Brands like Nike, H&M, and Lululemon appear to have run out of places in the world to hide from U.S. tariffs.
Driving the news: The U.S.’s country-specific tariffs come into effect today, and global apparel manufacturing hubs are very much in the crosshairs. The top six apparel-exporting countries to the U.S. — India, Indonesia, Bangladesh, Vietnam, Cambodia, and China — face duties of 27% to 104%.
Why it matters: It’s not just U.S. companies that will feel the sting of higher costs — Canadian apparel businesses that manufacture their products overseas and sell them to Americans will face similar problems.
- One trade lawyer told CBC News it’s unlikely there will be any loopholes for foreign-made products that have a stopover in Canada.
- That means a Chinese-made T-shirt sold by a Canadian retailer would still be hit with tariffs.
Zoom out: Lululemon, which makes 86% of its products in Vietnam, Cambodia, Sri Lanka, Indonesia, and Bangladesh, is particularly vulnerable. Its stock has fallen ~26% in the last two weeks.
- Fellow Canadian retailer Aritzia, which also heavily relies on Asian countries for manufacturing, has seen its stock plunge ~27% over that span.
Bottom line: Apparel companies will either have to raise prices for consumers — which feels like the inevitable next step — or eat the added tariff costs, which most smaller businesses can’t afford to do.—LA