Trump's tariff threat: Walmart, Nike's Chinese suppliers put on notice

Trump's latest tariff treat on imports from China ensnares some of the country's most successful manufacturing companies

Some of China’s biggest manufacturers that supply US multinationals from Walmart to Nike find themselves in US President Donald Trump’s crosshairs as his administration discusses new import tariffs.

The US is considering taxing imports from shoes and clothing to consumer electronics, putting on the hook companies including Yue Yuen Industrial Holdings and Li & Fung that help fuel the about $450 billion in Chinese goods imported to America annually. Chinese manufacturers won’t be the only ones hurt in a trade war, as their close relationships as suppliers to American brands will likely create a ripple effect.

“Our greatest fear is a trade war,” said Eric Li, the owner of Huizhou Baizhan Glass, which has a factory in Guangdong province and makes glass lampshades for Home Depot and Lowe’s Cos. “I hope Trump realises that everything has a price. Americans also have things they need to sell to China and the world, so he should think of the consequences.”

Source: Bloomberg

Many Chinese manufacturers are part of the global supply chain. Li & Fung, which sources clothes and toys for retailers, counts Walmart and Macy’s as customers, while Yue Yuen supplies Nike and Under Armour.

Yue Yuen generates about 25 per cent of its sales in the US, while Li & Fung relies on the US for almost two-thirds of revenue, according to Bloomberg data. The American Apparel and Footwear Association said that some 98 per cent of shoes and 97 per cent of clothing sold in the US is imported. Most of that manufacturing comes from China.

Companies that have products assembled in China, such as Apple Inc., may be hurt. It’s also not clear how tariffs might affect a borderless company like Samsonite International SA. The Hong Kong-listed company has headquarters in Mansfield, Massachusetts, and uses Chinese factories to make some of its travel luggage.