U.S. President Donald Trump announced a policy for imposing reciprocal tariffs on imported goods, suggesting that the business strategies of domestic fashion corporations such as Hansei Industry, Sae-A Trading, and Youngone may change.
On Feb. 2, local time, the U.S. government announced that a reciprocal tariff rate of 46% will be applied to products from Vietnam exported to the U.S. A rate of 32% will apply to products from Indonesia, while a rate of 34% will apply to those from China. Products from Bangladesh will face a tariff of 37%. All of these rates are higher than the 25% applicable to Korea.
According to the distribution industry on the 3rd, fashion corporations with production facilities in Southeast Asia are scrambling to prepare countermeasures in response to the announcement of reciprocal tariff rates by the Trump administration. Most domestic fashion corporations have production facilities in Southeast Asia, including Vietnam, due to issues like labor costs.
These corporations produce clothing based on orders from branded fashion companies and take intermediate profits (margins). The issue is that they cannot directly make decisions to raise consumer prices due to the tariff increase.
A fashion industry official noted, "Our strengths have been timely delivery, delicate craftsmanship, high quality, and efficient pricing, but there are concerns about tariff damage," adding, "We are contemplating the room for price negotiations and other countermeasures."
Hansei Industry operates 15 factories in Vietnam for clothing sewing, fabric processing, and dyeing. It also has production facilities in Indonesia. Its major clients include U.S. retailers such as Target, Walmart, Gap, and Old Navy.
Sae-A Trading manufactures products for fashion brands such as Zara and Mango. Most of its factories are located in Southeast Asia and Central America. Youngone, which produces items for brands like The North Face, Lululemon, and Patagonia, operates factories in Bangladesh and Vietnam.
Securities analysts predict a slowdown in profits for these corporations. Although fashion corporations have prepared alternatives domestically, the situation is considered far from complete. Sae-A Trading acquired the U.S. sports apparel company 'Tegra' last year, while Hansei Industry acquired the U.S. textile manufacturing company 'Textolini' last year.
Jung Ji-yoon, a researcher at NH Investment & Securities, said, "Concerns about consumption slowing due to U.S. tariff imposition will delay order recovery." On that day, Hansei Industry's stock price closed at 9,850 won, down 8.54% from the previous day. Youngone's stock price fell by 10.83%, recording 44,050 won.