Retailers Prepare for Potential Tariffs with Diversified Supply Chains and Negotiations
Davos, Switzerland - As former President Trump resumes office, retail CEOs are confident in their ability to navigate potential tariffs thanks to lessons learned during his first administration.
"We reduced our China exposure by 50%," said Laura Alber, CEO of Williams-Sonoma (WSM), at the World Economic Forum (WEF). By diversifying their supply chains, retailers have lessened their vulnerability to tariffs.
Trump's proposed 10% tariff on Chinese imports and potential 25% duty on Mexico and Canada imports are being met with preparedness by retailers. They are actively negotiating with suppliers to mitigate price increases.
"Vendors are willing to help with tariffs to retain our business," said Alber. "They don't want to lose out."
Williams-Sonoma, with 25% of its sourcing from China, manufactures furniture in the US to minimize supply chain disruptions. Ralph Lauren (RL) and Gap (GAP) have also significantly reduced their reliance on Chinese suppliers.
Gap CEO Richard Dickson emphasized the company's commitment to value amidst potential tariff increases. "It's our responsibility to offer consumers the best product at the best price possible," he said.
However, analysts warn that consumers may face higher prices. "A 25% duty on apparel could lead to a 5-10% increase," said Dylan Carden of William Blair. "With inflation already impacting consumers, passing on costs may be challenging."