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Economy • May 8, 20:10 • Modified on May 8, 20:10
Philips prepares for doomsday scenario around trade war and import duties
Author : Thijs Baas
Philips assumes very negative effects of the trade war and the high import duties from the United States, says reporter Martijn de Rijk. 'Philips thinks that the tariffs will simply come to 20 percent after a ninety-day freeze, and that tariffs of 125 and 145 percent will apply between the US and China.'

\hareholders meeting of Philips today in Amsterdam. From the worst-case scenario, Roy Jakobs comes to a setback of 250 to 300 million euros for this year, says De Rijk. 'That is quite a lot, it means that there is a very real chance that no profit will be made for the fourth year in a row. That really hurts.'

Jakobs does notice the impact of import duties, especially from the US and China. These will affect profit and cash flow, also based on what has been announced at the moment, he said on Tuesday. 'We have taken substantial mitigating measures against this in the form of several hundred million euros. Knowing that it is still a very fluid situation, where what is going to happen in the coming period is especially important. Demand is encouraging, we can hold on to the sales figures.'

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With the mediocre news and the pain of expectations in mind, you would almost expect a revolt and a huge disappointment, but the opposite seems to be true, says De Rijk. 'Gerben Everts of the VEB started his speech today with compliments, and I have certainly heard him say things differently at shareholder meetings. You may ask openness from companies like Philips, who cannot simply lift those trade tariffs on their own.'

Long process in US
Although Everts has found a hobbyhorse for this, by means of the 'Nairobi exemption' - which applies to levies on medical equipment, from the corona period. De Rijk: 'He wondered whether that medical equipment could not fall under that. Philips is indeed working on that, but it is a long process to persuade the American government to include it, and moreover it is very complicated, because that equipment is built almost everywhere in the world.'

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Philips still has the ambition to maintain the ESG goals. For example, Philips employees must reflect their customers: of all shapes, sizes and colors you can think of. However, the company will have to adhere to the locally applicable laws worldwide, says De Rijk. 'So quotas, as demanded in some places, will not be possible in the US for a while. Trump has also demanded that companies may not demand that in other places either, but Philips is not responding to that.'