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By Pooja Menon
(Reuters) -Water solutions company Ecolab said on Wednesday it would add a 5% surcharge, effective May 1, on all its products and services in the U.S. to mitigate rising raw material costs due to recent changes in international trade policies.
Global companies are looking at ways to deal with the ripple effects of escalating trade tensions, particularly between the U.S. and China.
"Global tariffs greater than 10% and 145% tariff placed on China are having broader impacts on the cost of some raw materials, packaging, and equipment," CEO Christophe Beck said.
Washington's fresh round of tariffs lifted duties on China to an eye-watering 145%, prompting Beijing to jack up levies on U.S. goods by 125% in an intensifying trade war between the world's two biggest economies.
"We cannot fully mitigate these increases, necessitating adjustments in our pricing. Because of the proactive actions we have taken in our supply chain, we are currently able to limit the price increase to 5% for our customers in the United States," CEO Beck added.
William Blair analyst Tim Mulrooney said a proactive pricing surcharge across the affected customer base could immediately offset rising costs of some raw materials, packaging, and equipment caused by recent changes in tariff rates.
"What remains unknown is how these tariffs will impact demand trends across the company's industrial, institutional, healthcare, and pest control customers. We expect there to be some near-term impact from increased uncertainty on volumes," Mulrooney added.
The U.S. is the company's biggest market, with 52.8% of its overall revenue coming from the region in 2024, as per Ecolab's annual filing.
The Saint Paul, Minnesota-based company operates 32 manufacturing facilities in the U.S. and 67 internationally.
(Reporting by Pooja Menon in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)