Thursday, November 14, 2024

Trump’s tariff promises have import-heavy retailers facing ‘new reality’

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Just days after Donald Trump’s election win, the president-elect’s proposed tariffs are shaping the strategy conversation at retailers across the fashion, beauty, and footwear industries.

Companies from athletic apparel maker Under Armour (UA, UAA) to Ralph Lauren (RL), Steve Madden (SHOO), and Kate Spade and Coach parent Tapestry (TPR) reported earnings this week. And each faced questions from Wall Street analysts about how Trump’s proposals — which include 10%-20% tariffs across the board and a 60% tariff on goods from China — could pose a challenge in the months and years ahead.

“Just under half of our current business would be potentially subject to tariffs on Chinese imports,” Steve Madden CEO Edward Rosenfeld said in a call with investors Thursday.

Christopher Hufnagel, CEO at Saucony and Chaco shoe-maker Wolverine Worldwide (WWW), said Thursday: “I think us, along with just about everyone, is sort of digesting the news and the new reality and to contemplate what’s going to be on the horizon.”

Meanwhile, makeup company e.l.f Beauty (ELF) said Wednesday evening that 80% of its products are imported from China. CEO Tarang Amin suggested impacts won’t hit the company until 2026.

“Tariffs will have no impact in FY ’25,” Amin said. “It’s when the new administration comes into power, we’ll see what they enact, and given the length of our supply chain, this is something that would potentially hit us later in 2026.”

Trump has promised to implement tariffs at levels unseen since the Great Depression.

And with more than one-third of US apparel imports coming from China alone, those promises on the campaign trail were already “triggering market panic” in the fashion industry this summer, Dr. Sheng Lu of the University of Delaware wrote in a July report from the US Fashion Industry Association.

Read more: How do tariffs work, and who really pays them?

As Yahoo Finance’s Brooke DiPalma noted, the retail sector at large began feeling the effects of a looming Trump presidency on Wednesday, when retailers’ stocks, including Five Below (FIVE), Best Buy (BBY), and online furniture retailer Wayfair (W), all dropped. Wayfair stock was hit hardest, falling 12%.

Footwear firms also face an especially difficult road ahead. Brooks Running CEO Dan Sheridan told Yahoo Finance earlier this month Trump’s tariffs would be a “huge headwind” for the entire industry.

While apparel companies’ earnings largely outperformed Wall Street’s expectations this week, questions about the potential for restrictive trade policies under the newly elected US president had executives on the defensive during calls with investors.

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