What Kadant, Inc. told the SEC could break it.

Kadant imports products and inputs hit by several overlapping U.S. tariff regimes: Section 301 tariffs of 25% on Chinese pulp and paper machinery, Section 232 tariffs of 50% on numerous steel and aluminum products (and certain derivatives), and a 50% Section 232 tariff on semi-finished copper and copper derivatives effective August 1, 2025. IEEPA tariffs it had been paying were ruled unlawful by the Supreme Court on February 20, 2026 (with refunds unaddressed) and immediately replaced by new Section 122 global tariffs of up to 15%. These have negatively affected its business and its ability to compete against rivals who do not manufacture in China; it can only partly mitigate via pricing and sourcing.

“Certain products imported from China, including pulp and paper machinery, are subject to tariffs imposed by the Office of the United States Trade Representative, pursuant to Section 301 of the Trade Act of 1974. The tariffs on pulp and paper machinery are set at 25%. In addition, the U.S. Department of Commerce has imposed tariffs of 50% on numerous categories of steel and aluminum products, under Section 232 of the Trade Expansion Act of 1962, and has expanded these tariffs to include certain derivative steel and aluminum products.”

Kadant operates significant manufacturing facilities in China that not only serve the Chinese market (sales to China were $62.6 million, ~6% of 2025 revenue) but also provide low-cost sourcing to many of its global subsidiaries. This makes its cost structure dependent on China, exposing it to Chinese government policy changes, currency devaluation, cash-repatriation restrictions and political unrest — and, critically, to U.S. tariffs that raise the cost of and erode the competitiveness of its China-manufactured goods relative to competitors who do not source from China.

“We operate significant manufacturing facilities in China. In 2025, our sales to China were $62.6 million, or 6%, of our revenue. Our Chinese manufacturing facilities provide low-cost sourcing to many of our subsidiaries.”

Approximately 22% of Kadant's 2025 revenue came from its Wood Processing product line, whose demand depends on forestry-industry capital spending and therefore on timber availability. Environmental shocks to natural resources — wildfires and pest damage such as the mountain pine beetle affecting tracts of Western Canada — can reduce loggable timber, cut logging activity, close mills and lower mill operating rates, in turn reducing mill capital expenditures and demand for Kadant's new wood-processing equipment. This links a meaningful share of revenue to climate- and pest-driven timber-supply shocks.

“Changes in the environment that affect natural resources such as timber may have significant effects on the sales of wood processing equipment by our Industrial Processing segment. Approximately 22% of our revenue in 2025 was from our Wood Processing product line.”