Tariffs force companies to play pricing chess
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Newell Brands conceded Friday that it raised prices too high for imported kitchen products like its Calphalon, Mr. Coffee and Crockpot brands, causing sales to drop last quarter.
Why it matters: Tariffs are forcing companies into an increasingly risky game of pricing chess — go too low and margins vanish; go too high and customers disappear.
The big picture: Pricing strategy has always been a balancing act, but tariffs have added new variables.
- Where products are sourced — in the U.S. or from abroad — now matters more than ever. And where competitors source their product matters too.
- Market leaders protecting margins can quickly become prey for rivals willing to eat short-term losses to win share.
- With consumers already squeezed by rising prices, even small missteps can drive sales declines.
Case in point: Newell Brands "really got caught offside" last quarter on pricing in its kitchen products business, CEO Chris Peterson said on the company's third-quarter earnings call Friday.
- Many of its kitchen products come from Asia, where tariffs are steep. The company raised prices in the category to protect margins in the quarter, but competitors didn't follow, Peterson said.
- "The pricing that we put in the market turned out to position us as being uncompetitive in those businesses that are primarily sourced businesses," he said.
- On the flip side, Newell raised prices on its baby products three times to offset tariffs and inflation — but in that area competitors followed. "We continued to gain market share despite leading pricing higher in the category," Peterson said.
Between the lines: The tariff equation is spawning new corporate jargon, too. Executives used the phrase "tariff advantaged" six times on the call, describing product categories — like its Sharpie pens — where Newell's U.S. manufacturing gives it a cost edge over import-dependent competitors.
- In the last quarter, Peterson told investors, Newell has been proactively selling those tariff-advantaged products to retailers to secure more shelf space, better placement and in-store merchandising opportunities.
The bottom line: Companies racing to offset tariffs are playing a risky pricing game — balancing profit protection against consumer tolerance and opportunities for competitors, one price tag at a time.
