Trump Stuns Industry with Tariffs

Since Trumps tariff announcement on Thursday, business, financial markets and governments around the world have been in turmoil as they try to figure out the real cost and how to navigate through these uncharted waters. The boardsport industry and its supply chains are as deeply impacted as any other manufactured product category with their interdependence spread out across the globe.

What we do know is Trump had introduced a baseline tariff of 10 % on all manufactured goods bought into the USA, but with many countries being penalised by even higher tariffs depending roughly on the level of their trading imbalance with the USA.

Here are the percentages from those countries where the boardsports business has a large supplier presence.

Bangladesh +37%     Cambodia +49%    China  +34 %    India +26%    Indonesia +32%   Laos +48%

Malaysia +24      South Korea +26%     Thailand +36%     Taiwan +32   Turkey +10%  Vietnam +46%

Governments are working out how to respond. China quickly countered, imposing a 34% tax on all USA manufactured products entering the country. In the last 24hours, Trump has threatened an additional 50%, which if imposed, will mean US companies will pay a total rate of 104% on Chinese imports. Vietnam has now reduced its existing high tariffs to a much lower level to try and negotiate a lowering of its tariff. With the size of the tariffs announced, countries impacted are scrambling to talk to the USA trade negotiators as quickly as possible before too much damage is done with Trump already claiming 50 countries are trying to arrange meetings to lower their exposure.

Europe is obviously impacted as it has in many sectors a trade surplus with the USA. All manufactured products exported from Europe into the USA face a 20% tax, whilst UK exports to the USA face a 10% tax. So far Europe and the UK are keeping their powder dry in the hope that this will bring calm and stop a descent into a full blown trade war. Most boardsport products consumed in Europe come from factories outside the USA so no tariffs. Europe might in the short term see a wave of boardsport products arrive on its shores having been diverted from going into the USA. This could well result in an unstable business environment  as brands compete for a share of the European market.

The USA market is obviously by far the most impacted from a boardsports point of view with the vast majority of the hardgoods, apparel and accessories consumed there, sourced from countries in Asia which have had some of the highest tariff rates imposed. This will lead to higher prices in the USA boardsports market as much of the tariff cost will have to be passed on and will most probably lead to a drop in demand.

Seamless multi country supply chains operating across the Far East are the norm for many boardsport products manufactured in the region. Built over many years they provide the global boardsports industry with a low cost manufacturing base that is unlikely to be replicated in the USA anytime soon.

Meanwhile Financial markets have reacted with falls in value not seen since the beginning of Covid as investors try to work out the impact of the Tariffs on each company. Some of the largest boardsports brands have seen major falls in value for example Nike down 11% and VF down 19%. The problem going forward is no one is sure what the end game really is, will the reciprocal tariffs just be a negotiating platform or are they really all here to stay?

Lets see what tomorrow brings