Garmin faces $100 million tariff impact and rising watch prices

In the United States, Garmin recently disclosed significant financial insights during its Q1 2025 earnings call held on April 30, 2025. The company, known for its outdoor and fitness products, indicated that it anticipates a substantial impact of approximately $100 million due to tariffs imposed by the Trump administration. These tariffs are expected to notably affect Garmin's cost structure and consumer pricing strategy moving forward, particularly in light of changing economic conditions and historical tariff levels. CFO Clifton Pemble emphasized that their guidance reflects a potential reduction in demand as a result of these elevated costs. Despite these challenges, Garmin demonstrated resilience in its financial performance, reporting a 20% increase in revenues for its Outdoor segment and a 12% increase in the Fitness category. With revenues reaching $438 million and $385 million respectively, the company remains committed to navigating these hurdles while pursuing strategic mitigations for the upcoming tariffs. However, it's important to note that recent fluctuations in the stock market have not been favorable, with Garmin’s stock value experiencing a near 10% decline amidst these concerns, despite positive revenue figures. Garmin's operations are primarily based outside the U.S., particularly in Taiwan, where many of their products, including watches, are manufactured. The CEO mentioned that ongoing tariff rates for Taiwan are currently at 10%, though this could revert to 32%, considerably raising production costs. This complicates their pricing strategy, particularly for upcoming product releases such as the Forerunner 970, a successor to the highly regarded Forerunner 965. Garmin must balance these increasing costs against the expectation of maintaining its competitive pricing to attract consumers. The situation outlines the broader challenges facing U.S. companies with international manufacturing bases as they adapt to an evolving trade environment. Garmin’s situation highlights the sticky point of tariff-related costs, manufacturing location dependencies, and how these factors can translate into higher prices for consumers in the U.S. market. As they prepare for new product launches, the implications of these tariffs are anticipated to play a crucial role in shaping consumer pricing in the immediate future.