About Kimberly-Clark
Kimberly-Clark is a well-known multinational corporation based in the United States, renowned for producing consumer and personal care products such as Huggies diapers, Kleenex tissues, and Kotex feminine care items. The company’s extensive portfolio of brands has made it a household name across the globe.
Impact of EU Tariffs on Kimberly-Clark
In a recent financial report for the first quarter of 2025, Kimberly-Clark’s CEO and President, Mike Hsu, disclosed that the company’s production costs will rise by $300 million this year due to tariffs imposed by the U.S. administration.
Tariff Breakdown
- 145% tariffs on products originating from China
- 10% reciprocal tariffs on countries that are their suppliers
- An additional 25% tariff imposed by other countries in retaliation to the U.S.’s trade policies
Kimberly-Clark’s Response and Strategy
Mike Hsu acknowledged that the current environment presents a short-term challenge but also an opportunity to optimize their supply chain and accelerate savings. However, he emphasized that these measures will take time.
Nelson Urdaneta, Kimberly-Clark’s Chief Financial Officer, explained that while the estimated impact is $300 million, not all of their production is affected. 80% of the products sold in the U.S. are manufactured domestically, exposing only 20% of their U.S. market costs to tariffs.
Supply Chain Adjustments
Urdaneta highlighted that changing supply sources is not an immediate solution, as it requires redesigning logistical and operational strategies that cannot be implemented overnight. The company expects to mitigate one-third of the impact this year and the rest in 2026.
Adjusted Growth Estimations
Due to the tariff impact, Kimberly-Clark adjusted their growth projections for 2025. They now anticipate flat operating profit and earnings per share (EPS), contrasting their previous projection of mid-single digit to high single-digit growth.
Innovation Investments
Despite the tariff challenges, Kimberly-Clark has no plans to reduce investments in product innovation.
Key Questions and Answers
- What is the main reason for Kimberly-Clark’s increased production costs? The primary cause is the tariffs imposed by the U.S. administration on products originating from China, along with reciprocal tariffs on supplier countries and additional tariffs by other nations in response to U.S. trade policies.
- What percentage of Kimberly-Clark’s U.S. products are manufactured domestically? 80% of the products sold in the U.S. are manufactured locally, exposing only 20% of their U.S. market costs to tariffs.
- How is Kimberly-Clark addressing the tariff challenges? The company plans to optimize their supply chain, accelerate savings, and adjust their strategies over time. They also aim to mitigate the impact by changing supply sources, though this is not an immediate solution.
- How have tariffs affected Kimberly-Clark’s growth projections? Due to the tariff impact, Kimberly-Clark adjusted their growth projections for 2025, now anticipating flat operating profit and earnings per share (EPS) instead of mid-single digit to high single-digit growth.
- Are Kimberly-Clark’s innovation investments being reduced due to tariff challenges? No, the company has no plans to reduce investments in product innovation despite the tariff challenges.
