The steep tariffs on Chinese imports promised by President-elect Donald Trump have some consumer product brands taking preemptive action to move production out of China.
As CNN reported Nov. 8, footwear brand Steve Madden CEO Edward Rosenfeld told analysts the company would sharply decrease Chinese production to avoid the risk of tariffs, with the percentage of Chinese-sourced goods “to begin to come down more rapidly going forward.”
Trump has said he will impose Chinese tariffs of 60% or higher, while also imposing tariffs on imports from other countries, including a 25% tariff against Mexico, where officials have hinted at retaliation. While no one can say for sure if or when such tariffs will be imposed, the risk has some U.S. brands scrambling to blunt the potential impact. Others, like Steve Madden, have been working for years to reduce their dependence on Chinese production, but are now pushing those efforts forward with more urgency.
Stanley Black & Decker, maker of Craftsman tools, was also among the brands moving or contemplating production moves in anticipation of tariffs, Bloomberg reported.
As Modern Retail reported Nov. 13, the threat of tariffs is “the latest blow for consumer brands” which have struggled to keep up with chaotic supply chain conditions since the pandemic.
Navigating the Threat of Tariffs on Your Supply Chain
Supply chain conditions can be volatile even without the threat of tariffs, as recent years have starkly illustrated. An agile approach to supply chain practices can help keep your business in front of changing conditions and minimize the impact of market turbulence.
While switching suppliers can be disruptive, a diversified and optimized supply chain is always a good strategy. In the near term, some brands may also be able to make use of strategies like those recommended by the consulting firm RSM: pulling orders forward, deferring tariffs by purchasing and storing goods in economies that have free trade treaties with the U.S., taking advantage of trade duty refunds, and reducing the value of declared goods.
How TPH Can Help You Navigate Supply Chain Turbulence
At TPH Global Solutions®, we have decades of experience navigating retail supply chain complexities, and the resources to support brands as they move out of China to Cambodia, Vietnam or Indonesia.
While tariffs may take a toll, an optimized supply chain is an asset you can leverage to shrink costs, improve quality and create the speed and agility needed to troubleshoot and react to shifting market conditions.
Contact a member of our team to learn more about our work helping CPG brands around the world streamline and optimize their supply chains for cost-effective production, on-time delivery and meticulous quality control.
Contact us to learn more about retail supply chain optimization
