The Trump administration has imposed 15% Section 301 punitive tariffs on $300 billion Chinese products (tranche 4) effective September 1, 2019, which includes almost 80% of U.S. apparel imports from China. As illustrated above, 15% punitive tariffs mean:
- If the retailer keeps the retail price unchanged, its gross margin% could drop around 2.9-3 percentage points.
- If the retailer tries to maintain a gross margin% of 40%, it may have to increase the retail price by around 11.5-12%.
Likewise, should the punitive tariffs reach 25%, it means:
- If the retailer keeps the retail price unchanged, its gross margin% could drop around 4.9-5.0 percentage points.
- If the retailer tries to maintain a gross margin% of 40%, it may have to increase the retail price by around 19.4-20%.
(Welcome for any comments and suggestions)
by Sheng Lu
