Faced with rising tariffs on Chinese goods, Fastenal is taking aggressive steps to seek new suppliers, redirect shipments, and implement phased price increases. CEO Dan Florness says the industrial supplies distributor’s long-standing investments in direct sourcing and supply chain transparency are enabling it to act swiftly while maintaining service levels.
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“Our contracts allow for pricing flexibility,” Florness said during the company’s recent Q1 2025 earnings call, “but the real focus is on optionality—how we can pivot sourcing and still deliver what our customers need.”
Fastenal has already begun rerouting some imports directly to Canada and Mexico to avoid U.S. duties that do not qualify for drawbacks, refunds of duties paid when imported goods are subsequently exported. “It might be more expensive logistically,” Florness said, “but it’s a lot cheaper than tariffs layered on top of other tariffs.”
With tariffs as high as 170% on some non-steel products, the company’s first pricing adjustments began in April, with Fastenal expecting a 3% to 4% contribution to second-quarter revenue from these actions. Depending on how the tariff situation evolves, that figure could double in the second half of the year, Fastenal says.
Holden Lewis, Fastenal’s outgoing chief financial officer, emphasized that the company’s granular pricing tools—developed during the 2018 tariff round—are helping communicate changes clearly to customers. “We’re starting from a position of strength. When you lead with detailed sourcing intelligence, the conversations are easier, even in this chaotic environment,” Lewis said.
Florness said Fastenal has significantly expanded sourcing teams outside China—tenfold since 2019—and continues to shift supply where possible. Still, he noted the challenge in reshoring production to North America, citing a lack of manufacturing scale and investment uncertainty tied to the political volatility of tariffs.
“There’s no silver bullet when tariffs jump 145% overnight,” Florness said. “But our ability to move quickly, source broadly, and work transparently with customers puts us in a strong position to win during disruption.”
Jeff Windau, industrials analyst at the investment firm Edward Jones, says Fastenal has maintained solid sales momentum, particularly in its core markets. “About 84% of Fastenal’s sales go to customers in manufacturing and construction,” Windau said. “While we expect some near-term sales volatility due to softening conditions, we believe the company is well-positioned to benefit from long-term growth in the industrial economy.”
For the first quarter ended March 31, Fastenal reported total sales of $1,959 billion compared with sales of $1.895 billion, an increase of 3.4% from sales of $1.895 billion in the prior year. Net income for the first quarter was $298.7 billion compared with $297.7 million in the first quarter of 2024.
