Procter & Gamble has announced plans to cut up to 7,000 jobs, translating to approximately 6% of its global workforce, over the next two years.

This decision comes as the Cincinnati-based consumer goods giant confronts increased costs attributable to tariffs and shifting consumer behaviors amid economic uncertainty.

The announcement was made during the Deutsche Bank consumer conference held in Paris, where chief financial officer Andre Schulten specified that the reductions would affect around 15% of the company’s current non-manufacturing workforce.

Schulten stated, "This restructuring program is an important step toward ensuring our ability to deliver our long-term algorithm over the coming two to three years," while acknowledging the persistent challenges the company faces in the short term.

As of June 2024, Procter & Gamble employed approximately 108,000 people globally.

In conjunction with the job cuts, the company plans to cease sales of certain products in select markets, with further details expected to be released in July.

Procter & Gamble is not alone in grappling with a cautious consumer base in the United States.

Recent data indicates a decline in consumer sentiment, which fell for the fifth consecutive month in May. The University of Michigan's consumer sentiment index recorded a preliminary reading of 50.8, marking a 2.7% decrease from the previous month and the second-lowest level in the survey's nearly 75-year history.

Since January, consumer sentiment has dropped by nearly 30%.

Further complicating matters, a report from the Congressional Budget Office revealed that former President Donald Trump’s proposed tariff plan could lead to a reduction in federal deficits by $2.8 trillion over a decade, while simultaneously contracting the economy and raising inflation.

This analysis suggests that households may ultimately decrease purchases from countries affected by increased tariffs, forecasting a 0.4 percentage point rise in the annual inflation rate by 2025 and 2026.

In an April conference call, Procter & Gamble highlighted that the most significant tariff impacts for the company were related to raw and packaging materials, as well as some finished products sourced from China.

The company indicated its intention to explore alternative sourcing options and seek productivity enhancements to alleviate the impacts of the tariffs, although it may necessitate price increases on specific products.

In a related context, the Consumer Brands Association, which includes major food and consumer product companies, expressed concerns about the influence of tariffs on essential imported ingredients, such as wood pulp for toilet paper and cinnamon, which are vital for domestic production but are subject to external supply constraints.