The trade war raging between US and China has seen many brands treading cautiously as they cut production because of uncertainty hanging over tariffs on goods imported from China.
Levi’s is the latest brand to do so and is ‘deliberate and diligent’ in moving production out of China as told by Chief Executive Officer, Chip Bergh.
The company has already cut down a lot of its production with only 1 to 2 per cent of its products sold in USA coming from China, as compared to 16 per cent two years ago. This shift comes as President Donald Trump announced the imposition of tariffs on another US $ 300 billion of Chinese goods, including apparel.
Along with apparel, the new tariffs are imposed on consumer goods such as electronics and toys which comes in addition to those already imposed on US $ 250 billion of other goods imported from China.
“The on-again, off-again nature of the US tariffs on Chinese goods had created uncertainty for many US retailers,” Bergh said. “Every day is a new day. Sometimes it looks like it’s definitely going to happen and then other days you think it’s off, it’s not going to happen,” he added.
San Francisco-based Levi’s, is one of the several retailers including Steve Madden and Macy’s that have been shifting supply out of China to countries like Vietnam and Bangladesh.
However, China still is a big supplier to the industry with 42 per cent of apparel and 69 per cent of footwear sold in the United States produced in China, according to the American Apparel and Footwear Association.
Levi’s has two of its own factories in Poland and South Africa but mostly uses third-party vendors or suppliers spread across 22 different countries, said Bergh, who joined the company in September 2011.
The company also has a contingency plan in place after Trump threatened imposition of tariffs on Mexico in retaliation for illegal immigration largely from Central America. The company will shift production in such a scenario.
