Stanley’s $1 Billion Tariff Truce Is a Lifeline But Not a Strategy

The latest ceasefire in the U.S.-China tariff war is giving Stanley Black & Decker some much-needed breathing room. The company now expects to save over $1 billion annually in avoided tariff costs, a steep drop from the $1.7 billion it once projected under earlier Trump-era duties. For consumers, this could mean fewer price hikes on tools, lawn mowers, and leaf blowers. For Stanley, it’s a reprieve, not a solution.

Stanley still imports around 15% of its U.S.-bound products from China. That’s a significant improvement from 40% back in 2018, but enough exposure to remain highly vulnerable to trade policy mood swings. Under the previous 145% tariff spike, the company was bracing for an earnings bloodbath. With the new truce dialing rates down to around 30%, Stanley’s pricing power improves, but only at the margins.

Stanley’s COO, Chris Nelson, told investors at a Wolfe Research conference that while tariffs remain a “significant number,” the company won’t need to push prices up as aggressively. The company had already implemented substantial hikes in April, and more were expected. But for now, Stanley is playing defense.

Stanley’s longer-term strategy is less about shielding itself from tariffs than escaping China altogether. The company now sources over 40% of U.S.-bound goods domestically and another 19% from Mexico. By 2027, Stanley expects to end all Chinese imports for the U.S. market.

This is part of a broader trend. As Home Depot reported this week, the company is actively working with suppliers to ensure that no single country (besides the U.S.) accounts for more than 10% of its product sourcing. Others, like Snap-on Inc., have adopted a hardline stance: “You’re trying to avoid China products at all costs,” said CEO Nicholas Pinchuk.

Still, Stanley’s shift isn’t toward American factories. Its much-hyped $90 million Craftsman plant in Fort Worth was shut down in 2023 after automation underperformed and labor costs proved unsustainable. “We’re not betting on U.S. manufacturing to fix tariffs,” CEO Donald Allan has said in past remarks, noting both cost concerns and America’s ongoing labor shortages.

Mexico has become Stanley’s main hedge. The company is scaling up its Mexican production capacity and working to qualify more goods for duty-free treatment under the United States-Mexico-Canada Agreement (USMCA). Less than a third of its products currently qualify not because they can’t, but because compliance with trade rules hadn’t mattered until now.

The shift isn’t just about geography; it’s about flexibility. Stanley is reshuffling its bills of materials and suppliers to meet USMCA standards, aiming for tariff-free production without moving entire factories. In parallel, the company is exploring Vietnam, India, Thailand, and Taiwan as supplemental low-cost sourcing hubs.

Stanley is not alone. Husqvarna AB, a Swedish rival, is also rerouting production. CEO Pavel Hajman noted in a recent earnings call that the company’s European supply network offers the fastest workaround to U.S.-China tariffs. While Husqvarna plans price increases, it’s hedging those with regional diversification.

The truce may look like a win for U.S. manufacturers, but it’s also a warning shot. Companies like Stanley are building their resilience not by bringing jobs back, but by spreading risk. Barclays analyst Julian Mitchell put it bluntly: “There is less impetus for onshoring.” Globalization isn’t dead, it’s just being recalibrated.

A 2024 report by the Reshoring Initiative showed that while reshoring announcements hit a record high last year, actual onshore production remains modest. Most firms still prefer “nearshoring” to places like Mexico, where labor is cheaper, logistics are faster, and trade deals are intact.

Meanwhile, investment in automation-heavy U.S. plants has hit a wall. “There’s a myth that robotics will solve the labor shortage,” said MIT economist David Autor in a recent paper. “In practice, we’re seeing high capital costs with limited productivity gains.”

The tariff truce, negotiated under Trump’s second term, is itself fragile. Trump has publicly flip-flopped on China, promising to be both “tough” and “strategic.” Industry leaders are wary. The ongoing review of Nippon Steel’s $14.1 billion bid for U.S. Steel, a deal Trump has publicly criticized, shows how trade policy, national security, and election-year politics remain tightly intertwined.

If tariffs rise again, companies without diversified supply chains will feel it first. For now, Stanley has avoided the worst. But the broader industrial sector has taken note: global manufacturing strategy now starts with geopolitical forecasting, not just cost accounting.

Stanley’s billion-dollar break is a rare win in a volatile trade environment. But the company’s roadmap away from China, into Mexico, and away from U.S. factories reflects a more sobering truth: Tariff relief helps, but structural vulnerability remains.

For companies reliant on global supply chains, agility, not patriotism, is the new survival strategy.