Item 1A. Risk Factors
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, except for the revision to the following risk factor as set forth below:
Increased tariffs or the imposition of other barriers to international trade could impact the cost of our products, demand for our products and our competitive position.
Changes to trade protection measures and import or export licensing requirements; the imposition of new, additional, or retaliatory tariffs, quotas, exchange controls, sanctions, trade barriers or other restrictions; and the withdrawal from or modification of trade agreements or the negotiation of new trade agreements, in countries where we operate, particularly in Mexico, Canada, China, and India, could impact the cost of our products, demand for our products and the competitive position of our products. Our largest global manufacturing facility is in San Luis Potosi, Mexico, and it supplies products to our U.S. and global markets. There can be no assurance that the consequences of these actions, given our global operations, will not have a material adverse effect upon our business, financial condition, results of operations or cash flows.
For example, in February and March 2025, the U.S. presidential administration announced new and substantial tariff increases on imports to the United States from China, Mexico and Canada, On March 12, 2025, the U.S. government imposed a 25% tariff on steel imports, and on April 2, 2025, the U.S. government announced a 10% tariff on product imports from almost all countries and individualized higher tariffs on certain other countries, most notably, a 145% tariff on substantially all products of Chinese origin. These actions have resulted in retaliatory measures on U.S. goods and have begun to impact our business. Several tariff announcements have been followed by announcements of temporary pauses and limited exemptions, such as the temporary exemption for goods that enter the U.S. as qualifying goods under the U.S. Mexico Canada Free Trade Agreement, for which the majority of our products from Mexico for the U.S. market are certified compliant, or expected to be certified compliant. If maintained, the newly announced tariffs and the potential escalation of trade disputes would pose a significant risk to our business and would affect our revenue and cost of goods sold. For example, we have raised the prices of certain of our products in response to cost increases we have incurred on purchases of finished and other goods and some raw materials due to tariffs. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions we take to adapt to new tariffs or trade restrictions, including raising the prices of our products or shifting supply sourcing or production locations, may cause us to modify our operations, lose customers, experience increased costs, or forgo business opportunities.
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