By Helen Reed and Nicholas P. Brown
London/New York (Reuters) – Retail and accessories in the United States slow orders and freeze the rent before tariff hikes that enter into force on Wednesday on products imported from Vietnam and China.
These businesses, similar to Nike (NKE) and Lululemon (Lulu), are confronted with an impossible choice: compensate for the price of tariffs by raising prices by about 40% – potentially chatting sales – or absorb costs and more voltage already reduces the margins of profit.
Unlike their bigger rivals, however, the smaller clothes and shoes do not have huge supply chains, which makes them highly dependent on Vietnam and China.
Ian Rosenberger, CEO of Day Owl, a six -year -old company in New York, making backpacks in Vietnam, has stopped future orders. Unless there is a deal for a significantly lower Vietnamese tariffs, Rosenberger estimates that Day Owl has 30 days before folding.
But with a production cycle of about 100 days, waiting for much longer risks, missing the decisive shopping season at school. “The damage is already important enough to be an existential threat,” he said, adding that his seven employees asked if they should prepare to be out of work.
Rosenberger said the tariffs would increase his debt to $ 22 from $ 5, which encouraged him to increase the price of his highest-end bag to $ 212 from $ 155.
Shoe Distributors and retailers of America – whose members include Nike (NKE), Walmart (WMT), Skechers (SKX) and Deckers (Deck) – estimated that the $ 155 runs in Vietnam will have to be marked to $ 220.
Vietnam has developed specialized factories that produce everything from high-tech shoes to run to tracking suits. This is the second largest source of clothing and shoes imported to the United States after China and a key production center for Nike, Adidas and others.
Vietnam demanded a 45-day delay in US tariffs and said it would buy more US goods after Trump and the Vietnamese leader in LAM agreed to discuss a deal to eliminate the taxes on Friday.
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Nike’s shares have dropped by 14%since the markets closed on April 2, the day Trump announced tariffs while Adidas shares lost 16%, Puma (Pum.de) shares dropped by 18%, and the North Face Corp’s VF Corpha fell 31%.
These large companies work with factories around the world, providing them with some negotiations on negotiating tariff costs with suppliers. VF Corp is “well diversified in your supply chain to manage tariffs,” a spokesman said.
Small businesses, such as Seattle-based Washington-based Oiselle, have less capacity to absorb costs and less resources to plan alternatives.