Rockwell Automation Poised to Gain From U.S. Tariffs & Onshoring

Key Points

• Rockwell Automation manufactures industrial automation products, including robots for factories and manufacturers.
• The company manufactures around 70% of its products in the United States.
• Rockwell Automation could benefit from the onshoring of manufacturing products back to the United States as companies try to mitigate tariffs, which is the opposite of offshoring.

One of the key goals of President Trump’s import tariffs is to bolster the manufacturing sector in the United States. By levying import tariffs like the 25% on Canadian and Mexican goods and the additional 10% on China, imported products become more expensive as business flows to domestic products, in theory.

By making domestic products more competitive, Trump aims to encourage companies to produce in the United States. Critics argue that it would encourage domestic manufacturers to raise prices as they can squeeze out more margins, as U.S. steel makers did in 2018.

While there aren’t many companies that appear to benefit from tariffs, Rockwell Automation Inc. NYSE: ROK could be a winner in many ways.

Rockwell Automation Benefits from the Manufacturing Sector

Rockwell produces automation equipment, including robots for factories and manufacturing plants. As foreign investors and companies decide to open up new factories in the United States, Rockwell Automation will be a leading choice to provide them.

The recent announcements of major investments in the United States are a boon to the company. These will all need factory automation products and support.

Onshoring Trend Will Boost Rockwell’s Business

While America’s manufacturing had gone offshore to lower costs, the Trump administration is attempting to bring manufacturing back into the country, onshoring. Onshoring is the opposite of offshoring, as companies bring the manufacturing of products back to the United States to avoid tariffs. Investments from outside the United States are also a trend that Trump wants to promote.

The $500 billion Stargate project with investments from Oracle Co. NYSE: ORCL, Softbank and Open.AI, the $100 billion investment from Taiwan Semiconductor Manufacturing Company Ltd. NYSE: TSM or the $500 billion investment for new factories from Apple Inc. NASDAQ: AAPL could entail using industrial automation equipment (robots, drives, motors), hardware (PLCs, sensors, actuators), software (visualization, control, design, configuration and analytics) and services (installation, training, maintenance and support) from Rockwell.

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Rockwell’s Products Are Mostly Made in America

Over 70% of Rockwell’s products are “Made in America,” which could shift business away from competitors like Siemens Aktiengesellschaft OTCMKTS: SMAWF and Mitsubishi Electric Co. OTCMKTS: MIELY. By keeping prices stable, Rockwell could gain market share as onshoring revives domestic sales. Rockwell’s products and services are all about improving factory and facility efficiency to ultimately improve margins for its customers.

A Reversal of Fortune Could Be Coming to Rockwell

Rockwell Automation reported its fiscal first quarter of 2025 results on Feb 10, 2025. The company posted earnings per share (EPS) of $1.83, beating consensus analyst estimates of $1.58 by 25 cents. However, revenues fell 8.3% YoY to $1.88 billion, matching consensus estimates. Orders did rise 10% year over year (YoY), and margins improved.

Management Issues Conservative Guidance

Rockwell issued inline guidance for fiscal 2025 with EPS of $8.60 to $9.80, with a midpoint of $9.20, versus $9.24 consensus estimates. Revenues are forecast to be around $8.1 billion versus $8.13 billion. The sales growth range is estimated between negative 5.5% to 0.5%, hurt by a negative 1.5% FX impact. Management reaffirmed organic sales growth of negative 4% to 2%.

The CEO Is Upbeat About Being a Beneficiary of Tariffs

CEO Blake Moret is calling for $250 million in productivity gains in fiscal 2025 as the company continues to cut costs and expand margins. Orders grew sequentially, and backlog increased, driven by large multi-year project wins in life sciences, logistics and automotive.

Moret addressed the tariffs in the company’s conference call, “Additionally, we are confident that we are dealing with the recently announced tariffs in a way that mitigates the impact and maximizes our position as a large US manufacturer. We've been working on various scenarios since before the election. Undoubtedly, there will be near-term disruptions and volatility in the global supply chain, both for us and our customers, but we continue to believe Rockwell is a net beneficiary of policies that increase US manufacturing. “