“Our 2018 country of origin chart was 29 percent made in China. In 2019 the estimate is it’s about 15 percent,” said Jamie Bragg, executive vice president and chief supply chain officer at Tailored Brands, at RILA LINK2019.
Bragg was among the panelists discussing “Trade Wars: Retailers’ Strategies for Coping with Tariff Uncertainty” during the Retail Industry Leaders Association’s annual conference in Orlando, Fla., Tuesday.
Hun Quach, vice president of international trade for RILA, said, “We’ve been working with our member companies over the past year trying to figure out ways to mitigate the tariffs. … It seems like we’re facing tariffs on a number of fronts, not just China, but the EU, Canada, Mexico, you name it.”
With the long lists of products affected, “it’s felt like a tariff tidal wave,” Quach said.
“The Trump administration is considering additional tariffs on things like autos and auto parts,” Quach said, “and a number of other products that are likely to impact the consumer. We know that those tariffs are going to impact not only our supply chains but also the U.S. economy with respect to jobs.”
She continued, “We got good news on Sunday. The president announced via Twitter that he is delaying the tariff increase that was scheduled for March 1.”
Still, there’s been a record amount of tariffs collected, Quach said. “In October 2018, the United States collected $6.2 billion in additional tariffs.”
Kris Arabia, vice president of global sourcing for JOANN, a 75-year-old, Ohio-based company with nearly 900 stores, said the retailer, “a sizable importer,” planned for the hardest of hits from the tariffs.
“A lot of people were kind of taking this wait-and-see approach — maybe it won’t happen, we’re not quite sure, a hope-for-the-best kind of plan. While we too hoped for the best and still hope for the best … we had to plan for the worst,” Arabia said.
An internal team was formed last summer that included representatives from the legal and government affairs departments. “I led from a sourcing perspective,” said Arabia, explaining that JOANN launched a PR campaign and appealed to lawmakers. The CEO testified in front of the Section 301 committee.
In September “we saw the removal of 300 [HTS] lines, 19 of which were on our radar, two of which were on our top five” list for removal, Arabia said. “Having two in the top five come off was really important to us and we really felt the lobbying efforts drove that.”
JOANN continues to study sourcing intently.
“We continue to ask ourselves, “Do we have the right mix of vendors? Do we have the right mix of countries?” We were asking ourselves that five years ago, 10 years ago. We continue to ask ourselves that. It’s not anything new. It’s not because of tariffs. But with the added pressure and perhaps increasing tariffs on the horizon, we have additional pressure. We have additional incentive,” Arabia said, “to move faster with our discovery efforts.”
Fashion retailers must think ahead, said Bragg of Tailored Brands, which includes Men’s Warehouse, Jos. A. Bank and K&G Fashion Superstore. “The calendar is not our friend in fashion design. We typically are working 10 to 12 months out on a season.”
And looking ahead at potential tariff impacts, “List 4 is the one that could really be a problem for us,” Bragg said. “We made a decision that we would take action on our fall ’19 receipts.”
With about 30 percent of Tailored Brands’ imports coming from China, a 25 percent tariff would mean an approximately $27 million hit, Bragg said.
“The one business difficult for us to move was our mass customization business,” Bragg said, noting, “We just went live with production for custom suiting in India.”
Quach commended JOANN “for doing the work they needed to do to build public support” and said the Trump administration will listen.
“One of those products that was included in List 1 was televisions. Once we engaged with the administration to explain to them that sourcing televisions from China is different than sourcing televisions from countries like Mexico … we were successful in getting several billion dollars’ worth of televisions off List 1,” Quach said, adding that RILA also was successful in getting products removed from Lists 2 and 3.
“That said, there’s still a lot of work to be done.”