HP Stockpiles Inventory Amid Tariff Concerns
HP Inc. (HPQ) has joined a growing list of companies stockpiling inventory ahead of potential tariffs from the Trump administration.
CEO Enrique Lores disclosed that HP has increased its inventory within the last month. The move is intended to mitigate the impact of tariffs on finished products. This mirrors similar actions taken by whiskey giant Suntory, which has stockpiled enough alcohol in Europe to last a year.
Concerns about Trump's proposed tariffs on Chinese imports have sparked uncertainty for HP. The company relies on China for key components and sales. Higher tariffs could increase material costs and necessitate consumer price increases.
The Consumer Technology Association forecasts that the proposed tariffs could raise laptop and tablet prices by as much as 46% and smartphone prices by 26%. Electronics retailers have also expressed concern, with one board member reporting that 50% of their time is now spent studying tariff scenarios.
Amidst the tariff concerns, HP's recent earnings have been mixed. Consumer PC sales declined 4%, while commercial sales rose 5%. Operating margins in the PC division have declined year-over-year.
HP faces challenges from competitive pricing dynamics in the market as it attempts to pass through pricing increases to recover higher memory costs. Analyst Samik Chatterjee notes that HP is facing greater headwinds in this regard.