French electrical and digital infrastructure company Legrand (EPA:LEGD) plans to raise prices, adjust its supply chains, and freeze spending to manage an estimated $200 million in costs from U.S. tariffs on Chinese imports, CEO Benoît Coquart told Reuters.
Legrand now expects the impact of the U.S. tariffs on Chinese goods to be between $150 million and $200 million on its adjusted earnings before interest and tax (EBIT) this year. This estimate assumes that the 145% tariff on Chinese imports will decrease to 50-60% later in the year. Earlier in February, the company had projected a financial impact of around $30 million from the previous 10% U.S. tariff.
The company plans to introduce a standard pricing strategy for products sourced from China, which could lead to a 1-2% increase in overall pricing, Coquart explained.
Additionally, Legrand is shifting production from higher-tariff countries like China to lower-tariff locations such as Vietnam, India, and Mexico. Production in Vietnam began ramping up two months ago, and the company is opening a second low-capex factory there. This move primarily affects lower-cost products like switches and presence detectors, which were previously made in China for the U.S. market.
Legrand had already expanded its presence in Vietnam during U.S. President Donald Trump’s first term by opening a 500-employee factory to shift some manufacturing from China.
The third element of Legrand’s plan is to cut costs, but Coquart emphasized that this would involve freezing certain expenses and delaying hiring rather than making significant layoffs.
Legrand is also utilizing the U.S.-Mexico-Canada Agreement (USMCA) to ensure its products qualify for preferential treatment under the trade deal. This agreement grants benefits to goods sourced from or containing significant value added in the U.S., Mexico, or Canada.
The company believes these measures will help mitigate the impact of tariffs and support operating margins in 2025, which are expected to align with those of 2024.
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