Consumer goods giant Procter & Gamble may need to implement price adjustments in response to newly announced tariffs by the Biden administration, according to recent statements from company
leadership. The manufacturer of household staples like Tide, Bounty, Dawn and Crest is preparing for the impact of upcoming trade policy changes.
In a recent media briefing, P&G’s Chief Financial Officer Andre Schulten addressed the company’s strategy for handling the announced 25% tariffs on Mexican and Canadian imports and 10% tariffs on Chinese goods, set to take effect February 1st. While expressing confidence in P&G’s ability to navigate the new trade landscape, Schulten indicated that consumers might ultimately see higher prices on store shelves.
The CFO emphasized that P&G will first attempt to offset increased costs through internal efficiency measures. However, he noted that if productivity improvements prove insufficient, the company may need to implement “incremental pricing” to maintain profitability. Schulten also mentioned the company’s “formulation flexibility,” suggesting that product ingredients could be adjusted if certain materials become too costly under the new tariff structure.
This development comes as P&G reported positive financial results in its second quarter fiscal year 2025 earnings, with net sales growing 2% compared to the previous year. The company saw improved performance across multiple categories, including beauty, health care, and home care products. Operating income showed particularly strong growth, increasing by 30% year over year.
The potential for new price increases follows a pattern of previous adjustments, with P&G having implemented minimum 1% price hikes over several recent quarters. These increases occurred during a period when annual inflation reached 3.2% in 2024, already putting pressure on consumer spending power. Customers have also noticed instances of “shrinkflation,” where product sizes decreased while prices remained stable.
P&G isn’t alone in warning about potential price increases due to the new tariffs. Other major retailers including Walmart, AutoZone, Best Buy, Dollar Tree, and Costco have issued similar cautions about passing increased costs to consumers.
Consumer resistance to ongoing price increases could pose challenges for companies considering such moves. Research from R.R. Donnelley & Sons Co. indicates widespread consumer frustration with rising prices across various sectors. Their survey revealed that 88% of consumers express frustration with higher prices in categories like groceries, gas, and restaurants. In response to pricing pressures, 35% of shoppers have switched to private-label alternatives instead of name brands, while 37% have reduced their overall purchase quantities.
P&G, which maintains manufacturing operations across the United States, Canada, Mexico, and China, finds itself particularly exposed to the new tariff regime. While Schulten expressed confidence in the company’s ability to “deal with” whatever policy changes emerge, the situation highlights the complex balance between maintaining profit margins and retaining price-sensitive customers.
The potential pricing adjustments would come at a time when consumers are already demonstrating changing shopping behaviors in response to economic pressures. The combination of new tariffs, existing inflation, and consumer resistance to higher prices presents a significant challenge for consumer goods manufacturers and retailers as they navigate an increasingly complex economic landscape.