by Esther Bendayan | August 1, 2019
In our most recent interactive webinar entitled “How to Navigate Changing Trade Realities,” Arvind Gupta, President at Jesta I.S., discussed global trade strategies and why this topic is so relevant today. New trade tactics, specifically tariffs, are being pursued by the American government to bolster their economy. As a result, many American companies that make and sell products internationally are being forced to adjust their trade strategies and make serious changes to their manufacturing in order to maintain profitability.
Companies affected by tariffs typically change their supply chain processes to allow for more tariff-friendly jurisdictions; alternatively, companies often absorb the higher tariff costs. The most popular option for resolving this issue, however, is to pass the costs along to customers. Although some brands and product categories (men’s and children’s clothing, for example) can typically withstand price increases without an enormous impact on demand, other brands, product categories and items cannot. Passing costs on to customers isn’t ideal because it’s difficult to predict how customers will react. In many cases, shoppers won’t digest the increases easily and will turn to other retailers to meet their needs.
The ideal way to adapt to new tariffs is to understand and leverage tariff engineering. Tariff engineered designs require extensive collaboration between designers and trade experts to engineer products with tariff guidelines in mind. Ultimately, the goal is to mitigate the impact of tariffs. In the following video, Arvind explains how two of the world’s most agile companies, Nike and Columbia Sportswear, modify their product designs to reduce tariffs by as much as 20 percent. This is the most optimal and competitive way to save lots of money, and also to achieve price points and cost goals without compromising the integrity of your products.
Click here to watch a video clip from the webinar to learn more about how these companies reduce the impact of tariffs.
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