DAVOS, SWITZERLAND — Even a 25% tariff on China would hurt iconic retailer Ralph Lauren (RL).
“It’s a pressure point. But again, I think we can work through it, and we can manage it. I think we’ve lived with tariffs already. It’s not a new concept and we’ve been able to navigate it,” Ralph Lauren CEO Patrice Louvet told Yahoo Finance at the World Economic Forum in Davos, Switzerland.
Trump tariffs lurk as a dark cloud over retailers in 2025.
During his presidential campaign, Trump pitched several ways to up tariffs on other countries. Those included a 10% to 20% tariff on all foreign imports, a 60% to 100% additional tariff on Chinese imports, and a 25% tariff on Mexican imports.
Read more: How do tariffs work, and who really pays them?
Ralph Lauren once relied on China for 50% of its sourcing. Today, that number is close to a mid-single-digit percentage, Louvet disclosed.
It’s unlikely Ralph Lauren could fully exit China to mitigate tariff risk.
“China has some unique expertise in certain categories for us. You know, some of our more sophisticated sweaters are made in China. Some of our more sophisticated footwear is made in China,” explained Louvet.
“I think under duress, we could always find alternatives. And as you can imagine, we’re running all types of scenarios to be prepared. But again, what’s important for us is multiplicity of sourcing options,” Louvet explained.
Tariffs could materially impact apparel companies as a sizable portion of their merchandise is sourced from China due to its low cost of production. But they could also stunt demand as consumers balk at price hikes.
Trump’s proposed tariffs could reduce American consumers’ spending power by $46 billion to $78 billion every year the tariffs are in place, estimates the National Retail Federation (NRF). Consumers would pay $13.9 billion to $24 billion more for apparel.
“It likely translates into higher pricing for consumers,” conceded Louvet.
Apparel company stocks have shrugged off tariff concerns.
Ralph Lauren and North Face purveyor VF Corp. (VFC) shares are up 18% and 19%, respectively, in the past three months. Skechers (SKX) is up 12%, while Uggs maker Decker’s Outdoor (DECK) has tacked on 28%.
“We are not obsessed with tariffs. We are obsessed with our consumer. We’re obsessed with making sure we’re giving him and her an incredible experience around the world,” said Louvet.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram and on LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
