US consumer companies warn Trump’s tariffs could hit results - GulfToday

US consumer companies warn Trump’s tariffs could hit results

US-consumer

Visitors look at a display of smartphones from Chinese technology firm Huawei at the Consumer Electronics Show in Shanghai on Tuesday. Associated Press

A host of US consumer companies have warned that costs related to tariffs on goods imported from China would weigh on their results. The United States increased tariffs on $200 billion worth of Chinese goods to 25% from 10% in May.

President Donald Trump has also threatened an additional round of tariffs on $300 billion worth of goods that would cover nearly everything imported from China to the United States.

Best Buy: “The impact of tariffs at 25% (proposed to be enacted) will result in price increases and will be felt by US consumers,” CEO Hubert Joly said.

Home Depot: If the latest round of tariffs hold, it would increase annual cost of goods sold by $1 billion, on top of a $1 billion hit that the home improvement chain has taken from tariffs imposed in 2018.

The impact from new tariffs would still be manageable as it would make up less than 1% of total sales, said Edward Decker, executive vice president of merchandising.

J.C. Penney: “We do anticipate a more meaningful impact on both our private and national brands if the potential fourth tranche of tariffs does go into effect,” CEO Jill Soltau said.

Kohl’s Corp: Tariffs will primarily hit China-sourced merchandise in home and accessories business but apparel and footwear are not impacted at this point.

The department store chain said about 20% of its merchandise is sourced from China.

Walmart: “Higher tariffs will lead to higher prices for customers,” CFO Brett Biggs told Reuters in an interview last week. He said the company, known for lower prices, will try to minimize the effect of the levies on the company and its customers.

MACY’S INC: “The increase of the third tranche from 10% to 25% on May 10 does have some impact, particularly on our furniture business. However, the team anticipates that this can be mitigated,” CEO Jeffrey Gennette told investors on a conference call on Wednesday.

“It’s too early to comment on what we think that’s going to mean in terms of potential price increases and what categories are going to be more affected than others,” he said.

RALPH LAUREN CORP: “The tariffs enacted to date have a limited impact on our business, but our teams are prepared for multiple scenarios and have accelerated the diversification of our supply chain to mitigate the long-term impact of any potential tariff outcomes,” CFO Jane Nielsen told investors on a conference call last week.

CROCS INC: Footwear maker estimates an impact of about $5 million in 2019 assuming a 25% tariff takes effect. Co also expects the amount of US product sourced from China to be below 10% for 2020, it now imports about 30%.

“Our current sourcing mix reflects our need to balance ramping up incremental supply to meet the growing demand for our product and continuing our multi-year effort to reduce our sourcing from China,” The company said in a statement.

DEL MONTE FOODS INC: “It’s not just tariffs. Transportation costs are up, labour costs are up,” CEO Greg Longstreet told Reuters at a conference in New York last week. “It’s an inflationary environment. A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.” Del Monte has already raised prices on many products, including mandarin oranges that it imports from China, and will do so again with tariffs rising, he said.

Meanwhile, Thyssenkrupp and Tata Steel’s plan to form a landmark joint venture was rejected by EU antitrust regulators on Tuesday, concerned that the deal would have pushed up prices and reduced competition.

The European Commission said the companies, which had looked to the deal as one way to tackle overcapacity and other challenges in the steel industry, had not done enough to allay its concerns.

“Steel is a crucial input for many things we use in our everyday life, such as canned food and cars. Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level,” European Competition Commissioner Margrethe Vestager said in a statement.

The Commission said imports from third countries would not have been able to offset potential price hikes resulting from the deal.

This is Vestager’s third veto this year, after she blocked Siemens’ bid for Alstom, and German copper company Wieland-Werke AG to buy a business unit from Aurubis, Europe’s biggest copper smelter, in February.

ThyssenKrupp and Tata Steel last month flagged the EU veto after they declined to offer further concessions to address regulators’ concerns.

German steel-to-submarines group ThyssenKrupp will now list its elevator business, its most profitable unit worth an estimated 14 billion euros ($15.9 billion) and twice the parent group’s market value.

Agencies