From social issues to the economy, any change in the presidency leads to major changes in the way a country is run, no matter who wins.
However, the outcome of the recent US presidential election could lead to one of the biggest changes to retailers' business models if they are to continue making profits and keep their finances under control.
For years, the United States has relied heavily on China as its largest import market, primarily due to its low-cost manufacturing that allows for much more affordable consumer goods and enormous supply chain capacity.
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According to the Office of the United States Trade Representative, in 2022, about $758.4 billion in U.S. goods and services were traded with China, of which $562.9 billion were Chinese imports to the United States.
President Donald Trump proposes increasing tariffs on imported goods
During his presidential campaign, President Donald Trump said he planned to impose significantly higher tariffs on goods imported from China, which could be 60% or more. He added that a tariff of up to 20% would be implemented on all goods manufactured abroad and threatened a 100% tariff on all goods imported from Mexico.
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In Trump's view, high tariffs would bring manufacturing back to the United States, create more jobs, reduce the federal deficit and boost the country's economy. Although the tariffs are intended to protect domestic industries, economists warn they could also harm foreign relations between the United States and the rest of the world, leading to possible retaliation by those affected and a price war that could raise costs. .
Academy reduces Chinese inventory amid potential Trump tariffs
Academy Sports + Outdoors, the American sporting goods store chain, revealed that it has reduced the percentage of goods it sources from its Chinese suppliers to reduce its dependence on the country amid potential Trump tariffs that could be implemented now that the new presidential term. .
“Over the past few years, as part of the normal course of our business, we have taken proactive steps to diversify our supply base to reduce our exposure to direct imports from a single country, which we believe better positions our business into 2025 and beyond. there,” he said. The Academy's financial director, Carl Ford, during his last call for results.
The sporting goods company has been making these changes slowly but effectively since 2019, when it relied on its Chinese suppliers for more than 70% of its inventory.
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Academy currently only relies on around 50% of its Chinese-sourced inventory, reflecting a 20% cut from previously. As for other international suppliers, the company said none of its inventory comes from Mexico or Canada.
For the rest of its inventory, Ford said during the earnings call that a large portion of its firearms and ammunition business is manufactured domestically, which does not represent exposure to potential foreign-made tariffs.
Although private brands represent approximately 21% of Academy's total business, these partner brands are also diversifying their sourcing as a precaution for potential future tariffs, actively reducing exposure.
“When changes occur, we will take appropriate actions to serve our customers and preserve the company's profitability while continuing to deliver everyday value,” Ford said.
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