Dive Brief:
- Steve Madden is reducing its reliance on China for sourcing materials and products ahead of possible tariff hikes under a new presidential administration, according to a Nov. 7 earnings call.
- The apparel manufacturer and retailer aims to cut its imports from China by 40% to 45% over the next year, CEO Edward Rosenfeld said on the call.
- Imports into the U.S. currently account for two-thirds of Steve Madden’s overall business, Rosenfeld said, with roughly 70% of those goods sourced from China.
Dive Insight:
Several U.S.-based manufacturers and retailers are looking to shift their sourcing mix outside of China as the threat of higher tariffs on goods from the country continues to heat up.
The Biden-Harris administration finalized a slew of heightened tariffs on China-made products in September. Meanwhile, Donald Trump, who was reelected president last week, proposed a 60% or more duties increase on China-made goods during his campaign.
“Look, we have been planning for a potential scenario in which we would have to move goods out of China more quickly,” Rosenfeld said.
Rosenfeld added that the company began putting its tariff mitigation plan into motion the day after the election, noting that Steve Madden has spent multiple years developing its factory base and sourcing capabilities in countries like Cambodia, Vietnam, Mexico and Brazil.
Last year, 79% of Steve Madden’s supplier spend was in East Asia and 17% was in Southeast Asia, according to its latest sustainability report.
Of course, China may not be the only country subject to increasing tariffs, particularly under a new administration. Trump previously threatened to place a 200% tariff on Deere & Co. if it moved some of its U.S. manufacturing operations to Mexico. The president-elect has also pushed for up to 20% tariffs on imports writ large.
Rosenfeld said it was too early to speculate about the specific impacts of the incoming Trump administration’s trade policy, but the CEO did say he expects “wide-ranging implications” for the supply chain and overall economy in countries from which it sources.
