Tariff Uncertainty and Currency Volatility: Implications for Global Industrial Suppliers Like LEM Holding SA

In 2025, industrial suppliers are navigating a perfect storm of U.S. trade policy shifts and foreign exchange (FX) volatility. For firms like LEM Holding SA, a Swiss-based manufacturer of sensors and measurement technologies, the twin challenges of tariffs and currency fluctuations have tested their operational agility and long-term resilience. This article examines how LEM and its peers are adapting—and whether these strategies position them for sustained success in a high-uncertainty environment.

The Dual Threat: Tariffs and FX Volatility

The U.S. government's 2025 tariff regime, which imposes a 10% baseline duty on all imports with higher rates for key partners, has disrupted global supply chains. For LEM, which operates in sectors like automotive, renewable energy, and industrial automation, these tariffs directly increase the cost of exporting to the U.S. market. Compounding this are FX headwinds: the Swiss franc's strength against the dollar and yuan has eroded LEM's reported sales by 6.5% in Q1 2025/26, even as constant-currency performance showed minimal decline.

LEM is not alone. Industry peers are grappling with similar pressures. Tariffs have forced firms to reassess inventory valuations, goodwill, and transfer pricing frameworks, while FX swings have amplified cash flow risks. For example, industrial measurement firms in the U.S. now face the need to integrate tariff charges into inventory costs under ASC 606 revenue recognition rules, potentially squeezing gross margins unless prices are adjusted.

LEM's Strategic Response: A Blueprint for Resilience?

LEM's approach to these challenges is multifaceted. The company's “Fit for Growth” program, launched in 2024/25, has already cut SG&A costs by 12.8% in Q1 2025/26, outpacing the 6.5% sales decline. This cost discipline is critical, as tariffs and currency shifts have compressed margins. LEM has also shifted production to Penang, Malaysia, to reduce exposure to U.S. tariffs and diversify its supply chain. This move mirrors broader industry trends, as companies seek to localize production in lower-cost regions.

In terms of FX risk, LEM is leveraging its strong market position in China. Despite the yuan's weakness, the company has secured growth in the Chinese EV market, offsetting some of the U.S. headwinds. This regional pivot is a key differentiator: while many firms are retreating from China, LEM is doubling down, capitalizing on its technological expertise in electrification and renewable energy.

Industry-Wide Trends: Automation, Hedging, and Onshoring

LEM's strategies align with broader industry responses to trade and currency risks. Automated risk management systems, such as GTreasury, are gaining traction as firms seek real-time visibility into FX exposures. These tools allow companies to stress-test scenarios and hedge against volatility, though LEM's public disclosures on hedging specifics remain limited.

Onshoring incentives are another trend. U.S. and European governments are offering tax credits and infrastructure support to lure manufacturing back home. While LEM has not announced large-scale onshoring, its Penang facility suggests a preference for nearshoring—reducing lead times and geopolitical risks without fully relocating to the U.S.

Long-Term Resilience: Can LEM Weather the Storm?

LEM's long-term viability hinges on its ability to sustain its cost-cutting momentum and expand in high-growth markets. The company's focus on electrification and e-mobility—sectors expected to grow at 15% CAGR through 2030—positions it to capture demand despite short-term headwinds. However, its reliance on China exposes it to further currency swings and potential U.S.-China trade escalations.

A look at LEM's stock performance reveals a mixed picture. While the share price has dipped in line with broader market jitters over tariffs and FX, it has outperformed peers in the industrial sector, reflecting investor confidence in its strategic pivot. The “Fit for Growth” program's early success and strong order backlog (particularly in China) suggest a path to margin recovery.

Investment Implications

For investors, LEM represents a high-conviction bet on resilience amid uncertainty. Its proactive cost management, geographic diversification, and alignment with global megatrends offer a compelling case for long-term growth. However, risks persist: a further U.S. tariff hike or a sharp euro-dollar reversal could test its margins.

A diversified portfolio approach is advisable. Pairing LEM with firms that have robust hedging programs or are leveraging onshoring incentives (e.g., Siemens or Schneider Electric) could mitigate sector-specific risks. Investors should also monitor LEM's cash flow trends and its ability to pass on cost increases through pricing.

Conclusion

LEM Holding SA's journey through 2025 underscores the challenges and opportunities facing global industrial suppliers. By embracing cost efficiency, strategic nearshoring, and high-growth sectors, the company is building a foundation for long-term resilience. While the road ahead remains bumpy, its proactive stance offers a blueprint for navigating the new era of trade and currency uncertainty. For investors willing to look beyond short-term volatility, LEM's story is one of cautious optimism—and potential rewards.