How Colgate-Palmolive Is Preparing for Potential Tariffs
Colgate-Palmolive is among the many consumer goods companies keeping an eye on trade discussions as potential tariffs loom on the horizon.
During its recent earnings call, the company said it hasn’t directly included any potential incremental tariffs in its 2025 financial forecast, but it hopes to absorb any impact through an agile, long-term supply chain strategy.
“We spent the last few years building much more flexibility into our global supply chain,” said CFO Stanley Sutula of the $2 million the company has invested in its U.S. supply chain since 2020. It’s not necessarily about building more capacity, but instead making better use of existing capacity and alternative sourcing — and standardizing formulas across the markets, he added.
Also read: Gartner Advises Supply Chain Leaders To Turn Tariffs into Strategic Advantages
The strategy has included increasing the number of its U.S.-based manufacturing facilities by more than 40% over that time and improving flexibility by increasing the number of SKUs that can be produced at each plant (previously facing limitations around available machine manual toothbrush capacity outside of China).
Supply Chain Considerations
Primarily, the company aims to have local manufacturing as a cost of shipping. For products that are manufactured outside of the U.S., such as in Mexico which handles some of the company’s toothpaste production, Colgate-Palmolive is “working on potential mitigation plans, which can impact both raw materials and finished products.”
The company is preparing against multiple scenarios, taking into account the possible impact of retaliatory tariffs and being very tactical about short-, mid-, and long-term decisions.
“This philosophy gives us better flexibility as we enter a period with potentially higher tariffs,” said Sutula.
