Dell, HP Report Success in Mitigating Costs of Chinese Import Tariffs
Section 301 tariffs on Chinese imports topped the lists of supply-chain “headwinds” that Dell Technologies and HP encountered in their most recent quarters, said executives with both companies on separate earnings calls Thursday.
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Despite “uncertainty with the tariff picture,” Dell “navigated the current list for tariffs quite successfully,” said Jeff Clarke, vice chairman-products and operations. “Most of our desktops are already built in North America anyway, so we didn't have a bunch of hurdles to jump through,” he said. Where Dell did incur higher costs from tariffs, “we have passed that through to end-users” in the form of price increases, with “no apparent impact to demand,” he said.
HP’s plans to “mitigate” the higher tariff costs “are on track,” said Chief Financial Officer Steve Fieler. “We expect the headwinds to be larger in the short term,” lower throughout the fiscal year ending October, he said. “We have not considered any impact from unannounced tariffs or any significant demand changes that may result from an increase in geopolitical uncertainties.”
HP won’t “speculate or chase ghosts” about the possibility of additional tariffs, said CEO Dion Weisler. For the tariffs “that we know about,” HP will continue to “optimize” the company “to deal with the industry dynamics that are just part of operating this business,” he said. HP’s personal systems and desktop businesses took gross-margin hits in the recent quarter from the tariffs, said Fieler.
The company is "working through a variety of mitigation items on the tariffs,” including price increases, said Fieler. HP is “obviously watching our pricing very carefully,” said Weisler. “We are looking at our competitors’ pricing very carefully. We tend not to lead the market down on price and sometimes in many cases, we’re the first to take up pricing.”