The U.S. apparel industry worries about the impact of U.S. taxes on Chinese products on profits
According to the Wall Street Journal, Trump’s latest list of taxable products will be implemented on September 1, 2019, including most clothing, footwear, etc. exported from China. The imposition of a 10% tariff has U.S. apparel companies worried about declining profits and possibly triggering a trend of store closures.
According to statistics from the American Apparel and Footwear Association, about 40% of clothing and 70% of footwear in the United States are manufactured in China. Since China joined the World Trade Organization (WTO) in 2001, Later, American retailers gradually relied on China’s cheap labor for OEM manufacturing.
The report pointed out that China’s US$33 billion in garments, footwear, hats and US$250 million in socks will be subject to a 10% tax starting from September 1. % tariffs, most businesses such as Macy’s department stores will absorb the tariff costs themselves, or require Chinese manufacturers to reduce prices to avoid passing the tariff costs to consumers.
WeycoGroup, which sells shoe brands such as Florsheim and Stacy Adams, has already increased shipments to China in the spring of 2019 to avoid taxes. Columbia, a sports goods brand, said that uncertainties will affect investment and will suspend production in China. Edward Rosenfeld, CEO of fashion brand Steveu Madden, said that he has moved some production lines from China to Mexico and Cambodia.
American ready-to-wear brands have been under competitive pressure from online e-commerce in recent years, and many have cut prices. Now they are facing a 10% tax increase, which is once again squeezing profit margins. According to statistics from UBS analysts, 15 publicly traded clothing and footwear retailers have gross profit margins of less than 3%. If Trump imposes a 25% tariff on China, 12,000 stores may be closed.
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