Buzz
By now, you may have heard that raising tariffs on imports from China could cause prices to go up on products ranging from sneakers to outdoor furniture, possibly by as much as 25%.
However, it’s still uncertain how much this price increase will affect consumers like you, who are trying to purchase items like shoes or garden chairs.
Everlane, a direct-to-consumer clothing brand, demonstrated to the New York Times how the prices of its popular items could be affected when new tariffs are factored into production expenses.
Take, for instance, a women’s cashmere sweater priced at $100, accounting for production costs, shipping, current tariffs, and of course, profit (because businesses have to make money).
With an additional $11 tariff, the price of that sweater could rise to $124.
Consider a pair of men's chinos priced at $68. With a $6 tariff increase, the price could go up to $82.
The figures shared with the Times are estimates per item, which might frustrate those already questioning Everlane’s transparency practices. However, part of the reason we haven't seen definitive price changes yet is that retailers are still searching for ways to offset the added cost.
Everlane manufactures many of its clothes in China, though it's not its only source. Some companies might relocate production to other well-known, albeit problematic, manufacturing countries like Vietnam or Bangladesh to avoid tariffs. But shifting production isn’t a quick fix.
Companies are also exploring ways to absorb the increase in tariffs so they can keep their customers satisfied. For example, Everlane mentioned it is calculating its pricing and profit margins to prevent the price of a cashmere sweater from rising by the full $24. However, this may be easier for some businesses than others.
“It will be more challenging for companies with smaller margins to absorb the rising costs of products affected by tariffs,” writes Sapna Maheshwari of The Times. For a company like Forever 21, it’s harder to adjust production costs for a $9 shirt that offers minimal profit, compared to a slower, more premium retail model like Everlane’s.
