How More Tariffs On China Will Impact American Companies | NBC News Now

Channel: NBC News
Published: 12/07/2019

Description
NBC News’ Dasha Burns speaks to the CEO of Ledbury, a clothing company based in the U.S. to find out how more China tariffs may impact American companies, like his own. » Subscribe to NBC News: http://nbcnews.to/SubscribeToNBC » Watch more NBC video: http://bit.ly/MoreNBCNews NBC News Digital ...



Transcript
What is ledbury, how would our viewers recognize this brand well bears and men's luxury shirt maker were based in richmond virginia we've been around for about ten years to the day, and we started kind of with the whole idea of making shirts that fit better, feel better And last longer than any else in the closet, so we do that through our e-commerce business, we have about 50,000 customers, our n ...
twork stores and then sort of retailer start the country so you're an american company based in richmond virginia. But you have been affected by this administration's tariffs policy. Can you walk me through that? How have you been impacted and why yeah, of course i mean ithink like any modern apparel brand like we're. A global business have a global supply chain, and so, when you start talking about that, obviously, like tariffs are our big issue yeah, i think one of things that's interesting is when people think about tariffs are the new tariffs that have happened recently. It'S like you know where there's all this free trade and now we're adding tariffs to it. That'S not the case, so particularly the shirt business, not on the apparel business. Our tariffs are about, like nineteen point, five percent on everything we bring in in most businesses. I think the average is around 1. 4. So really i already yesterday already there's sort of there's a highbar already for what we're paying for is a tariff thing and we understand that's part of it and then that's fine that sort of built into our business model. But i think the question is when you have additive tariffs. On top of that, can you walk? What are the numbers that you can sort of share in terms of just how the tariffs have impacted you, and what does that jump mean from if it is 19 and it jumps to 35 yeah? Well, i think i think tariffs couldn't affect us in a couple different reasons why it's like, obviously, there's the cost.

So just gon na make things i can go on more and that's meaningful imean, i'm sure our shirts average from 100 to 150 dollars, they're, not inexpensive product, but an additional 15 % on our cost basis. Getup can be challenging couple. Other things happen, i mean if we're bringing in company bringing product from - let's say china. Recently before the most recent tariffs came in, everyone was trying to move product out of asia to the united states. Before this tariffs went and says, shipping prices went up, just thinking became a more specific ross. The board - and i think, lastly, when tears happen, it's not only what happens to us, but what happens to our suppliers so we're in turkey, for example, their amazing history of craftsmanship and turkey, and particularly inthe shirt making business. You know when the tariffs were had last year with turkey. They were on steel, but it didn't affect our shirt, making business, but all of a sudden, because the turkish economy was already in recession and they were a little wobbly. Investment money got pulled out. Banking lines seized up and all of a sudden behave. You know, maybe our suppliers are struggling, much more, which that affects us downlines, considering the the moving targets, considering how unpredictable this is. What is your worst-case scenario with how this could play out? I mean, i think the worst-case scenario is that you know we we there's a 50 % tariff.

That happens. You know in china whichsmaller piece of our business. Let'S say more tariffs happen in other countries where we're producing a big turkey, yeah turkey or italy or scotland, who knows where they might come to next most likely not, but but it could happen, particularly the unpredictability of what's happening. Now i mean at the end of the day we we make shirts, i mean, and we make amazing shirts that people love and they come back again again. We take care of those folks, so we just have to keep doing that. So it's predictable. We should be able to run that business you're on a year for the next ten years, but if tears happen and we need to move supplychains, you know, then that could not only affect our business from a supply chain perspective. But what if it takes us a year to make a shirt as good as we make it in turkey in the new place, where what? What are the challenges to manufacturing here in the states? Yeah, i think you know there's two challenges. One is certainly cost so from a labor cost perspective, it's just it's more, it's more expensive and so that ends up for the customer becomes a lot more expensive. I think the other thing is the availability of people and sort of factories to be able to produce the type of like clothing volume that we're consuming the unitedstates. You know if, if 40 years ago, we were making ninety five seven percent of our clothing and today we're making three percent we've lost generations of that know-how of people who know how to sew know how to craft patterns anybody's skill set at skill set. So i think, when we're looking at american manufacturing, i think there's there spots of strength for it and the apparel business there's people that are doing interesting things from a customization perspective, but i think think the large mass scale production that we're used to today.

It'S very difficult to do the united states, and so we just have to do in a more creative way. Let'S talk about the consumerside of things. What can people expect? This holiday season is a probably a lot of shirts. A lot of other things are gon na be bought. Will they see prices go up over the holidays? I think there will be some prices to go up on holidays. I think that's that's obvious, but i think it's gon na be marginal compared to what will happen next year and i think a lot of brands and a lot of companies brought in products and stockpiled them before the holiday season and before the tariffs wouldn't do effect. So i think, there's a little bit of a grace period. The real question is: does the trump administration do the chinese discontinue the newyear? You know if it does, those products have already been bought through summer times and fall. That'S what you've got a bit of a buffer? That'S where you see things go up: five, ten fifteen dollars and it's gon na it's gon na hurt consumers wallets and eventually you know we're not raising at this point, so we're actually taking that for the customer. Right now - and i think, we're hopeful - that's you're feeling that cost so we're feeling that so what that's going to do is really sacrifice our margin for the business, and so you know that's something that we've tried to build in as quickly as we could react to It but we're not necessarily going to beand if tariffs go, you know in two countries we operate from, you know fifteen to thirty, and you know 35 percent continuing out like that. We really would be. You know really detrimental.

The business and we'd have to figure out a creative way to spread those cost around. Hey nbc news viewers, thanks for checking out our youtube channel subscribe by clicking on that button down here and click on any of the videos over here to watch. The latest interviews show highlights, and digital exclusives thanks for watching.


Watch Next

Loading...