Steve Madden moving production out of China to avoid Trump tariffs
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Hours after Donald Trump recaptured the White House, at least one major American company is already making plans to shift production out of China.
Why it matters: Trump has threatened to ramp up tariffs on China to put pressure on Beijing, but experts fear a trade war could reignite inflation here at home.
The big picture: Fashion company Steve Madden revealed Thursday that it plans to slash China-made products by 40% to 45%.
- "As of yesterday morning, we are putting that plan into motion," CEO Edward Rosenfeld said on an earnings call.
Follow the money: Trump has floated a 60% tariff on Chinese imports, which would likely translate into higher prices as companies pass along those extra costs to their customers.
- S&P Global Ratings said in a report today that 60% tariffs "would be inflationary in the short term" with "consumers paying more for finished goods," though 60% is "unlikely and may just be a starting point for negotiations."
- During his first term, Trump imposed China tariffs of mostly 10% or 15%, applying to specific products accounting for only a slice of U.S. imports, Axios Macro's Neil Irwin reported in July.
Reality check: Increased tariffs on China could "accelerate the diversification of supply chains, in particular away from China," S&P reported — but that won't necessarily mean more jobs for Americans.
- Rosenfeld said Steve Madden is exploring a move to "countries like Cambodia, Vietnam, Mexico, Brazil."
- He didn't mention the U.S. as a possible place of production.
The intrigue: The pandemic already prompted many companies to bring aspects of their supply chains back home.
- Companies that make goods closer to home are generally less exposed to currency fluctuation, international shipping hiccups and product shortages.
What we're watching: Which companies make similar moves.
