Tariff Disruption

Taxes and Tariffs slapped on goods exiting one country and entering another has been around for centuries. The events of the Boston Tea Party in 1773 also remind us that the combination of tariffs and politics is nothing new. So why all the hoopla over it now? One big reason is its current volatility. Tariffs are being used by the current political administration like bullets in a six-shooter revolver. The weapon is loaded with significant tariff penalties and keeps getting pulled out of its holster to intimidate opposing forces with the threat of firing. Some warning shots are even being fired to speed political policy along with the knowledge that the weapon can be re-holstered if compromises can be achieved. It’s the current frequency of the drawing and re-holstering of that weapon that is causing such disruption.

China and Mexico have particularly been the most recent target in the cross-hairs. If your company is sourcing from one of these two countries, it has stirred up a lot of uncertainty within your supply chain as you navigate through this political duel. Some of the questions you should be asking yourself:

  • Did the recent tariff increases impact our products?

  • Will the additional tariffs increase, decrease or be rescinded by the time I take delivery?

  • Should I price in the additional tariffs into my upcoming collections?

  • What’s the extent of the negative impact on sales if I raise my pricing?

  • If I shoulder the tariff increase how much does that impact my profits and cash flow?

  • Should I move my sourcing to non or less impacted countries?

The handbag category has currently been targeted with the 25 percent import tax and it is suggested that apparel and jewelry are in the line of sight.

If you would like to talk through some of these issues as it impacts your upcoming collections, we at the Franklin St. Showroom are here to help.