15% and 25% Section 301 Punitive Tariffs on Apparel Imports from China: Retail Price Impact Assessment

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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%.

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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

Author: Sheng Lu

Professor @ University of Delaware

One thought on “15% and 25% Section 301 Punitive Tariffs on Apparel Imports from China: Retail Price Impact Assessment”

  1. Dear Professor Lu,

    Thank you for sharing your insights here. I graduated from Columbia University and am currently working for a garment supplier catering to consumers in mass market in the U.S.
    Can I cite your analysis and extend a little bit on the impact of additional tariffs on retail prices and all the role players in supply chain?

    Thank you.

    Huijie

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