Hello again! Summer has arrived, and the weather is great. The time for beaches, swimming, barbecues and enjoying the summer and the great outdoors is upon us.
However, we have many issues facing us as we head into the second half of the year. Tariffs are the one major primary concern we have to deal with right now. The Chinese will be facing a 25% tariff on most goods imported into the United States.
Mexican Tariffs & Chinese Imports
As of this writing, we have averted tariffs on Mexican goods for now, which were to start at 5% a month and then increasing each month after that. However, Mexican tariffs remain a real possibility if immigration controls don’t go the way President Trump wants.
We all know that the American consumer will be facing higher costs on Chinese imports. Manufacturers will absorb a portion of the price, but they will have no choice but to pass the balance of the cost onto the consumer. Marcum has been consulting with many of our clients over the tariff increase in cost. The situation is forcing the manufacturers to look for sourcing alternatives in other countries.
Easier said than done!
It takes time to find new factories in other countries, and once you find them, it takes time for these factories to gear up for the extra production, which also requires capital investment. It can take up to a year for production to come flow from new sourcing. Marcum has many clients that have anticipated this; the need to source from other countries and those clients that those who started the process early will have an advantage of getting to market sooner than the late-comers.
Marcum understands that our clients have been dependent upon production from China. This dependency puts importers at cost risk. Time is not on the side of the importers, but those who think long-term can start addressing the sourcing issues. Our clients have been turning to Vietnam, Laos, India and Mexico.
I am confident more countries will become available for meeting the needs of our clients. Marcum is also recommending that our clients work with their Chinese suppliers to share in the tariff cost; it is not possible or realistic to expect to absorb it all yourself. Moreover, don’t think you can pass on all the increased cost to your customers.
The economy is strong in the United States. However, with the tariff increases, there will be a slowdown in the marketplace as uncertainty will play a factor. The Federal Reserve, in anticipation of the slowing, has been sending out signals that we can expect a lowering of interest rates in the second half of the year.
Marcum Retail Symposium
On May 9 at the LA Live Marriott Hotel, Marcum presented a fireside chat with a group of speakers that discussed the future of what we can expect to see for retailers, consumers, and suppliers. Social media, digital 3D printers, influencers, and data privacy laws were some of the key topics covered during our afternoon session.
I want to thank our many sponsors who made this event possible: Our media sponsor was Mann Publications. Our gold sponsors included White Oak Commercial Finance and Global Accounting Advisors. Our silver sponsors included Hilldun Factors, HUB International, Milberg Factors and US Bank. Our bronze sponsors included JP Morgan Chase, CTBC Bank, Mahl & Associates and Thompson Coburn. Our cocktail sponsor was Brutzkus Gubner, and our parking sponsor was CIT.
I also want to take this time to thank our supporting sponsors: The Accessories Council, Apparel News, Big Hairy Dog, California Fashion Association, Diamond Veneer Travel Company, Fashiondex.Com, Gable Tax Consulting Group, The Horowitz Group-Merrill Lynch, Marcum Technology, MMG, Looking Good, Yaya; Marcum Technology, Republic Business Credit and Rosenthal & Rosenthal.
A special thank you to my colleagues at Marcum for all of their support and collaboration in making sure this was a successful event. Marcum would also like to recognize Andrea Kennedy, Karen Giberson, Cindy Krupp, and Gina Bibby, who spent many hours arranging all of our great panelists.
I am already thinking about next year’s symposium and how we can look back over the past year and project what 2020 will look like.
Will the economy continue to grow as we move closer to elections? Will the trade wars be over with China? How much more will technology change the way business is done?
These challenges will keep us guessing, but as I always say, if you’re not having fun, then do something else.
Ron Friedman
Partner
Assurance and advisory services
Marcum LLP
ron.friedman@marcumllp.com
