A survey of 700 middle market executives, conducted before List 4 tariffs were announced, found 40 percent say tariffs on imports are challenging their businesses, and 26 percent say retaliatory tariffs are a problem for their firms. Middle market firms tend to have revenue of $10 million to $500 million and 100 to 2,000 employees. The survey, co-sponsored by the U.S. Chamber of Commerce, showed that gross revenues and profits both are growing, but capital investments are sluggish, and there's a decline in hiring expectations. More than half the respondents said they don't expect the economy to improve in the next six months.
The U.S. Chamber of Commerce led a letter to U.S. Trade Representative Robert Lighthizer expressing fear that the mini deal nearing completion with Japan will stall momentum for a broader trade negotiation. "We respectfully urge the Administration to hold fast to its commitment to achieve a comprehensive, high-standard trade agreement with Japan and ensure this initial package does not impede momentum toward such a broader accord." The Chamber and 13 trade groups said a comprehensive trade deal should address services, including express delivery, customs administration and trade facilitation, regulatory cooperation, intellectual property and more.
Products like TVs and headphones that consumers deem “nice to have,” but not essential, likely will bear the biggest sales fallout from tariff-induced price increases, The NPD Group said in a Sept. 9 research report. Consumer buying decisions “will be impacted less by household income or cost and more by whether a product is considered a 'necessity,'” it said.
The fourth list of Section 301 tariffs that was split into two subgroups, 4A and 4B, includes many very similar items that will require some specificity for differentiating between them, the Atlanta International Forwarders and Brokers Association said in a blog post. Fifteen percent tariffs on the 4A group of products took effect on Sept. 1, while the 15 percent tariffs on the 4B items start on Dec. 15. The differing effective dates are hoped to reduce the holiday season impacts (see 1908130033).
Samsung’s Galaxy Tab S6, released for sale on Sept. 6 and marked on the packaging as a product of Vietnam, typifies the growing volume of Vietnamese-sourced tablets and laptops imported to the U.S. under Harmonized Tariff Schedule subheading 8471.30.01. Though the overwhelming majority of those goods continue to originate from China, Vietnam is emerging as a more important country of origin, according to Census Bureau trade data accessed through the International Trade Commission’s DataWeb tool.
One-third of Fortune 500 top executives discussed the impact of tariffs on their firms during earning calls this summer, according to analysis conducted by the U.S. Chamber of Commerce. Manufacturing and industrial firms were most likely to talk tariffs, with 64 percent mentioning them; about 58 percent of retailers talked about tariffs' effects, and 43 percent of tech firms talked tariffs.
Walmart Chief Merchandising Officer Steve Bratspies was “really proud” how his team mitigated the cost impact of the Lists 1, 2 and 3 Section 301 tariffs on Chinese goods, he told a Barclays investor conference Sept. 4. List 4, which covers virtually all China-sourced goods not previously tariffed, “makes it tougher” to manage, Bratspies said. “There's no doubt about that.” With the previous three tariff rounds, “there were a few prices” that Walmart did have to raise, “but we didn't see any change in our unit projection of where we thought it would be, so that was absorbed,” he said. “We were very focused and targeted on how we did it. We didn't let any of our price gaps slip, and we maintained price leadership.” Though List 4 “gets tougher,” Walmart plans “the same approach that we took to List 3, which is we literally go through item by item,” Bratspies said. “That's what our buyers do.” There's “a whole bunch of different levers that a buyer can pull to understand how to manage that,” he said. The goal is to “offset as much as we possibly can either through negotiation or managing mix,” he said. Even if Walmart needs to raise prices as a “last resort” to maintain margins where they need to be, “we're going to run the Walmart model, which is we want to lead on price,” he said. Walmart last month slightly scaled back full-year expectations on consolidated net sales growth, factoring in the impact of the List 4 tariffs when they were still at 10 percent (see 1908150049).
UPS is expanding its foreign-trade zone management and consulting services, it said in a news release. The company's Zone Solutions offering was integrated within the UPS customs brokerage, warehousing, logistics and transportation business, it said. "UPS also converted four of its major U.S. international air freight (IAF) gateways into FTZs: Chicago (ORD), New York (JFK), Dallas (DFW), and Los Angeles (LAX)," UPS said. "The expansion extends UPS's FTZ-related capabilities beyond warehousing and distribution to create a comprehensive FTZ solution for helping clients manage the end-to-end process from dealing with customs to inventory control."
FDAImports.com and Mesh Intelligence will work together to provide "a new service to help the world’s leading food organizations predict, manage and protect mission critical supplier networks to reduce risk of food recalls, supply chain disruptions and import delays," the companies said in a news release. Mesh Intelligence provides "predictive food safety and security analytics," it said. The joint offering will be called "Threat Intelligence," the companies said. "Mesh’s technology, coupled with the breadth of industry expertise FDAImports.com already offers, delivers insight into what is happening on their clients’ supplier networks on an ongoing and predicted basis, helping organizations monitor, assess, identify and manage the threats and vulnerabilities they face on a daily basis."
Movado Group downgraded its forecast in virtually all metrics for fiscal year 2020 ending Jan. 31, blaming market volatility it sees worsening with the 15 percent List 4A Section 301 tariffs taking effect Sept. 1 on fashion watches and smartwatches imported from China. It's “very early on in the process” to forecast with any precision the impact of the List 4A tariffs taking effect in a few days, CEO Efraim Grinberg said on a fiscal Q2 call. The tariffs will “definitely have an impact, I believe, on U.S. business,” he said. “We will take certain actions in terms of pricing initiatives, in terms of working with our suppliers,” to mitigate the fallout, he said. “Some will have an effect to gross profits.”