What BorgWarner Inc. told the SEC could break it.

BorgWarner is exposed to raw-material cost changes, mainly for various non-ferrous metals and natural gas consumed in manufacturing vehicle components, which it occasionally hedges with forwards and options.

“Commodity price risk is the possibility that the Company will incur economic losses due to adverse changes in the cost of raw materials used in the production of its products. Commodity forward and option contracts are occasionally executed to offset exposure to potential change in prices mainly for various non-ferrous metals and natural gas consumption used in the manufacturing of vehicle components.”

BorgWarner's sales are concentrated in a few auto OEMs — Volkswagen (~13%) and Ford (~12%) together were roughly a quarter of FY2025 consolidated net sales.

“Consolidated net sales to Volkswagen (including its subsidiaries) were approximately 13 %, 10 % and 11 % for the years ended December 31, 2025, 2024 and 2023. Consolidated net sales to Ford (including its subsidiaries) were approximately 12 %, 13 % and 14 % for the years ended December 31, 2025, 2024 and 2023, respectively.”

Approximately 84% of BorgWarner's FY2025 net sales were generated outside the U.S., with China, Mexico, Germany, Poland, South Korea and Hungary each exceeding 5%, exposing it to broad international trade, FX and political risk.

“During the year ended December 31, 2025, approximately 84 % of the Company's consolidated net sales were outside the U.S., attributing sales to the location of production rather than the location of the customer. Outside the U.S., China, Mexico, Germany, Poland, South Korea and Hungary exceeded 5 % of consolidated net sales during the year ended December 31, 2025.”

2025 U.S. tariffs on imports from the EU, Canada, Mexico and China have already increased BorgWarner's raw-material and component costs, and retaliatory tariffs (incl. from China) raise the cost of products it sells.

“In 2025, the U.S. announced significant tariffs on imports from a broad range of countries, including the European Union, Canada, Mexico and China. These tariffs have increased the cost of raw materials and components we purchase, and to the extent the tariffs announced to date or announced in the future become or remain effective and are maintained, these tariffs would likely further increase the cost of raw materials and components we purchase.”