The tariff shock has arrived, and the "king of fast-moving consumer goods" Procter & Gamble announces price increases in the United States

When the costs of trade turmoil ultimately pass through to the consumer end, even the "king of fast-moving consumer goods" has to bow to reality.

Faced with the enormous cost pressures brought by Trump's tariff policy, global consumer goods giant Procter & Gamble has been forced to pass the price increase pressure onto consumers. According to the latest report from the Financial Times, Procter & Gamble announced plans to raise prices of household goods in the U.S. market by about 5% this year to cope with the $1 billion cost impact from Trump's tariff policy.

The company, which produces well-known brands such as Gillette razors and Dawn dish soap, will implement "mid-single-digit" price increases on about a quarter of its products sold in the U.S.

Procter & Gamble expects the post-tax tariff costs to reach $800 million, accounting for more than 1% of the company's $84.3 billion net sales in the last fiscal year.

Tariff Costs Exceed Expectations

The tariffs imposed by the Trump administration on U.S. trading partners have significantly increased the costs of raw materials, packaging materials, and goods for Procter & Gamble. CFO Andre Schulten explained that although the company has made substantial investments in the U.S. to achieve localized production, some materials, ingredients, and packaging cannot be sourced domestically and must be imported from other markets, thus facing tariff pressures.

The impact of tariffs also extends to export businesses. Schulten pointed out, "Products we produce in the U.S. and export to Canada also face tariffs."

The uncertainty of tariff policies further complicates corporate planning. Although the U.S. and the EU reached an agreement this week to impose a 15% tariff on most European imports—only half of the level previously threatened by Washington—this could save Procter & Gamble $100 million in tariff costs, Schulten remains cautious, stating, "I am reserved about this until we really see the details."

Procter & Gamble's price increase strategy is not merely a simple cost pass-through but is combined with product innovation. Schulten noted that part of the price increase is due to product innovations, such as the recently improved Luvs diapers and Tide laundry detergent varieties. The company's financial report shows that organic sales grew by 2% in the second quarter, benefiting from higher pricing and product mix optimization.

Steady Performance but Cautious Outlook

Despite facing challenges, Procter & Gamble's performance in the second quarter was solid. Analysts surveyed by Visible Alpha expected the company's $20.9 billion net sales to exceed the market expectation of $20.8 billion, and the $3.6 billion net profit also surpassed forecasts.

However, the company’s guidance for future prospects is relatively conservative. Procter & Gamble expects organic sales growth for the current fiscal year to be in the range of 0% to 4%. CEO Jon Moeller explained the reasons for the cautious stance during an analyst conference call. He stated:

The company is facing a "highly dynamic, difficult, and turbulent environment," with consumers increasingly "anxious" due to tariffs, inflation, interest rates, political and social divisions, and uncertainties in immigration and employment.