Kimberly-Clark Optimizing Collaborative Supply Chain Amid Costly Tariff Environment

Kimberly-Clark estimates it will incur $300 million in additional expenses in 2025 due to changes in the international tariff environment.

Kimberly-Clark is moving forward with enterprise supply chain initiatives to help offset tariff-related cost increases and maintain long-term growth.

The company’s CEO Mike Hsu said during recent earnings conversations that it can expect greater costs across its global supply chain. For 2025 alone, Kimberly-Clark estimates it will incur $300 million in additional expenses due to changes in the international tariff environment. 

Some are likely to be passed down via pricing, as Hsu stated that it’s reasonable to expect economic pressure, especially on value-conscious consumers, to escalate.

“If you look at the kind of impacts on costs that are going to be hitting the average consumer in the U.S., I think budgets are going to be tight,” he said, adding that affordability will be a core strategy.

As a result, the company said it will adjust its sourcing, manufacturing and distribution operations to mitigate much of the costs.

Kimberly-Clark’s Supply Chain Landscape

The majority of what Kimberly-Clark sells in the U.S. is sourced and made locally, said CFO Nelson Urdaneta during the recent earnings call. 

In terms of raw materials and finished goods, combined exposure to China, Mexico and Canada is just less, or around, 10% of its total cost of goods. Factoring in raw materials and finished goods imports for its U.S. business, 80% of total costs in the U.S. are U.S.-based. Therefore, only 20% of its U.S. costs are exposed to tariffs.

Over the last 20 days, the company has had to reflect on cost impacts on three fronts, per Urdaneta:

1. Aggregate U.S. tariffs on China of 145%, which drive about two-thirds of the $300 million gross impact. This is largely on finished goods.
2. U.S. reciprocal tariffs: About 10% have been put in place on other countries Kimberly-Clark sources from. This represents about 10% of the $300 million impact.
3. Retaliatory tariffs announced by other countries on the U.S. represent around 25% of the $300 million. 

Editor’s note: This information was shared on April 22 at 8:30 a.m. Due to the swiftly changing nature of the tariff conversation, these numbers may have changed since publishing.