At least one company is already making major changes to its business relationship with China following president-elect Donald Trump’s victory. The multi-billion dollar shoe business Steve Madden said it plans to cut in half the amount of goods it sources from China.
The company’s CEO Edward Rosenfeld said about two-thirds of its business relies on goods imported to the United States. About 70% of those imports come from China.
The move is likely in response to Trump’s tough tariff talk. On the campaign trail, he threatened 60% tariffs on goods coming from China.
Trump has said hefty tariffs will bring manufacturing back to the U.S. and level the playing field.
He also said tariffs will increase revenues.
But while Steve Madden is planning to do what it can to minimize the business impact of China tariffs, the company has no plans to bring that production to the U.S.
“We have been planning for a potential scenario in which we would have to move goods out of China more quickly,” Rosenfeld told analysts. “We’ve worked hard over a multiyear period to develop our factory base and our sourcing capability in alternative countries, like Cambodia, Vietnam, Mexico, Brazil, etc.”
Economists have criticized Trump’s heavy-handed tariff plans, disputing the President-elect’s claims that countries like China will pay the price.
According to a study from the Peterson Institute for International Economics, the cost of Trump’s tariffs will be passed onto American consumers and could cost the typical middle-income household more than $2,600 a year.
Everything from clothing to cars to your iPhone could be more expensive.
Apple heavily relies on China for manufacturing.
In recent years the company has expanded manufacturing into India, but a former advisor to Apple in China told Straight Arrow News switching off China altogether would take multiple decades.
Tesla is another company that heavily relies on China for manufacturing.
It’s unclear whether CEO and Trump supporter Elon Musk will try to influence Trump’s tariff policy in his favor.
The first time Trump was president, Tesla and thousands of other companies sued the administration over his China tariff policy.
