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"Disastrous", Cataclysmic: Trump's Tariff Threat Has Dealership Alerting



Already killed by the e-commerce revolution, traditional retail stores are heading for another blow – new tariffs of 300 billion Chinese imports, which the Trump administration threatens to impose.

Retailers and analysts warn that the impact will be catastrophic for an industry that is already plagued by vacant outlets and deserted malls. The reason: Unlike previous tariffs, which are mainly targeted at industrial and commercial products, the next round is aimed at consumer goods such as footwear, toys and clothing.

Even for healthy chains, such as Walmart and Costco, the new jobs threaten the business formula that helped accelerate their rapid rise over the last few decades: Import cheap products from Asia and sell them at bottom prices. The National Retail Federation estimates that China delivers 42 percent of all clothing, 73 percent of household appliances and 88 percent of toys sold in the United States.

The government has already introduced tariffs of NOK 250 billion Chinese goods. President Trump has said he will decide whether to impose the remaining $ 300 billion on imports, but has not set a fixed deadline.

Herr. Trump's trading representative will start consultations on the proposed tariffs on Monday.

"The threat of customs could not come at a worse time," said Mark A. Cohen, a former Sears Executive, now Director of Retail Studies in Columbia Business School. "It's a press that can't be predicted or predicted."

With a profit margin of 5 to 10 percent, Mr Cohen said, the sellers of clothing and accessories didn't have much room to maneuver. As a supplement to the challenge, these chains prepare orders for the holiday holiday period.

In a letter from last month, over 170 shoemakers and retailers called on Mr Trump to stop the commercial war with China, which supplies nearly 70 percent of the shoes sold in the United States.

Industry cannot easily return shoe production to the US because labor costs are much higher here and there is little capacity for new production, says Matt Priest, CEO of footwear retailers and retailers of America. Even New Balance, which manufactures sneakers domestically, imports some material from China.

"I think it's disastrous," President said. "We are in the middle of right-sizing retail here in the United States, with fewer brick-mortar stores."

The impact will be greater on traditional retailers because they cannot adjust prices as quickly as online retailers, Mr. Cohen said. "This will close more stores and more people lose their jobs," he added.

"My prizes must be 12 months goals, and now they are 12-tweet goals," Mr. Siegel said. He added that the new 25 percent tariff could have a "catastrophic" effect on retailers, especially those who already have pain.

"The retail business is in the arms because they are not just fighting for their trade, they are fighting for their existence," Siegel said.

Brian Goldner, Managing Director of Hasbro, said tariffs would be a setback for the toy industry, just as it had begun to recover from the liquidation of Toys & Rs # 39; last year.

Hasbro, who makes toys and games like Play-Doh and Monopoly, said it was in favor of joining other companies to witness the tariffs by a separate hearing, which the trade representative is expected to hold in the coming weeks. About two-thirds of the toys it sells domestically come from China, although it has been expanding production elsewhere in recent years, also in the United States.

Still China is still crucial – as a supplier and customer. Hasbro's Transformers and My Little Pony offers are popular there. "We will continue to allow the China market to be open to US-rated brands globally," Goldner said in an interview.

Many companies refused to discuss the tariffs, fearing to be in the recipient of a presidential Twitter post or other unwanted advertising. However, on recent conversations with investors and analysts following revenue announcements, the tariffs were a hot topic.

Many leaders seemed hopeful that the commitments would not happen even when they described their efforts to alleviate the damage: leaving China, negotiating with the sellers and finding out new pricing strategies.

Five below, a chain targeting teens and tweens with $ 5 or less items, said it was already breaking with the administration's decision last month to raise rates for some Chinese products to 25 percent. from 10 percent.

The retailer selling pool fleet, phone chargers, beach towels and more at about 800 stores said it would raise some $ 1 to $ 4 items prices and even test higher prices like $ 5.25 and $ 5.55 in some shops this summer.

"Rising prices beyond the $ 5 price is a decision we don't take lightly," said Joel D. Anderson, the company's chief executive analysts this month.

While the chain would be affected by the new round of tariffs covering clothes and toys, Mr. Anderson, "it's too early to speculate as we assume there will be many exceptions," similar to previous tariffs. 19659002] Other retailers also stressed how difficult it was to predict the Trump administration course.

"It's still a very fluid situation right now," said Michael Gass, Kohl's CEO, about the proposed tariffs on a recent call. Art Peck, CEO of Gap Inc., said there was "considerable uncertainty about which goods the tariffs can use to and at what level they can be used."

"The stock market is not pricing throughout the impact yet," says Jay Sole, an analyst at UBS, about stock quotes for retail businesses. "Stock prices would fall further if this happened because earnings for some companies would be much lower."

Walmart, the country's largest chain and the largest private sector employer, faces a broader challenge. All in all, only one third of the goods it sells come from outside the United States. But China has been an important source of many things such as clothing and electronics that it and other big-box retailers sell so they can drive prices down.

As China grew into its position as the world's workshop, Walmart thrived on it, said Richard Vedder, emeritus professor of economics at Ohio University and the author of "The Walmart Revolution: How Big-Box Stores Benefit Consumers, Workers and the economy."

Relationship goes back to the days of Sam Walton, founder of Walmart. "Walton and his successors are looking at China as a source of cheap goods and would be aggressive in exploiting this opportunity," said Bitter.

Now these prices may not be so low, according to the company's chief financial officer, M. Brett Biggs. "Increased tariffs will lead to increased prices, we believe, for our customers," he said on a call with journalists last month.

Retailers have mounted a furious lobbying campaign in Washington as the deadline approaches.

"We are at a critical time for the retail industry as companies are evolving to meet customer expectations," said Matthew Shay, president and CEO of the National Retail Federation. "The introduction of tariffs just creates an additional headwind in an already challenging environment."


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