Tariff Whiplash is Already Taking a Toll on Retail

Welcome to the era of trade chaos for retail. Beginning in May, retailers lived with the official reality that a huge swatch of Chinese goods — known as “tranche four” which covers pretty much everything that hasn’t already gone through tariff increases — would get a 25% tariff. Retailers and analysts from nearly every sector warned of price hikes for consumers, disruptions to their supply chains and margin hits. Some companies began rushing in imports to beat the tariffs. Then the industry got a respite, as the Trump Administration hit the pause button on the tariffs and opened trade talks with Chinese leadership. Last week, President Trump announced the administration would move forward on a reduced — but still substantial at 10% — round of new import taxes on $300 billion in Chinese goods, set to begin Sept. 1. Higher tariffs were not ruled out, and Trump indicated they could go even higher than the previous 25% mark. Retailers and brands have been shifting their sourcing away from China since Trump took office. A 2018 survey by the United States Fashion Industry Association (USFIA) found that a majority of companies said they are planning to cut back on the share of their product that is manufactured in China. Even so, China remains the “dominant supplier,” accounting for 49% of total textile and apparel imports to the U.S. by quantity in 2018, USFIA said in a March report emailed to Retail Dive. The next largest supplier country is India, with a fraction of that amount at 8.1%.
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