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Despite operating in 170 countries and earning half its revenue internationally, IBM faces minimal financial impact from current tariff policies.
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Big Blue’s imported goods represent less than 5% of the company’s overall spending, limiting tariff exposure to under 1% of total revenues.
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The company is actively sourcing alternative suppliers for tariff-laden components, despite the relatively small financial impact.
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Trade tariffs are mixing up the global economy in 2025. The Trump administration has issued double-digit import fees on goods from most countries, with even higher rates in markets like China and India. Some of these tariffs are currently in effect, while others are pending, with a patchwork of countermeasures issued by the targeted countries. To keep an eye on this messy situation, check out The Motley Fool’s tariff and trade investigation tracker — a living document that does all the hard data-tracking work for you.
Few companies are more international than IBM (NYSE: IBM) — Big Blue even has “international” in its name. It runs research labs on six continents, has more employees in India than the United States, and runs business offices in more than 170 countries. Almost exactly half of IBM’s revenues were collected in the Americas in 2024, which also includes Canada and Latin America.
Surely this global giant must feel the pinch from criss-crossing tariff policies, right? As it turns out, IBM isn’t too concerned with the ongoing trade tensions.
There are different ways to figure out IBM’s tariff exposure. I could take the complicated web of current and future tariff rates, apply them to each of IBM’s products and services in various countries, and create an intimidating spreadsheet. Or I could look for management’s statements about the tariff challenge.
The company helped me out by addressing the unpredictable tariff policies in the first-quarter earnings call. This call took place on April 23, three weeks after Trump’s “Liberation Day” tariff announcement.
“Over the last several years, we have strategically diversified and streamlined our supply chain,” said CFO Jim Kavanaugh. “Goods imported to the U.S. represent less than 5% of our overall spend and under current U.S. tariff policy, the impact to IBM is minimal.”
That brief statement means a couple of things to me:
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It’s IBM’s only official discussion of tariffs in 2025, even though the trade expenses have shifted significantly since April. In other words, the tariff issue is hardly worth mentioning.
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Applying tariff rates to “less than 5%” of IBM’s global spending is not exactly nothing, of course. I’d hate to cover that multimillion-dollar bill from my personal accounts. IBM still builds mainframe computers, requiring parts from tariff-laden countries like China or the European Union. But the cost of products and services stopped at 16.3% of total revenues last year, and 5% of that gross expense ratio is less than 1% of IBM’s incoming revenues. Even if every tariff were a beefy 100% surcharge, that’s a pretty manageable extra cost — and most of the international trade fees are far smaller.
