U.S. companies warn Trump's tariffs could hit results
today May 24, 2019
A host of U.S. consumer companies have warned that costs related to tariffs on goods imported from China would weigh on their results.
The United States increased tariffs on $200 billion in Chinese imports to 25% from 10% last week.
U.S. President Donald Trump has also threatened an additional round of tariffs on $300 billion that would cover nearly everything imported from China to the United States.
"We do anticipate a more meaningful impact on both our private and national brands if the potential fourth tranche of tariffs does go into effect,” J.C. Penny, CEO Jill Soltau said.
Kohl's Corp said that the tariffs will primarily hit China-sourced merchandise in home and accessories business but apparel and footwear are not impacted at this point.
The department store chain added that about 20% of its merchandise is sourced from China.
“Higher tariffs will lead to higher prices for customers,” Walmart CFO, Brett Biggs told Reuters in an interview last week.
He said the company, known for lower prices, will try to minimize the effect of the levies on the company and its customers.
“The increase of the third tranche from 10% to 25% on May 10 does have some impact, particularly on our furniture business. However, the team anticipates that this can be mitigated,” Macy's CEO Jeffrey Gennette told investors on a conference call on Wednesday.
“It’s too early to comment on what we think that’s going to mean in terms of potential price increases and what categories are going to be more affected than others,” he said.
Likewise, luxury brands such as Ralph Lauren warned that business has been affected in a limited capacity, adding it was anticipating several potential outcomes in the long term and had already started spreading the risk.
"The tariffs enacted to date have a limited impact on our business, but our teams are prepared for multiple scenarios and have accelerated the diversification of our supply chain to mitigate the long-term impact of any potential tariff outcomes,” Ralph Lauren, CFO Jane Nielsen told investors on a conference call last week.
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