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Uniqlo Ponders US Exit Under Trump’s Tax Plan

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Companies continue to grapple with how to handle President Trump’s America First stance.

Trump has made no secret about the fact that he wants as many goods sold here to be made here as possible. He’s repeatedly threatened businesses looking to offshore production with “big” border taxes. And now that the Administration is turning its attention from healthcare to tax reform, we’ll soon learn how consistent Trump’s actions will be with his rhetoric.

For some companies, the worst-case scenario would be policies like the proposed border adjustment tax or tariffs on imports that would make it all but impossible to sell imported goods into the U.S. Last week, Tadashi Yanai, chairman and president of Uniqlo’s parent Fast Retailing, addressed the possibility in an interview with Japanese newspaper, The Asahi Shimbun. Yanai revealed that if Trump’s policies become so extreme that the company would have to manufacture here, it would signal Uniqlo’s exit from the U.S. market.

“If I was directly told to do so, I will withdraw from the United States,” Yanai told the paper, according the NBC News.

Yanai says its simple math. Production in the U.S. would not allow Uniqlo to offer its range of functional basics at an affordable price.

“Anyone will think that it is an open-and-shut and impossible situation,” Yanai continued. “If [manufacturing products in the United States] is not a good decision for consumers, it is meaningless to do business in the United States.”

The retailer, which launched its first store here New York in 2006, hasn’t had great success in the U.S. thus far. Originally it had planned for as many as 200 stores by 2020 but with missteps in design, messaging and sizing, the company has faltered.

The chain, which operates 48 stores in the U.S. currently, has been shuttering doors here lately but with plans to proceed with a new strategy of placing bigger stores in larger cities rather than suburban mall locations.

Along with a change in tactics in the U.S. market, the company is also taking a page from Zara, promising fresh deliveries every 13 days.

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