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Smart speaker company Sonos will re-examine its Chinese supply chains if the U.S.-China trade war worsens, company CEO Patrick Spence told Axios.

The impact: Spence said it could take "up to one year" to shift manufacturing and its supply chain out of China to avoid feeling the effect from a potential escalation of tariffs. However, the impact the company has felt so far from the trade war is "financially immaterial."

"We are actively evaluating ways to increase the flexibility of our manufacturing footprint and supply chain, including sourcing and producing products outside of China."

Sonos has been warning about the potential impact of tariffs since it filed paperwork to go public last year.

The big picture: Hardware companies are in the trade war's line of fire, as Axios' Ina Fried reported last year.

GoPro, for example, "warned it would move most manufacturing of U.S.-bound gear outside of China by this summer."

Between the lines: Sonos belongs to a class of hardware-dependent companies — along with GoPro and Fitbit — whose stocks have taken a hit as Google, Amazon and Apple assert more dominance in these product areas.

  • Sonos shares have fallen 30% since its public debut last August.
  • In its earnings report on Wednesday, which topped analysts expectations for earnings and revenue and announced the departure of its longtime CFO, Sonos said it had 22.7 million products in over 8 million households globally. That's up from the 19 million products in about 6.9 million households reported in March.
  • Neither Apple, Amazon or Alphabet break out unit sales for smart speakers.

Quick take: Spence tells Axios that while "macroeconomic conditions can certainly impact consumer demand through business cycles," the 16-year-old company has survived economic downturns.

  • Still, companies that bank on a strong economy, when consumers are flush with cash, are in focus as concerns about a coming recession grow.

Go deeper

Updated 1 hour ago - Politics & Policy

Dems fear supply-chain blame

Illustration: Aïda Amer/Axios

As supply-chain kinks drive up prices and disrupt holiday shopping, Democrats are scrambling to show action and deflect blame.

Why it matters: With their party controlling both the White House and Capitol, vulnerable Democrats worry supply-chain snafus will hurt them in midterms.

1 hour ago - World

Scoop: Germany urges Congress not to sanction Putin’s pipeline

Photo: Mikhail Svetlov/Getty Images

The German government has urged members of Congress not to sanction the Nord Stream 2 pipeline, arguing that doing so will "weaken" U.S. credibility and "ultimately damage transatlantic unity," according to documents obtained by Axios.

Why it matters: At a time when roughly 100,000 Russian troops are massing at its border, Ukraine views Nord Stream 2 as an existential threat to its security. The pipeline would circumvent Ukrainian transit infrastructure and deliver Russian gas directly to Germany, eliminating one of the last deterrents Ukraine has against an invasion.

Bryan Walsh, author of Future
2 hours ago - Politics & Policy

The benefits of giving cash directly on Giving Tuesday

Illustration: Aïda Amer/Axios

Direct cash giving — channeling donations to charities that dispense money, rather than goods or services — is emerging as the gold standard in anti-poverty philanthropy.

Why it matters: Giving Tuesday is this week, and the money donated that day can do the most good when it goes as directly as possible to those in the most need.