How Tariffs Are Reshaping US Manufacturing: D’Addario's Strategy

Tariff Impact on D'Addario - D'Addario estimates incremental tariffs will reach $22 million by year-end, tripling the $700 thousand paid last year [1] - Retaliatory tariffs imposed by China threaten D'Addario's Chinese business, which generates $5 million to $10 million annually [15] Company Operations and Strategy - D'Addario is a global company with approximately 1100 employees, about 800 based in Farmingdale, New York, and roughly $240 million in annual revenue [4] - The company distributes its products in over 130 countries, with its own distribution companies controlling about 50% of its international business [7] - D'Addario has been onshoring production, including starting its own injection molding factory in New York before the pandemic, to mitigate tariffs and supply chain disruptions [8] - D'Addario believes it can cut its tariff bill in half by onshoring additional products and parts [10] - Approximately 50% of D'Addario's product is sold in the U S, and 50% is sold internationally [7] - About 5% of D'Addario's business represents finished goods sourced from overseas, predominantly from China [5] - D'Addario sources raw materials from its own plantations in the South of France and Argentina for its reed business [5] Industry Perspective - Allianz Trade surveyed 4500 companies across China, the EU, the UK, and the U S, finding that U S firms are absorbing tariff costs into their margins [18][19] - Allianz Trade anticipates that U S retailers and wholesalers will start passing on tariff costs to consumers as inventories run low [19]