If the United States goes ahead with its threat to impose a 5 per cent tariff on all imports from Mexico, the decision would reportedly hurt US denim manufacturers. The United States, which imports nearly all its apparel, gets more men’s blue jeans from Mexico, the eighth largest supplier of apparel to the US, than it does from any other country.
The US imported about $691 mn worth men’s blue jeans from Mexico last year compared to $227 mn worth from China, according to US government statistics. A new tariff would obviously raise the prices for all US apparel brands manufacturing such jeans in Mexico and then importing them. In all probability, the companies will pass it on to consumers by raising prices rather than absorbing the expense, according to a top US business news organisation. Additional levies on US firms for imports would lead to higher inflation hurting consumer spend and that could hurt sales for key denim makers like Levi, American Eagle, Wrangler and Lee if they manufacture denim in Mexico, according to a Senior Retail Analyst with Bloomberg Intelligence.
Levi’s, while filing for its IPO in February, pointed to changes in US trade policies as a potential risk to its business, particularly the moves President Trump made to raise tariffs on Chinese imports and the possibility of changes in policy towards Mexico.