/A Winter-Coat Heavyweight Gives Trump’s Trade War the Cold Shoulder

A Winter-Coat Heavyweight Gives Trump’s Trade War the Cold Shoulder

PORTLAND, Ore. — Columbia Sportswear has spent years designing ski jackets and mountain climbing boots to face up to the components: wind, rain, snow and, more and more, tariffs.

Located on a sprawling campus adorned with hanging canoes, the 80-year-old retailer has lengthy protected its outside gear from the whims of Washington by partaking in what the firm calls “tariff engineering” — adjusting its merchandise to minimize import taxes on supplies from exterior the United States like rubber soles, zippers and waterproof nylon.

But now Columbia worries that its method is below menace from a president whose commerce technique leaves little room for American firms that make and promote merchandise globally.

Mr. Trump’s use of tariffs as a cudgel to revitalize manufacturing in the United States is forcing adjustments throughout giant multinational firms, although they might not all the time be the adjustments the president seeks. Harley-Davidson and Micron are moving production to factories in Europe or parts of Asia, while other companies have put off expansion plans amid trade uncertainty.

At Columbia, the response is to lean heavily on the company’s long experience in navigating the thicket of trade restrictions it has faced in the United States and abroad. Every fleece vest and waterproof glove stamped with the Columbia logo is manufactured abroad, and the company has come to rely on a system of pairing its designers with its team of trade experts, who recommend work-arounds that can help an item of clothing circumvent tariffs.

In a conference room filled with samples, Jeffrey W. Tooze, Columbia’s vice president for global customs and trade, showed how a small change in design can mean big money for a given product.

The addition of a super-thin sheath of fabric to the sole of a boot or shoe can help circumvent an existing 37.5 percent tariff on rubber soles imported into America. A fabric sole, by contrast, is taxed at 12.5 percent. (Customers find that the fabric wears off within days, revealing the rubber sole beneath.)

A water-resistant jacket triggers a 7.1 percent tariff, while a jacket that has not been waterproofed gets hit with a 27.7 percent tariff. A jacket filled at least 10 percent, by weight, with down, brings about a tariff of only 4.4 percent.

Those distinctions don’t reflect national security or economic concerns — they are the result of long-past lobbying campaigns intended to protect or exempt certain manufacturers. Recognizing them, and designing around them, has become part of Columbia’s corporate culture since Mr. Tooze joined the company in 2001.

“It’s part of the thought process, part of the creative thinking, part of the D.N.A.,” he said.

What Columbia is not doing, to any large degree, is bringing production jobs to the United States, as Mr. Trump would like.

Tim Boyle, Columbia’s chief executive, said in a recent interview that there was nothing the president could do to entice the company to make its products in the United States, where costs would be higher and apparel manufacturing expertise has withered through decades of outsourcing.

Mr. Boyle said the firm emulated another Oregon retailer, Nike, adopting the approach that it should “design, market merchandise from a central location — America, Portland, whatever — and make it where you should make it in the world and sell it everywhere in the world.”

Today, just under 40 percent of Columbia’s business is outside the United States, and all of its products are made abroad. It sells heavily to Asia, Europe and Canada. It has a joint venture in China and is in the process of buying out its Chinese partner. Vietnam is its largest supplier. A quarter of its footwear comes from China.

But companies like Columbia say they cannot adjust the way they do business on the fly to deal with policy changes, particularly when they are not settled. For instance, Mr. Trump has dangled the threat of additional tariffs on China while also saying a compromise could be reached. He plans to meet with President Xi Jinping of China for a high-stakes meeting at the G-20 in Buenos Aires later this month. And while the new tariffs are predicated on trade law, they have come about through executive, not congressional, action and could easily be undone by an administration that looks more kindly on global trade.

Thomas B. Cusick, Columbia’s chief operating officer, said the company has received its entire fall shipment already, as well as the “lion’s share” of merchandise for the Christmas season. In addition, it has bought all its products for next spring and reserved factory capacity for its fall 2019 line. Any changes it makes in response to moves out of Washington would not go into effect until 2020 — and that would mean large investments that the company would make only if they were certain to pay off in the long run.

Nearly every large American retailer is in a similar situation: 98 percent of the footwear bought by Americans is made overseas, and 97 percent of clothing sold in the United States is produced in other countries.

This migration to Asia has been happening since the ’60s,” Mr. Boyle said. “And so everybody who made investments in machines to make fabric or extreme, you know, plastics to make nylon or any kind of textile products — all those investments have been in Asia. All the technology.”

Along with the factories, the manufacturing expertise has moved overseas.

“It’s one thing to design a shirt like you’re wearing,” Mr. Boyle said. “You can sketch that out on a piece of paper. But to make it fit somebody, that’s a technical expertise in tailoring that doesn’t exist here anymore. You could come up with some stuff that nobody could wear.”

Mr. Boyle conceded that if Mr. Trump does hit China with more tariffs — and Columbia is not immediately able to find a way around them — the company will have no choice but to charge more, despite its long expertise in navigating trade winds.

“The prices will go up — we’re going to pass those along,” he said. “We have no other option.”

Source link Nytimes.com

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