Trump Tariffs: A Threat to Retailers
Even a 25% tariff on China could harm major retailer Ralph Lauren (RL). "It's a pressure point," admits CEO Patrice Louvet. "But we have experience navigating tariffs."
Trump's proposed tariffs have retailers on edge. His campaign plans included a 10-20% tariff on all imports, a 25% tariff on Mexican imports, and a 60-100% tariff on Chinese imports.
Ralph Lauren's reliance on China has decreased from 50% to a low single-digit percentage. Still, Louvet acknowledges the challenges of fully exiting China, as it remains a source of specialized products like sweaters and footwear.
"We're running scenarios to be prepared," says Louvet. "Multiplicity of sourcing options is crucial."
Tariffs could impact apparel companies significantly, as much of their production is sourced from China. They could also reduce consumer demand due to higher prices. The National Retail Federation estimates tariffs could cost American consumers $46-$78 billion annually, with $13.9-$24 billion in increased apparel costs.
"Higher pricing is likely," Louvet concedes.
Despite tariff concerns, apparel stocks have performed well. Ralph Lauren, VF Corp., and Skechers have gained 18-29% in recent months.
"We're obsessed with our consumer," says Louvet. "We're focused on providing an exceptional experience."