DuPont: Shares Plummet on Chinese Regulator Investigation into Tyvek and Retaliatory Tariffs

DuPont DD confirmed its Tyvek business is being investigated by the State Administration for Market Regulation in China. Additionally, China imposed a 34% retaliatory tariff on all US imports. DuPont shares were down 11% at the time of writing.

Why it matters: Tyvek being investigated could lead customers in China, and potentially elsewhere, to stop using Tyvek and find an alternate material. This could lead to lower sales and profits for DuPont.

• Retaliatory tariffs by China on US imports further strain trade relations between the two countries. Any products DuPont sells in China from the US could become cost prohibitive after tariffs, leading customers to seek alternative products.

The bottom line: For now, we maintain our $95 fair value estimate for narrow-moat DuPont. At current prices, we view shares as undervalued, with the stock trading more than 35% below our fair value estimate and in 4-star territory.

• Tyvek sales in China were $90 million in 2024, less than 1% of total revenue. With the impact of US tariffs, Chinese retaliatory tariffs, and the investigation, we now see the potential impact to DuPont at 5%-15% of our $95 fair value estimate.
• The impact would largely come from lower sales volumes as a result of tariffs raising the end market cost for consumers in the US and China. Due to the high-fixed-cost nature of chemicals production, lower volumes would have an outsize impact on profits.