Alpha Pro Tech Ltd

ITEM 1A. RISK FACTORS

A list of factors that could materially affect our business, financial condition or operating results is described in Part I, Item 1A, Risk Factors in the 2024 Form 10-K. Other than the risk factor set forth below, there have been no material changes to our risk factors from those disclosed in Part I, Item 1A, Risk Factors in the 2024 Form 10-K.

Tariff policies and potential countermeasures could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations.

On February 1, 2025, President Trump announced the imposition of additional substantial tariffs on imports from various countries, including China, Canada and Mexico, and the subject countries indicated their intention to impose counter measures. Under the announced measures, tariffs will be applied to certain products from Mexico, while a 145% tariff will be imposed on certain imports from ChinaVietnam, India Canada, and China, among other countries.

On April 2, 2025, President Trump announced a 10% baseline reciprocal tariff on nearly all U.S. trading partners, effective April 5, 2025, and additional, higher reciprocal tariffs on specific countries, effective April 9, 2025. On April 9, 2025, President Trump paused tPrior to when the country-specific reciprocal tariffs were scheduled to take effect, the additministrational, higher t delayed the effective date of such tariffs on mostfor all countries for 90 days. However, Presideexcept China. Later, the U.S. and China reached a framework agreement Trump raised that resulted in the suspension of the higher reciprocal tariffs on China. As of Apr until 16August 10, 2025. Three other countries, the 10% baseline reciprocal United Kingdom, Vietnam and Indonesia, have also reached deals with the U.S. that include reduced tariff applirates to all countries otheand other measures. The administration has not indicated the effective date for than China, Canada, Mexico, and ese deals. Recently, the administration announced an extension of the deadline for the effective date of the countries listed under Column 2 ofy-specific tariffs for all remaining countries until August 1, 2025. Currently, the Harmonized Ta10% baseline reciprocal tariff Schedule of tannounced in April 2025 remains in effect, in addition to the United States, such as Russia aother tariffs on China (a minimum of an additional 20% as of July 15, 2025) and North Korea. ACanada and Mexico (25% as of July 15, 2025, for goods that are not covered by the USMCA).

As it pertains to the countries where we manufacture products, the additional, country-specific tariffs would have aappliedy to Vietnam, India, and Mexico. If the additional, higher tariffs on imports from these countries go into effect, it would increase the costs of our products manufactured in these countries with respect to our U.S. market. Further, such circumstances may impact our ability to sell certain products into the United States and therefore may also impact the operational status of certain of our international manufacturing facilities. As a result, our operating results could be adversely impacted if these tariffs are imposed.

If these tariffs remain in effect, the tariffs and any countermeasures could also increase finished goods, and the cost of raw materials and components necessary for our operations, disrupt our global supply chain and create additional operational challenges. We have experienced some adverse effects on our sales and costs due to the effects of actual and potential tariffs, and such effects could continue and potentially increase. Further, it is possible that government policy changes and related uncertainty about policy changes could increase market volatility and currency exchange rate fluctuations. Because of these dynamics, we cannot predict the impact of any future changes to the U.S.s or other countries trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries on our business. Such changes in tariffs and trade regulations could have a material adverse effect on our financial condition, results of operations and cash flows.

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Alpha Pro Tech, Ltd.