A (too) early look at Tariff Impact on Public Robotics Companies

ABB’s local‑for‑local moat, Zebra’s $20 m EBITDA drag, and why near‑shoring to Mexico is the industry’s default hedge.

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Sophisticated, large players are positioned to handle tariffs

There are a number of advantages to scale, and early tariff data shows another advantage to scale: handling tariffs. Large cap companies, such as ABB, spent the past few years positioning themselves to address changes in globalization with a “local‑for‑local” (producing goods in the buying market) strategy. Contrast this with smaller players, like Zebra, which took a $20M EBITDA hit with tariffs, due to heavy reliance on contract manufacturing in Vietnam and Malaysia. Regardless of size and sophistication, almost all players are looking at near‑shoring into Mexico—protected (for now?) by USMCA exemptions.

It’s Too Early to Tell the Impact of Tariffs

2025 tariff increases were only announced in March–April; announced tariffs were delayed, so Q1 will largely be devoid of the true impact. Still, first‑quarter calls and 10‑Qs give a hint about how companies are positioned to handle the tariffs. However, in its earnings call on April 22nd, Intuitive Surgical did provide an estimate of 1.7% of sales, and gross margins going from about 67% to 65%.

Sophisticated Players: Minimal Impact

Company What They Told Investors (Q1 ’25)

ABB

• “75‑80 % of U.S. sales already produced domestically”

• $120 m new CapEx in TN & MS.

• No guidance cut. Double down on U.S. factories; exploit tariff exemptions.

Intuitive Surgical

• Increasedcosts of 1.7% of sales, but no price hikes baked in

• 98% of robotic systems are built in the US

• 70% of endoscopes in the US

• 80% of instruments and accessories in Mexico

• ISRG is a net exporter

Symbotic

• Contracts allow tariff cost to be passed along

• Cost‑plus contracts + light Mexico assembly.

iRobot

• After a 2021–23 pivot, “substantially all” Roombas for America now ship from Vietnam/Malaysia, avoiding 125% China duties. (10‑K, Mar ’25)

• Margin drag largely solved.

• Multi‑country contract manufacturing.

ABB CEO Morten Wierod: “Our legacy local‑for‑local footprint lets us focus on what we can control.”

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Mid‑Caps & Small Caps: Headwinds AND Tailwinds

Company Pain / Benefit Mitigation Moves

Zebra Tech

• Guides to a $20 m EBITDA hit for FY ’25 despite offsets. Shift sourcing out of China & Mexico

• selective price hikes

• seeking exclusions

Red Cat (maker of US-drones)

• Believes it should benefit from the recent trade and tariff issues

• Produces all drones in the US. High tariffs on Chinese drones could drive more demand

Mexico & USMCA: The Industry’s Potential Safety Valve

The benefits of Mexico & USMCA

Thanks to USMCA, Mexico (currently) seems like a safer option than manufacturers in Asia. It has low cost, proximity, and a growing manufacturing capacity. All firms are looking at how to incorporate Mexico into their go-forward plans. Check out Semi Analysis Tariff Armageddon piece for some great details.¹

• USMCA carve‑out. Goods that clear the pact’s rules‑of‑origin test enter duty‑free from Mexico and Canada; the exemption was extended to 2 April and is expected to roll forward again.

• Practical upshot. Mexican sub‑assembly suddenly looks safer than importing from Asia—and cheaper than a last‑minute U.S. reshoring sprint.

• Why robots love Monterrey. Sub‑assemblies cleared under USMCA avoid new duties, reach U.S. customers in less than 48 hours, and tap a $3 an hour wage base.

• Fine print. 70% regional value content is now the norm in component BOMs to stay under the duty‑free umbrella.

• Key risk. Should Washington slap duties directly on Mexican imports, firms like Intuitive Surgical—whose disposable instruments line runs through Baja—face an overnight margin hit. Management called this out as a “material effect if enacted.” (earnings call, Jan ’25)

Takeaways

• Scale insulates. ABB, ISRG, and peers show that diversified, regional plants + contract leverage can address the tariff issues.

• Mexico matters. As long as USMCA stands, manufacturing out of Mexico beats Asia.

What I’m Watching Going Forward

1. EBITDA line‑items that explicitly break out tariff cost (Zebra, AVAV).

2. Domestic‑production share—ABB’s 75‑80% is the benchmark, ISRG at 98%

3. Tariff pass‑through clauses in new master‑service agreements (Symbotic model).

4. CapEx to localization—watch 10‑Q footnotes for fresh U.S. or Mexican plant spend.

5. USMCA certification disclosures in supplier filings.

1. https://semianalysis.com/2025/04/10/tariff-armageddon-gpu-loopholes/