The ongoing tariff war is riling the outdoor industry, with gear makers and brands deploying a variety of strategies to handle the Trump administration’s plan to raise tariffs on more than $200 billion worth of Chinese-made products to 25% from 10%.
The additional tariffs on things like backpacks, sports bags, ski gloves, kayaks, bikes, camp chairs and camp stoves “will further raise costs for outdoor manufacturers, suppliers and retailers and cut into already thin profit margins,” reads a letter the Outdoor Industry Association sent to President Donald Trump on Thursday.
Outdoor gear makers large and small are preparing to absorb a financial hit on their China-made products arriving stateside this summer, most of which are already sold to retailers ready to stock shelves for this fall.
Many brands are accelerating a long-planned shift out of China as production costs in the maturing country rise and Trump tinkers with tariffs as a tool to protect U.S. intellectual property interests.
If the Trump threats reach fruition, manufacturers will spike costs for 2020 products as much as 15 percent.
Right now they are galvanized in lobbying the White House to consider the impact on small outdoor businesses and the rural communities where those businesses are often based when waging an economic battle with the world’s manufacturing powerhouse.
Here’s a quick look at what four Colorado outdoor gear companies are doing as the tariff war escalates:
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Salewa North America
Boulder-based Salewa North America is bracing for a blow to its apparel revenue. While the company’s Dynafit skis and boots, Wild Country climbing equipment and Salewa shoes are not made in China, the company’s Dynafit and Salewa clothing and hats are and could see increased tariffs.
Later this summer the company will be receiving its fall 2019 orders from China. It’s already sold those products to retailers. Salewa priced the goods anticipating a 10% tariff. And now they will be hit with a 25% tariff. The company is pricing its spring 2020 apparel with that 25% tariff in mind.
“But we can only raise prices to the level that the market will support. The price is only so elastic,” said Drew Saunders, the head of Salewa North America. “This will hurt us financially in the short-term and is causing uncertainty in the longer term.”
Saunders was among the Outdoor Industry Association members who lobbied the Trump Administration to keep tariffs low for outdoor products, citing the potential to injure small businesses with already low yields.
“It feels like there is a bigger agenda about trying to correct some of the behaviors of China, which honestly, if you asked the people on the OIA committee and from the brands, ‘Are they interested in making those corrections with China?’ They would say ‘Yes, we want to protect intellectual property,’ but I think the concern is with the tools being used to do that,” Saunders said.
Yes, Saunders agreed that eventually the increased tariffs could pinch China’s manufacturing industry as more businesses explore sourcing outside of the country. But that’s a long-term play. Right now, the cost of the tariffs is carried by the small companies that produce in China and the customers who buy their products.
“We are trying to diversify our supply chain away from China for many reasons as part of a broader initiative for the company, but that takes time. It’s not something you can do overnight,” he said.
MORE: China tariffs are translating into higher prices and strategic shift for the outdoors industry
Hestra Gloves
The 83-year-old Swedish Hestra Gloves company recently moved its U.S. headquarters from Golden to a new $5 million, 27,000 square-foot facility in Arvada. Hestra USA president Dino Dardano said the company has been shifting its glove production from China over to Vietnam and Hungary in recent years, with a plan to be fully out of China in the next three to five years. The increase in tariffs will hasten the process, he said.
For this fall, with orders already inked with retailers, the tariff increase to 25% on leather gloves will cost the company about $200,000, Dardano said. Now, the company is adding an asterisk to its pricing lists, noting that increased tariffs could raise retailer costs for the popular ski gloves, costs that will be transferred over to customers. Dardano expects retail costs could rise 10% under the tariffs.
The company is planning to send a letter to Washington lawmakers explaining the impact to its business and customers. The idea of producing the gloves in the U.S. to revive domestic manufacturing, which is part of Trump’s tariff rhetoric, will not work for Hestra, Dardano said.
“It is so cost-prohibitive to produce in the U.S. If we made our gloves here, they would be $250 to $300 and up. The cost of labor is just so expensive here,” Dardano said. “We struggle in the Front Range staffing our facility here.”
Flylow Gear
Dan Abrams, the founder of Colorado-born Flylow Gear, tried to import all his products for the upcoming season early so he could avoid the threatened tariffs. If his team had not ordered 50,000 of Flylow’s popular gloves from the factory in China, he would have been forced to raise prices when he sold to retailers. Abrams also shifted production of Flylow’s top-selling items — like its Baker Bibs — to Vietnam for both better quality work and anticipation of the Trans Pacific Partnership, the multinational trade agreement that was to be the world’s largest free-trade deal before Trump withdrew in 2017.
“That fell through, but now the move to Vietnam will save us,” Abrams said.
So while the tariffs may climb to 25%, the move to production outside China will help Abrams keep the cost of his top-selling items from climbing that much in the next year — maybe 10% to cover the increased tariffs from his China-made gear.
“For fall ‘19 we have $1.7 million coming from China and $1.8 million coming from Vietnam and we already imported our gloves, so we are really on the hook for an additional $250,000 in duties. Which sucks, but we can handle that,” Abrams said. “Then for fall 2020, we will have to increase prices.”
RovR
Tom DeFrancia started selling his roto-molded, rolling RovR cooler / hauler in the winter of 2017. Assembled in Colorado with some parts made in China, RovR isn’t part of the most recent tariffs but could be if Trump delivers on his threat to include everything imported from China. DeFrancia says he has less leeway to raise his cooler prices — three models priced from $369 to $449 — than larger companies.
So right now he’s just hoping the tariff war ends before it reaches his doorstep.
“I’m watching this stuff like a hawk and trying to maneuver as best as I can. I’m hoping they figure it out,” DeFrancia said. “There’s a lot of blustering right now, but a lot of people and businesses are being affected.”