In the wake of seemingly unending trade negotiations between the U.S. and China, the unease felt by outdoor brands and retailers is mounting.
At the Outdoor Retailer trade show in Denver Wednesday, KPMG’s trade and customs practice spoke to a packed room of industry insiders about the current period of trade disruption, and what it means for their businesses.
According to the group, the situation shows no signs of resolving quickly. Nearly 18 months into a volatile situation that has involved tariff implementations, rollbacks, and daily tweeted threats, brands are beginning to recognize that some level of uncertainty could become the new normal.
That view was shared by KPMG’s Amie Ahanchian, managing director of trade and customs services at the firm.
“We strongly believe this will continue throughout the rest of the year, and most likely into the foreseeable future regardless of who wins the next election,” she said.
The president is not just using the tariffs as a tool in trade policy, KPMG analysts said, he’s wielding them as a way to impact foreign policy as a whole.
Pointing to the recent tariff threats levied against Mexico as a result of the immigration crisis at the border, analysts opined that Trump’s tariff strategy goes beyond what’s been seen in previous administrations, and has broader implications to national security.
While the administration reached a Phase One deal with China in December that was signed into law this month, the agreement—which indefinitely suspends List 4B from taking effect—is still being leveraged as a kind of bargaining chip.
If China doesn’t abide by its commitments, these taxes will snap back into place, analysts said.
The impact of the trade disruption is pervasive across industries, and has put massive pressure on brands and their supply chains.
American companies and their overseas partners are leaving no stone unturned when it comes to reducing landed costs. Streamlining production processes, rethinking materials and diversifying manufacturing away from China are some of the solutions outdoor brands have been using to offset damages.
While many brands have espoused a wait-and-see approach when it comes to completely moving their operations or investing in new programs to combat the tariffs’ impact, Ahanchian argued that developing strong internal compliance programs could represent the most impactful strategy.
According to KPMG’s research, 80 percent of companies that were successful at mitigating 80 percent or more of their tariff liability have invested heavily in what they characterize as “world class” compliance expertise.
“I think some companies are still not taking any action,” Ahanchian told Sourcing Journal. “Thinking that the situation will resolve itself through the right administrative channels is probably the biggest lost opportunity.”
Some companies have been more conservative about deviating from their current strategies and building out new departments around an unknown conclusion. But maintaining the same holding pattern could result in lost profits.
“Now, 18 months later, they are starting to feel the impact” of the tariffs, Ahanchian said, adding, “We’ve seen from our study that if you had a compliance program and strategy, you would have achieved some measure of savings.”
In the likelihood of continued uncertainty, she recommended that outdoor brands continue to monitor their important transactions globally.
“Know your data, analyze and assess, and understand that there’s no one-size-fits-all solution—every transaction flow will likely have a different mitigation strategy,” she said.