Aritzia, Canadian Tire and Lululemon are among Canadian retailers moving production out of China
Tariffs and forced labor concerns are prompting companies to reconsider their relationship with China
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While recent headlines have focused on Donald Trump's threatened tariffs on Canadian products, retailers in that country have been considering the potential impact of additional tariffs he has threatened to impose on Canadian goods originating in China.
This could affect Canadian brands that manufacture products overseas and sell them south of the border. This includes Groupe Dynamite, Aritzia, Lululemon and Canadian Tire, all of which were asked about the tariff threats during their recent earnings calls.
"Knowing that there will be a transition in the first quarter of the year, we have already taken steps — I won't get into percentages — but we have already taken steps to move more manufacturing out of China," said Andrew Lutfy, CEO of Groupe Dynamite, during a recent call with investors. Montreal-based clothing company Groupe Dynamite has been expanding in the United States since 2007 and has 109 Garage stores and five Dynamite stores south of the border, according to its latest investor presentation.
The trend of companies moving production out of China is not new. Tensions between the United States and China have been escalating for years, and tariffs that began under the first Trump administration have been maintained under his successor, Joe Biden.
That has prompted companies to make plans to move, and that has only accelerated recently. Shoe maker Steve Madden, for example, said it plans to reduce its China-made products by 40%, up from a previous goal of 10%. AnalysisA period of anxiety in Alberta's oil sector, with possible tariffs from Trump in the coming days
As the Canadian government has matched Sino-US trade restrictions with its own tariffs on Chinese electric vehicles, steel and aluminum, rising geopolitical tensions have prompted Canadian companies to examine their business relationships with China.
"The Canadian business community is getting these signals and understanding that there are potential vulnerabilities in having a significant portion of the supply chain located in China," said business lawyer John Boscariol, a partner at McCarthy Tétrault.
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