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The trade war arrived at Sun Y. Park’s doorstep the day a letter from Samsonite International SA was delivered to her Manhattan luggage and leather goods shop.
In the letter dated Aug. 13, Samsonite North America President Lynne Berard notified wholesale buyers that a 10 percent price increase is imminent if the U.S. follows through with more tariffs on Chinese goods — a measure that’s been threatened for months and that will now take effect Sept. 24. The levies will hit more than $3 billion in luggage and travel bags that’s imported by the U.S. from China.
U.S. President Donald Trump pulled the trigger late Monday evening to slap a 10 percent tariff on about $200 billion of Chinese goods that will be more than doubled next year. The new levies will send the retail industry bracing for impact. While shoppers have been insulated from previous tariffs that hit prices for steel, aluminum and other goods, the new round will include more products that Americans buy directly.
“We just don’t think tariffs are the right approach,” Jon Gold, vice president of supply chain and customs policy for the National Retail Federation, said in an interview on Monday before the tariffs were announced. “There certainly is concern going forward on the impact of the tariffs: The tariffs are paid by U.S. companies and then they’re passed onto the consumer.”
The wider scope of the latest tariffs means that merchandise ranging from handbags to rain gear to refrigerators are likely to start costing more for U.S. shoppers. Suitcases, travel and sports bags will also face levies. Samsonite brands including its High Sierra backpacks and American Tourister luggage will be subject to the price hike, it said.
Samsonite is ready to act, with a price increase of 10 percent on new shipments starting on or after the date that tariffs go into effect, according to the letter. Increases on orders from warehoused inventories will start 30 days after that date. The company declined to comment on the letter and its pricing plans.
Park, the owner of Mitsosa Luggage in midtown Manhattan, said she will have to pass the higher prices on to consumers. She’s concerned that other brands could follow suit with their own hikes.
“It’s not good,” said Park, when asked about the higher prices. “Samsonite is a worldwide brand, so we definitely have to have it. It’s the most popular.”
The uncertainty surrounding the tariffs has complicated business for consumer-goods companies such as Samsonite. In an August interview with Bloomberg, Chief Executive Officer Kyle Francis Gendreau said the company has been shifting production and diversifying from China as part of a long-term strategy unrelated to tariffs. Samsonite has said it manufactures two-thirds of its products in China.
He acknowledged that the process of anticipating potential tariffs has caused headaches both for the company and its suppliers, since it had been impossible to say when — or whether — the tariffs would go into effect.
“The whole thing is crazy, right?” he said in an interview last month. “You know, it’s there, it’s not there.”
–With assistance from Daniela Wei and Jeff Sutherland.
©2018 Bloomberg L.P.