CINCINNATI -- Bounty paper towels, Cascade detergent and Old Spice body wash are just a few of the Procter & Gamble Co. products now facing a 10 percent tariff in Canada.
It could be the biggest impact to date for a Cincinnati company since President Donald Trump started slapping new taxes on foreign imports in January, causing America's trading partners to respond with retaliatory tariffs of their own.
P&G said Canada represents 3 percent of its global revenue, or roughly $2 billion. It wouldn't say how many of its products are impacted, but it did say some of its largest revenue producers -- such as Tide, Pampers, Crest and Gillette razors -- are not affected. Products impacted include shave preps from Gillette and Venus, hair sprays from Pantene and Aussie, lotion and body wash from Gillette, Ivory, Olay and Safeguard and Febreze air freshener.
"P&G believes strongly that free trade benefits consumers and we encourage resolution between U.S. and Canadian authorities," spokesman Damon Jones said.
The Canadian tariffs come at a difficult time for P&G, as it grapples with the rising cost of raw materials and fierce competition makes it harder to raise prices.
"We estimate P&G's basket of commodity costs has risen by 15 percent in the last year," Jeffries analyst Kevin Grundy wrote in a July 9 report on the company. "After years of positive pricing, P&G reported flat pricing in (2017) and expects negative pricing in (2018) for the first time since 2004."
Grundy downgraded P&G's stock from "buy" to "hold" and reduced his 12-month price target from $83 to $79, saying its continuing market-share losses and sluggish growth in emerging markets will keep the company from growing at a pace desired by investors.
The new tariffs will not be a factor when P&G next reports earnings on July 31 because its fourth quarter and 2018 fiscal year ended June 30, a day before the Canadian tariffs took effect.
Looking forward, P&G wouldn't say whether it will try to offset the impact of Canadian tariffs by lowering its prices further.
"As P&G takes a holistic view of pricing by product category, we will include factors such as costs, the value of our brands and local marketplace dynamics," Jones said. "We will strive to ensure that our brands are competitive in Canada and continue to provide a strong value proposition to our consumers."
On the plus side, P&G is not expecting a big impact from rising trade tension between the U.S. and China because most of the products it sells in those countries are manufactured there.
"We import very little finished product from China into the U.S. and vice versa," Jones said.
