If you kayak, ski, ride a bicycle, hike, camp or anything of the sort in Colorado, the cost of your equipment could soar before the end of the year.
Among the industries that could take a hit from the latest Trump administration announcement of another 25% on goods from China is Colorado’s outdoor recreation industry.
Gail Ross, the chief operating officer at Krimson Klover, stays up late at night these days, worrying about what’s about to happen to the small Boulder women’s wear company.
The Trump administration announced on May 13 it would put virtually all imports from China under a 25% tariff — about $300 billion of goods annually.
Krimson Klover is a wholesaler of women’s knitwear, what it calls sustainable or “slow” fashion — sweaters and other products made from Merino wool and other natural fibers that the company’s website says are always in style.
The company employs eight to 10 in Boulder, plus contract designers and sales reps. But the clothing is manufactured in China.
The latest round of tariffs — known as the “fourth list” — targets just about everything imported from China. That includes agricultural products, live animals and processed; textiles, including footwear; vehicles; and firearms. Little will be excluded.
“Every product we make is on the fourth list,” Ross said.
Exactly when those tariffs go into effect is still a big question. If it’s Aug. 1, the company can probably get its factories to move up production so that the fall 2020 line is “in the water” (shipped) ahead of time, Ross pointed out.
But if it’s July 1 — or worse, if the products have to be at U.S. ports by then — “we’re screwed,” she said.
Krimson Klover priced the products they will sell for fall 2020 last October. Sales reps sold them until March at those prices. The factories are making the clothes at those same prices.
What happens to those prices with an additional 25% tacked on?
Ross said they haven’t decided yet. One option is to split it three ways, with the company, factory and the customers taking a third. That’s a price hike consumers will pay in about three to five months, Ross said.
“China is paying for [these tariffs] as much as Mexico is paying for the border wall,” she said.
Another option is to start looking outside China for factories, and while the company is exploring that option, it isn’t an easy one. The machinery to make sweaters doesn’t exist in the United States, she said. Travel to those countries — primarily in East Asia — is very costly.
Instead of a minimum order of 300 that they can get in China, another country may require 1,200 or more. That cuts into the variety in the product line, she said.
“If people start moving [manufacturing] to other countries, China better think long and hard on whether they want to play this game,” Ross warned.
“We’re a small brand that doesn’t want to go out of existence because of this stupid [trade war],” she added. “These aren’t essential products” that can sometimes be spared the tariffs. “People will be shocked” at the higher prices.
That story is being repeated all over Boulder and throughout Colorado, which has embraced the outdoor recreation industry and recently persuaded the Outdoor Industry Association to move to Boulder.
Amy Roberts, executive director of the Outdoor Industry Association, said in a letter sent to President Donald Trump on Wednesday that the group appreciates “the administration’s commitment to negotiate an agreement with China that will address long-standing concerns about China’s industrial policies and protect U.S. intellectual property.”
But more tariffs will “deliver a devastating blow to the $887 billion outdoor recreation economy and the 7.6 million American jobs it supports,” Roberts wrote.
Roberts pointed out there is no “viable domestic production” of products such as hiking boots, polar fleece jackets, ski helmets, ski jackets, sports bags and backpacks. Manufacturers are now paying an estimated $750 million annually in import tariffs. Raising the tariffs again on these and other outdoor gear such as kayaks, camp chairs, stoves and bicycles will “cut into an already thin profit margin,” she wrote. That threatens jobs and could force the closure of small- and medium-size businesses.
Outdoor recreation isn’t alone in worrying about the pain to come, of course; the impact of tariffs on agriculture is well-known but will not be as great of a concern in Colorado, according to Shawn Martini of Colorado Farm Bureau.
The fourth list doesn’t add agricultural products as much as it raises the tariffs on commodities that were already targeted, he said.
Colorado exports corn, wheat, beef and beef hides to China, with wheat exports at about $400 million per year. Colorado ranchers send a lot of beef hides to China, where they are tanned and turned into consumer products. But the beef export market to China was relatively new and never had a chance to get started before the trade war launched, Martini said.
The bigger concern for Colorado agriculture is ratification of NAFTA 2.0, he added. Colorado exports far more agricultural products to Mexico and Canada and that agreement is of more interest right now.