Outdoor Retailer - Winter 2020 - 19

were undermining U.S. IP and recommending
that the president impose tariffs."
The danger is very real: The Tariff War could
incite a full-blown recession. OIA is pressing Washington to understand that outdoor
brands are unable to innovate and unable to
hire when burdened with these costs-especially when prices are set a year in advance.
This alone sets off a turbulence in the industry
between brands, reps, and retailers with regard to pricing the impacts of which consumers will only begin to see next year, despite the
Trump Adminstration's claims that China is
somehow paying for these tariffs.
"We honor a sales order as a contract," says
Dino Dardano, president of the U.S. subsidiary
of Hestra gloves. "We've already internalized
more than $250,000 in tariff expense, an impact directly on the bottom line. Hestra is actually one of the lucky ones. It's been able to shift

nearly 70% of production from its two Chinese
factories into Hungary and Vietnam.
Like other suppliers, Hestra implemented a
pricing-modification clause into its purchase
orders, hoping to spread some increases over
onto reps' and dealers' plates next season. "It's
detrimental to our company, with these expenses that you can't budget for," says Dardano.
One way the company won't spread costs, he
says, is by increasing prices to dealers in the 25
other countries Hestra does business in. "We're
not going to penalize them based on this situation," Dardano says. "It's a sad state for all of us,
for the U.S. There's no positive outcome. All the
other countries are working toward free trade
agreements, and we're doing the opposite, and
forcing this on the U.S. consumer is unfortunate for all of us."
"Fortunately it's having relatively little impact on an international basis. The U.S. is only

one part of the market," says Drew Saunders,
U.S. country manager for Salewa, part of
Oberalp, which is based in Italy. Saunders says
that almost all of the apparel he imports from
China is on the third or fourth tariff list, but
again, it's a brand that only makes about half of
its goods in China. For those who are 100% in
China, it stings more.
"The big impact is that your costs go up instantly," Saunders says of the short lead times
and on-and-off nature of this war. "In some
cases we have to absorb, which hurts our profitability, and in other cases we have increased
our prices to retailers. But there's still a lot of
uncertainty for fall 20. We've had an interesting experience; fortunately we don't have the
same exposure as some people."
In the end, manufacturers have been forced
to make tough choices now, no matter what
shakes out in Washington. O.R.

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Outdoor Retailer - Winter 2020

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