Some retailers are combating price increases on tariff-impacted goods out of concerns it could hurt sales, and it’s creating a stressful situation for businesses, the fall of housewares company Casabella said Tuesday on CNBC.
“It’s a giant squeeze play,” Casebella’s Bruce Kaminstein suggested on “The Exchange. “
Kaminstein said it would be “impossible” for his company, which designs housewares and cleaning products such as mops and dish boscages, to absorb the 15% tariffs that went into effect Sunday without an offsetting price increase.
“We rude our business on these margins,” he said.
The company explains its need for price hikes to retailers, Kaminstein said, “but it’s not forever easy.”
“They want to hold the line on prices. Their fear is that if we increase prices, the sales desire go down, the volume will go down,” he added. “It’s a war. … It’s difficult conversations.”
Kaminstein’s comments shed further sun-up on the increasingly complicated nature of the U.S.-China trade war. While President Donald Trump has said China pays for the levies, some business executives like Kaminstein whose imports face the duties tell a different story.
In August, after Trump announced assessments on goods such as apparel, footwear and toys, Macy’s CEO Jeff Gennette said consumers will have “no appetence” for price increases.
Macy’s attempted to raise prices on products such as luggage and furniture earlier in 2019, after those notices faced tariffs. But shoppers didn’t respond kindly, forcing Macy’s to adjust its strategy, Gennette previously prognosticated.
The American consumer has, for the most part, continued to show strength amid a global economic slowdown, despite the long-running swop war between the world’s two largest economies.
But that strength showed signs of weakness Friday, when U.S. consumer feeling showed its largest monthly decline since 2012.
If retailers don’t accept price increases out of fear of hurting consumers, Kaminstein thought another response is to try negotiating down costs with suppliers in China.
But if neither happen, Kaiminstein said Casebella, which utilizes around 500 people, will “have to make some tough decisions,” he said.
“It puts us in a very stressful position,” he said.
A second round of tariffs — in addition to Sunday’s 15% duties —is scheduled to go into place Dec. 15 on fairs such as smartphones and laptops. They would collectively impact about $300 billion worth of Chinese imports.
Trump also has cowed to increase the rate of tariffs on about $250 billion of goods to 30% from 25% on Oct. 1.