“Once they are complete, we expect them to fully mitigate the impact of these tariffs.”

In context

“hind each of these macro change factors. Starting with the US-China tariffs, the tariff rates here are so substantial that they're likely to significantly reduce the volume of trade between the two countries. We expect this will impact the sales of our products in China that are produced by our facilities in the U.S. In our guidance, we're assuming this is a $400 million revenue headwind for the year. These tariffs are also expected to increase the cost of China-sourced parts and subassemblies. The pull-through on the lower volumes and higher costs, net of the aggressive mitigation actions, is assumed to be a headwind of adjusted operating income in 2025 of $375 million versus the prior guide. The mitigation actions take time to complete, so we don't get all the benefit from them in 2025. Once they are complete, we expect them to fully mitigate the impact of these tariffs. Moving on now to non-China-related tariffs, these recently raised tariffs are increasing our costs where we directly import items into the U.S. but also likely increase the cost of many items that we buy in the U.S. that have overseas content. A partial offset to the impact of these tariffs is foreign exchange. The increase in tariffs has caused a significant weakening of the US dollar, and at current rates, this increases our revenue guide for the year by $600 million. The bottom-line benefit of the FX change is more muted given the mix of currencies and one-time transactional FX caused by the recent rapid change in the rate. We're driving offsetting mitigation actions here as well, a combination of supply chain changes, actively managing our cost base, and appropriate pricing actions. A”