Iridium To Mitigate Tariffs By Expanding European Partnership

Iridium will expand work with a European partner to help navigate new U.S. tariffs that could dent operating earnings by between $3 million and $7 million this year.

The tariffs impact equipment that Iridium makes in Thailand that is typically imported to the U.S. for inventorying and packaging before dispatching to customers. Last year, the Virginia-based satellite services company began working with a European logistics provider to do some of that work for shipments to European Union users.

“We will be expanding this relationship quickly to mitigate as much of the new tariff costs as we can, utilizing it for almost all non-U.S. partner shipments, which is about 75% of the total,” Iridium CEO Matt Desch said April 22 on the company’s first-quarter earnings call.

The company sees a full-year earnings impact from the current 10% tariffs of $3 million. But if higher tariff levels announced by the Trump administration—and later suspended—return, that cost could jump to $7 million.

Desch signaled that Iridium is not looking to abandon its Asian partner. “The quality is outstanding,” he said. “Last year, we only had about 100 items returned out of more than 850,000 individual things that we ship to customers.”

Iridium also is on the lookout for impacts from U.S. government funding cutbacks on its business, indicating that cuts to cash for the U.S. Agency for International Development have dented overseas organizations' satellite services spending.

Desch said, however, “We have no reason to believe these changes will be material to our business.”

The company also said it is seeing good engagement with potential customers for “alternative positioning, navigation and timing [PNT] service after buying Satelles last year."

"We’ve already seen a big pickup in engagements on PNT since the beginning of this year,” Desch said, adding the operation should “be a major driver of revenue growth in both civil and commercial applications through 2030 and beyond.”