Chinese imports may impact the cost of everything

YarnsandFibers News Bureau 2019-06-10 14:45:00 – United States

By now you may have heard that increasing tariffs on imports from China may impact the cost of everything from sneakers to patio furniture by up to 25%.

But in many categories, it’s still unclear how that increased cost could impact the end consumer: that’s you, who’s trying to buy a shoe or a lawn chair.

Direct-to-consumer apparel company Everlane showed the New York Times how much prices for its popular products could change once new tariffs are included in production costs.

Take, for example, a women’s cashmere sweater that has a price of $100 after cost of production, shipping, current import tariffs, and, of course, profit (hey, it’s a business).

With an estimated $11 new tariff, that sweater price could be bumped up to a price tag of $124.

Or consider a pair of men’s chinos with a current price of $68. With an additional $6 in new tariffs, the price could bump to $82.

The numbers provided to the times are estimates per garment, which may rankle those already skeptical of Everlane’s transparency practices. But part of the reason we’re not seeing hard-and-fast price changes yet is because retailers are still looking for ways to mitigate that additional cost.

Everlane makes a lot of its clothing in China, but it’s not its only manufacturing location. Some companies may shift production to other popular, if problematic, clothing manufacturing spots, like Vietnam or Bangladesh, to skirt the tariffs. But the process of doing that is far from instantaneous.

Companies are also looking for ways to absorb the tariff increase in order to keep customers happy. Everlane, for example, said it’s doing the math on its prices and margins so that cashmere sweater doesn’t have to increase a full $24. But doing so may be easier for some companies than others.

“It will be harder for companies with lower margins to absorb the higher costs of products hit by tariffs,” The Times’ Sapna Maheshwari writes. It’ll be harder for Forever 21 to find wiggle room for its production costs for a $9 shirt where it makes a tiny profit, versus a slightly slower, more upscale retail model like Everlane’s.

Courtesy: Life Hacker

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