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The U.S. and China slapped each other with a fresh round of tariffs Monday and Moody’s has laid bare its potential impact on the fashion sector.

Among the companies that stand to be affected include G-III Apparel Group, according to credit ratings agency. That’s because the business, which owns DKNY and produces goods under license for Calvin Klein, Tommy Hilfiger and Karl Lagerfeld, generated around 88 percent of its 2017 revenue in the U.S., and purchased around 65 percent of its inventory from China.

Other companies set to be impacted are footwear firms Caleres Inc., Payless Inc. and Wolverine World Wide Inc. Caleres, for example, made 94 percent of its 2017 sales in the U.S., while 68 percent of its footwear was manufactured in China.

In contrast, Levi Strauss & Co. and VF Corp., whose brands include Lee and The North Face, are well positioned from a diversity standpoint, with less than 20 percent of their products sourced from China.

“The impact of the new tariffs will vary by company, depending on how much companies source products from China, the degree they can diversify away from China, their pricing flexibility and how they adjust product designs or cut costs elsewhere in their businesses,” Elena Duggar, associate managing director at Moody’s.

“Most companies will look to pass along at least some of the additional cost to consumers, including on premium products where the consumer may have less price sensitivity. Larger companies with stronger margins and balance sheets, such as Wolverine and PVH Corp. could decide to absorb higher costs in an effort to gain market share.”

She added that companies will try to save on costs by adjusting product designs to achieve a desired cost and more broadly, will aim to cut costs within their organizations.

The tariffs will start at 10 percent, before rising to 25 percent on Jan. 1. The list includes certain apparel accessories such as handbags and leather gloves, textiles and yarns, leathers and cotton.

As promised, the Chinese government also imposed 5 to 10 percent tariffs on $60 billion worth of American goods entering China in a retaliatory move, but stressed that it was still willing to enter talks.

That may not be it as more tariffs could soon be on their way, with President Trump stating that he has earmarked another $267 billion worth of Chinese imports that he can target if the administration feels it need to take further action. If this materializes, it will mean that all Chinese products entering the U.S. will be subject to tariffs.

“Large, rated apparel manufacturers derive more than half of their revenue from the U.S.; therefore, these additional tariffs, if imposed, would be credit negative for the U.S. apparel and footwear sector because of the higher cost of goods sold for the U.S. divisions of companies that import goods from China,” Duggar added.

As for China’s big e-commerce companies, Moody’s believe they have low exposure to today’s tariffs, with cross-border sales typically accounting for less than 5 percent of revenue for Inc. and Vipshop Holdings Ltd.

Alibaba Group, meanwhile, has a revenue exposure of between 5 and 10 percent, both direct and indirect, to the U.S. so Moody’s estimates that it can easily diversify its revenue exposure to other regions.

Last week, Jack Ma, Alibaba’s outgoing chairman, warned that the trade war between the U.S. and China could last for two decades.

He cautioned that it could lead some Chinese companies to leave China in the medium term in a bid to avoid tariffs and that he doesn’t believe a change in the U.S. president would resolve the situation, as there is a need for new trade rules and for the World Trade Organization to be upgraded.

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