HP says 90% of products for the U.S. will be made outside of China by October

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HP says 90% of products for the U.S. will be made outside of China by October

Leading PC makers have been shifting their production away from China for several years already, and now that the Trump administration is imposing prohibitive tariffs on imports from China, they are not caught completely off guard. HP will continue to shift production to other regions, and by the end of its fiscal year, 90% of its products for North America will be made outside of China. Dell also expects its diversified supply chain to lower the impact of tariffs but will have to pass the extra costs to end users if it cannot mitigate them. 

“ By the end of fiscal year 2025 [in October], we expect more than 90% of HP products sold in North America will be built outside of China,”

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Enrique Lotes, chief executive of HP, during the company’s earnings conference call with analysts and investors. “China will continue to be an important manufacturing hub for the rest of the world. As we look ahead, we are managing the current tariff increases on China and have included them in our

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.” 

Early this month, Trump’s administration imposed a 10% tariff on imports from China, and earlier this week, U.S. President Donald Trump proposed an extra 10% duty on goods made in China and shipped to the U.S. For PC makers, this means increased costs. However, companies like HP seem to be prepared for this.

HP and other PC makers have been working to restructure their production network and reduce reliance on China, which has historically played a key role in manufacturing for North America. Shifting production from one country to another is difficult and cannot be done as a short-term or mid-term solution. So, to mitigate the ongoing instability due to tariffs, HP stockpiled hardware during the quarter to protect against cost fluctuations and ensure a steady supply of products. Of course, such actions lead to higher inventory levels, which affects HP’s cash flow and cash conversion.

 ”As part of the tariff response actions, we purposely produced additional inventory and also took advantage of strategic buy opportunities as part of overall cost mitigations,” said Karen Parkhill, chief financial officer of HP. “While these actions will be economically beneficial to the year, they increased our cash conversion cycle, and as we pay for and sell the increased inventory, we anticipate a further impact in cash conversion.”

While HP clearly says that 90% of the products it sells in North America will be made outside of China by October, its rival Dell only says that it has a diversified supply chain, which is expected to help it mitigate the tariffs on China-made goods.

“We built an industry-leading supply chain that is globally diverse, agile, resilient that helps us minimize the impacts of these trade regulations, tariffs to our customers and shareholders,”

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Jeffrey Clarke, chief operating officer, at the company’s earnings call. “[…] Whatever tariff we cannot mitigate, we view that as an input cost and as our input costs go up, it may require us to adjust prices. That is what we have done in the past. I cannot imagine we are going to do anything differently.”

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#products #U.S #China #October

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