pronged approach:
- Shift and Shield
Retooling supply chains and increasing sourcing flexibility to reduce tariff exposure. - Strategic Passthroughs
Selective price increases 2.5% average in the U.S., higher for affected SKUs. Many are tied to innovation, not just cost recovery. As reported by SupplyChainBrain, P&G plans to raise prices on roughly 25% of its products to offset tariff-driven losses - Productivity Offsets
$2.7B in savings across SG&A and COGS, reinvested into innovation and margin protection. - Modeling Tariffs Like Currency Risk
Treating tariffs as structural risk, like FX volatility, monitoring, pricing in uncertainty, and proactive planning.
The Bottom Line
Tariffs’ impact on supply chain isn’t temporary. While many companies treat trade disruptions as short-term events, P&G is building operations for a world where trade volatility is the norm.
Tariffs aren’t just taxes, they’re strategy. And companies that adapt fastest will be best positioned to grow.
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