Newell Brands CEO announced on Friday that the company is accelerating the reduction of reliance on Chinese suppliers to mitigate the impact of U.S. import tariffs. This move comes after the company reported quarterly losses exceeding expectations.
According to Reuters, some products of the Sharpie marker pen manufacturer are sourced from China, including local procurement of raw materials. The company plans to reduce the cost of imported goods to the U.S. from around 15% of total sales costs to less than 10% by the end of this year.
Earlier this week, U.S. President Donald Trump announced a 10% tariff on all Chinese imports, sparking a new round of trade tensions between the world’s two largest economies.
“Company has been transitioning production from China to other regions, including adjustments through existing and new suppliers,” said Newell’s CEO Chris Peterson during Friday’s earnings conference call.
Newell, a significant American consumer goods manufacturing, marketing, and distribution company, owns several well-known brands in home, outdoor, stationery, children’s products, and kitchen appliances sectors. The company is headquartered in Atlanta, Georgia.
Newell’s stock plummeted by 27% on Friday after the company projected first-quarter losses of 6 to 9 cents per share, far below analysts’ expectations of 3 cents earnings per share (according to LSEG data).
Additionally, the company anticipates a 2% to 4% decrease in annual net sales, while analysts had originally estimated a decrease of only 0.7%. Newell added that these forecasts do not yet account for the impact of tariffs.
Before last year’s U.S. presidential election, Peterson had told Reuters that the company had begun moving some kitchen appliance production out of China and relocating the manufacturing of its writing instruments business to Tennessee in response to tariff policy uncertainties.
Currently, Newell manufactures most writing products at its facility in Maryville, Tennessee, including Paper Mate pens, Expo markers, and Elmer’s Glue. Peterson stated that earlier this year, the company further transferred the manufacturing operations of the writing division from China and Korea to Tennessee, where the plant still has expansion space.
Amid heightened geopolitical tensions between the U.S. and China, Southeast Asia has become a preferred region for many companies seeking to reduce their dependence on China. Peterson revealed that the company has other ongoing relocation plans, such as shifting kitchenware manufacturing from China to Vietnam, Thailand, Indonesia, and other locations, to diversify the supply chain risks and minimize tariff impacts.