Political upheaval in the form of new tariffs have retailers on edge. Last month, President Trump imposed a 25 percent tariff on steel imports and 10 percent on aluminum (excluding imports from Canada and Mexico) with potential to enforce tariffs reaching as high as 45 percent on goods imported from China. The tariffs have spurred talk of trade wars and a tumultuous road ahead for U.S. manufacturers, undoubtedly causing trouble and higher production costs across all sectors of retail.
As a result, organizations are asking how the tariffs will affect prices in the apparel and footwear supply chain moving forward. With the threat of retaliation from major trade partners – including the EU warning of a potential 25 percent tariff on any American goods it imports and China promising a trade war of its own – manufacturers across the states are prepping for the imminent cost impact on their operations. Despite the U.S. topping the list of all of globally imported steel at 8 percent in 2016, U.S. manufacturing and sourcing professionals are trying to find ways to keep operation costs down to mitigate the new tariffs.
This wouldn’t be the first time America’s trade partners have retaliated against the Trump administration. In January, Trump imposed tariffs on washing machines and solar products aimed at curbing imports from countries such as China and South Korea. As a result, China launched a dumping probe into U.S. sorghum imports. China is the top buyer of U.S. sorghum, and many saw the action as a direct response to Trump’s action on washing machines.
Amid rising trade tension, retailers need a way to mitigate these tariffs and the looming associated costs to their operations. What-if costing can act as the crystal ball retailers need to better predict product pricing by enabling retailers to quickly and accurately calculate various scenarios, including tariff impositions. Retailers are then able to see cost comparisons and recommendations for all products, regardless of geography, channel, franchise or customer.
Another way retailers can better track tariffs is by leveraging robust what-if costing tools. Bamboo Rose’s platform, for example, integrates with the Harmonized Tariff Schedule (HTS), which is updated quarterly by the U.S. International Trade Commission. In fact, Bamboo Rose users automatically get updated tariff information as soon as it’s available so they can better prepare for the potential impact to their business.
Implementing what-if costing is only the first step on the journey to more predictable supply chain operations. While overcoming the effects of tariffs – especially the newly imposed steel and aluminum tariffs – may be difficult, organizations that work to immediately mitigate its effects will find themselves in a strong position for a competitive market.
“What-if” costing methods won’t just help retailers mitigate the effects of tariffs: Read our whitepaper to learn more.