The news: Kimberly-Clark expects tariffs to cost it an additional $300 million this year, despite the fact that the majority of its US products are sourced and manufactured domestically.

By the numbers: While just 20% of its US business is exposed to tariffs, Kimberly-Clark’s global presence means it faces duties from multiple sides.

• Roughly two-thirds of the $300 million stems from the 145% tariff on China imports, CFO Nelson Urdaneta said on the company’s Q1 earnings call.
• Another 10% comes from the reciprocal tariffs, which are wider in breadth and reach than Kimberly-Clark anticipated.
• And 25% is from the retaliatory tariffs other countries have slapped on US imports.

The company is reworking its network to reduce the impact of tariffs, but those actions won’t be fully in place until at least 2026.

Navigating consumer behavior: The challenge for Kimberly-Clark, as for other CPGs, is how to manage tariff costs without alienating consumers who are already highly price-conscious—and without being able to pull many of the levers that they used during the past few years of high inflation, such as introducing smaller package sizes.

Kimberly-Clark’s solution has been to implement a “good, better, best” pricing strategy.

• That’s helped it offer value to lower-income shoppers, who are gravitating toward the entry price point, as well as benefit from wealthier consumers’ interest in more premium products.
• The company’s investment in innovation is also helping to reduce trade-down behaviors as consumers gravitate toward high-performing products in categories like diapers and feminine care.

Our take: Like the rest of the retail landscape, Kimberly-Clark expects tariffs to weigh on its bottom line. But unlike many other companies, it doesn’t plan to pass on the costs to consumers, which should help with volume recovery and keep consumers from trading down.

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