Companies prepare for higher tariffs threatened by Trump

Short Summary:

President-elect Trump's threatened tariffs on Chinese imports are causing significant concern among US companies. The transcript focuses on the impact on the retail sector, specifically highlighting Steve Madden's response of diversifying its manufacturing away from China to countries like Vietnam, Cambodia, Brazil, and Mexico. The increased costs due to tariffs will ultimately be passed on to consumers, leading to higher prices for goods. Economists and executives are divided on the effectiveness and implications of these tariffs, with concerns raised about the potential economic consequences for retailers and consumers alike. Examples of price increases are given (sneakers, toasters, mattresses), and vulnerable retailers like Five Below, Wayfair, and Dollar Tree are mentioned.

Detailed Summary:

The transcript discusses the impending impact of President-elect Trump's proposed tariffs on Chinese goods, focusing primarily on the retail industry.

Section 1: Steve Madden's Response: The segment introduces Steve Madden, a shoe company heavily reliant on Chinese manufacturing (70% of its US sales). Its CEO announced plans to rapidly decrease reliance on China, shifting production to Vietnam, Cambodia, Brazil, and Mexico. This highlights the immediate response of companies to mitigate the potential negative effects of tariffs.

Section 2: The Consumer Burden: The discussion shifts to the ultimate cost of the tariffs. CNBC's senior retail reporter, Courtney Reagan, explicitly states that "the consumer is ultimately going to pay for that increased price," citing examples of price increases for various goods (sneakers, toasters, mattresses). This section emphasizes the inflationary pressure on consumers.

Section 3: Vulnerable Retailers and the Economic Divide: The transcript identifies retailers like Five Below, Wayfair, and Dollar Tree as particularly vulnerable to the tariffs. It also notes that initially, retailers or manufacturers absorb the increased cost, but ultimately pass it on to consumers to maintain profit margins. The segment highlights the existing division among economists and executives regarding the effectiveness and overall impact of the tariffs. The CEO of Steve Madden's statement that the US is not on his list of alternative manufacturing locations underscores the challenges of reshoring.

Section 4: The Intended Impact and Underlying Debate: The transcript briefly touches upon the intended purpose of the tariffs: to increase revenue and encourage domestic manufacturing. However, it emphasizes the ongoing debate among economists and executives about the actual economic consequences. The lack of consensus on the effectiveness of this policy is highlighted.

Notable Quotes:

"the percentage of goods that we source from China to begin to come down more rapidly uh going forward" - Steve Madden CEO.
"the consumer is ultimately going to pay for that increased price" - Courtney Reagan, CNBC.
"the US is not on his list" - referring to Steve Madden's CEO's statement about US manufacturing.