Cisco plans further supply chain adjustments to offset tariffs

Cisco executives are prioritizing supply chain adjustments over price increases as a way to offset the 25% tariffs on steel and aluminum imports, according to its Feb. 12 earnings call. 

The telecommunications giant’s supply chain team has already cut its tariff exposure for goods and materials made in China by 80%, EVP and CFO Richard Scott Herren said. He added that it may be a “muscle” they have to flex again as President Donald Trump reviews U.S. tariff policies. 

“We’ve game-planned out several scenarios and steps we could take depending on what actually goes into effect, we’ll start to take those steps to mitigate the impact of the tariffs,” Herren said during the Q2 call.

Cisco has nine global manufacturing sites, three logistics operations and four dual manufacturing and repair facilities — four of which are in China — according to a map included in the company’s 2024 supply chain sustainability report.

To further diversify its supply chain, the company began manufacturing and repair operations in India in 2023, which is home to its second largest research and development center outside of the U.S.

Moving forward, Cisco expects slightly higher revenues and adjusted gross margins in fiscal year 2025, despite including the estimated impact of additional tariffs on China, Mexico and Canada in its latest guidance. The company now anticipates earnings per share between $3.68 and $3.74, up from the $3.60 to $3.66 earnings per share, as projected in its Q1 earnings report.