American companies are already pivoting ahead of Trump’s proposed tariffs
This piece was produced by our colleagues at the BBC.
Sherrill Mosee is a handbag designer at her company MinkeeBlue. She took time out of her day to show me around her company’s warehouse in Philadelphia — but she’s busy.
With threats of sharply higher import duties from President-elect Donald Trump, the leaders of many companies like Mosee’s are rushing to stock up and insulate themselves from the higher cost of doing business that could follow.
Mosee immediately took action after the election, reaching out to her Chinese manufacturing partner. She said she didn’t want to risk delays, especially with the Chinese New Year fast approaching at the end of January.
“After the election, I’m like, ‘OK, we got to get these bags in before you go on your vacation,'” Mosee explained. “I’ve got to be ready and prepare for it and bring it in before the administration changes.”
By shipping her bags ahead of schedule, Mosee is working to avoid the tariffs on Chinese imports that Donald Trump has promised to impose on Day 1 of his presidency.
It’s worth remembering that the tariffs, in theory, are designed to boost U.S. manufacturing by making imported goods more expensive compared to products made in America. But the big question is: Will companies actually move manufacturing back to the U.S.?
One American firm with no plans to bring manufacturing back to the United States is Steve Madden, the well-known shoe brand. But it is speeding up its relocation efforts. Two days after the election, the company said it would cut its Chinese production in half to avoid Trump’s tariffs.
“Our goal over the next year is to reduce that percentage of goods that we source from China by approximately 40% to 45%,” Edward Rosenfeld, Steven Madden CEO, told investors.
The proposed tariffs are already changing how goods are being handled. Warehousing giant Prologis is seeing an uptick in interest from businesses looking for space to stock up.
“In the last few weeks, there has been a pickup. There have been more tours, there’s been more proposals, there’s been more trading paper on signing leases,” said Chris Caton, managing director for global strategy and analytics at Prologis.
“These types of requirements have really been on the margin, but you are seeing some goods come into the United States,” he went on. “Our customers are telling us that they’re finding spare places to store goods.”
Mosee doesn’t believe she can pass the added costs from tariffs on to her customers. Instead, she’s now looking for new suppliers in Cambodia and India.
“If you’re talking about adding tariffs on everything that comes up, people are going to be more concerned about buying their kids clothes and things that they need in their home, not a bag,” she said.
With the disruption already being felt, the threat of Trump’s tariffs are already imposing real-world costs on businesses.