Experts widely agree that American consumers are likely to bear the brunt of the U.S.-China trade war, as it motivates firms to increase prices in a bid to offset rising tariffs.
Macy’s Inc. today added its name to the growing list of fashion firms — Steve Madden, Shoe Carnival and Wolverine World Wide Inc. among them — that have said that elevated levies borne of the ongoing U.S.-China trade dispute will lead to higher end prices for shoppers.
On Monday, the Office of the U.S. Trade Representative released a list of about $300 billion in Chinese imports that could receive a proposed 25% hike in duties — the fourth tranche of tariffs. (For the first time in the 10-month-long trade dispute, footwear is among the target products.)
On a conference call to discuss Macy’s first-quarter earnings results today, CEO Jeff Gennette told investors that the department store’s furniture business will take a hit due to last week’s hike in the third tranche of tariffs. (The Trump administration announced last week that levies on $200 billion in China tariffs — or the third tranche — would advance from 10% to 25%.)
While Genette seemed optimistic that the firm could mitigate some of the furniture impact and anticipates no “meaningful impact” from the first few tariff tranches, the CEO warned that the fourth proposed round of hikes could prove to be a significant challenge.
“Looking at all those categories and those brands that are included, it is hard to do the math to find a path that gets you to a place where you don’t have a customer impact,” he said, noting that the department store will double down on its efforts to move production of its private-label wares out of China.
“The bigger piece is really our negotiations with our national brand partners, and we’re very working very closely with them on the potential impact to our shared customers,” Gennette added.
The tit-for-tat dispute between the U.S. and China has yielded widespread concern across the fashion industry, with trade groups and corporations citing significant repercussions for both consumers and corporations.
The Footwear Distributors and Retailers of America estimates that Americans could pay an astounding $7 billion in additional costs per year for shoes if President Donald Trump makes good on his threats to enact the fourth tranche of tariffs.
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