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Which Home Goods Chains Stand to Gain From China Tariff Rollback?

Bed Bath & Beyond, Wayfair, Williams-Sonoma and RH stand to see the greatest benefit if the Biden administration decides to roll back Trump-era tariffs on China-made goods.

Announced in May, the U.S. Trade Representative’s (USTR) statutory four-year review of the China 301 tariffs appears to be drawing to a close, with American Apparel and Footwear Association (AAFA) president and CEO Steve Lamar telling Sourcing Journal movement on the issue could be announced this week, based on the trade group’s conversations with members of the administration and Congress.

Politico, citing former federal officials and others with knowledge of the situation, reported Wednesday that new actions could include a rollback of duties on a small list of goods, the implementation of a new exclusion process and a new Section 301 investigation into China’s trade actions, conducted by the USTR.

In a report published Tuesday, analysts with the investment bank UBS claimed that a “recent conversation with a former White House trade representative” suggested “some roll back of tariffs is likely, especially as the current administration looks to contain inflation.” Based on their conversions with experts, they said they believed it “more likely” a rollback would initially focus on “less strategic products with lower amounts of technology content,” including apparel, home furnishings and sporting goods.

Though many companies have moved sourcing away from China over the past four years, UBS estimated that retailers like Bed Bath & Beyond, Williams-Sonoma and Wayfair “likely” source at least 35 percent of their goods from China, whether directly or indirectly. The bank’s estimates suggest RH sources 34 percent of its goods from the country. Since these companies source a relatively high percentage of products from China, any tariff reduction “should benefit [them] most,” UBS’ analysts concluded.

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The bank estimated that Target, Academy Sports & Outdoors and Dick’s Sporting Goods each source 25 percent of their goods from China. It placed Walmart at 20 percent.

The UBS report predicted that Target would be most likely to pass on any financial benefit from eased tariffs to consumers, followed closely behind by Walmart. It determined that Bed Bath & Beyond, Wayfair, Williams-Sonoma and RH would be less likely to do so than either of the two mega-retailers, but more likely than companies like Dollar General, Dollar Tree, Five Below and AutoZone.

The National Council of Textile Organizations (NCTO) and Central America-Dominican Republic Apparel and Textile Council (CECATEC), as well as a bipartisan slate of senators, have urged Biden and his administration to not lift the Section 301 tariffs. Industry groups, including the AAFA and National Retail Federation, however, have urged tariff reform and suggested ending the duties could lower prices and lessen inflation.