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Pro: Apparel Companies Among Most Vulnerable To New Tariffs

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Pro: Apparel Companies Among Most Vulnerable To New Tariffs

President Donald Trump's surprise announcement of new tariffs on Chinese goods Thursday represents a "horrible event" for apparel companies, Liz Dunn, the founder and CEO of the retail data firm Pro4ma, told CNBC.

ICYMI: New Tariffs

The retail sector's fear of new tariffs on previously exempt goods from China is now a reality, CNBC's Courney Reagan reported Friday.

Clothing, shoes and electronics are among the list of items that will be subject to a new 10% tariff. 

One of the more notable moves in Thursday's trading session was electronics retailer Best Buy Co Inc (NYSE: BBY), which lost 11%. 

Steven Madden, Ltd. (NASDAQ: SHOO) fell nearly 10%; Reagan said the company sources almost all of the products it sells in the U.S. from China. 

American companies have been actively shifting away from China over the past few years, but 42% of all apparel and 69% of all footwear sales in the U.S. are traced to goods made in China, the CNBC host said.

'Fighting For Their Lives'

Many apparel companies are showing minimal profit margins, so a new cost in the form of tariffs implies that companies will be "fighting for their lives," Dunn said on "Squawk Box" Friday. 

The companies most at risk are those with no pricing power and heavy competition — but even those with some pricing power will experience difficulties, she said. 

For example, Best Buy can get away with some price increases on its electronic goods, but there are "very few" apparel companies that can get a way with adding an extra 8% to 10% to their goods, she said.

Finally, the apparel expert said she is working with an unnamed leather goods company that is actively moving operations away from China into Vietnam.

A year from now, any tariff woes will merely be a "footnote" in the company's history, she said — but this doesn't take away from the immediate challenges.

Related Links:

Stocks Crash After Trump Threatens New Tariffs On $300B In Chinese Goods

Trump To China: Ink A Deal Now Or Wait Years For 'Much Tougher' Agreement

Posted-In: Apparel China Donald Trump Liz Dunn retail tariffs trade warMedia Best of Benzinga

 

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