WEBVTT - Harris, Trump Election Impact on Consumer

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<v Speaker 1>Hello and welcome to the Votesenbergs podcast hosted by Bloomberg Intelligence,

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<v Speaker 1>part of Bloomberg's investment research department, with five hundred analysts

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<v Speaker 1>and strategists bringing across all major world markets. Our coverage

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<v Speaker 1>outlooks on more than ninety industries and one hundred market industries, currencies,

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<v Speaker 1>and commodities. In this podcast series, we talk about the

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<v Speaker 1>intersection of business policy and law. The forthcoming Conversation is

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<v Speaker 1>part of the Bloomberg Intelligence Election series, covering the industry

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<v Speaker 1>and company impacts of the upcoming election. On October twenty second,

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<v Speaker 1>Holifrom and Punam Goyle discuss what the election might mean

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<v Speaker 1>for the US consumer sector. If you have any questions,

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<v Speaker 1>please feel free to reach out to any of us

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<v Speaker 1>on the Bloomberg terminal. Good morning, everyone will get started.

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<v Speaker 1>Welcome and thank you for joining this webinar. We're my

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<v Speaker 1>colleague gol. I will discuss implications of the next election

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<v Speaker 1>on consumer companies. My name is Holly from I'm a

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<v Speaker 1>litigation analyst. A few quick administrative notes. This presentation will

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<v Speaker 1>be recorded and available for playback. Questions will be taken

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<v Speaker 1>at the end of the call, and you can ask

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<v Speaker 1>questions by submitting them in the Q and A box.

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<v Speaker 1>Feel free to reach out to any of us directly

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<v Speaker 1>after the webinar if the question is not answered. And

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<v Speaker 1>just a quick word about Bloomberg Intelligence. We are the

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<v Speaker 1>investment research platform on the Bloomberg terminal, providing in depth

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<v Speaker 1>research on industries, companies, and markets and delivering key data

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<v Speaker 1>from bi analysts in their given industry. So the outcome

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<v Speaker 1>of the US presidential election could have important implications for

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<v Speaker 1>consumer companies, including apparel companies, auto manufacturers, and grocery chains.

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<v Speaker 1>President Trump and Vice President Harris have somewhat different views

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<v Speaker 1>about the applications of tariffs, which could have multi billion

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<v Speaker 1>dollar implications. The other area of the campaigns seem to

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<v Speaker 1>be focusing on is grocery prices. So I will start

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<v Speaker 1>with tariffs, and then I'll talk about potential price gouting

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<v Speaker 1>bills in a Harris administration, and then I'll pass it

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<v Speaker 1>over to my colleague, senior US retail analyst Punum Gooyle,

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<v Speaker 1>who will talk more about potential business implications of terrafs.

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<v Speaker 1>So tariffs have become a focal point of the campaign.

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<v Speaker 1>We think tariffs are likely under either Harris or Trump,

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<v Speaker 1>given precedent and what the candidates have been saying on

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<v Speaker 1>the campaign trail, but we think tariffs will be far

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<v Speaker 1>more far reaching under a Trump presidency. So what are

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<v Speaker 1>the proposals? Trump has said he would impose ten to

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<v Speaker 1>twenty percent across the board tariffs on imports into the

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<v Speaker 1>US and sixty percent on those from China, and in fact,

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<v Speaker 1>recently he has threatened to increase terrists by as much

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<v Speaker 1>as one hundred percent on Chinese goods and two hundred

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<v Speaker 1>percent on Chinese electric vehicles. The sixty percent tariffs on

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<v Speaker 1>goods from China put impact apparel companies like Nike and Adidas, which,

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<v Speaker 1>according to the estimates source, eighteen and fourteen percent of

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<v Speaker 1>their footwear from China. Automakers like Pulster and Vovo could

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<v Speaker 1>also be impacted since some of their evs are made

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<v Speaker 1>in China, and companies like Mulu, Lemon and Alberts may

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<v Speaker 1>also be affected by the proposal of ten to twenty

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<v Speaker 1>percent across the boer tariffs on imports given they largely

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<v Speaker 1>make products in Vietnam. So Harris has criticized Trump's plan,

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<v Speaker 1>saying it would cost the average household thousands of dollars

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<v Speaker 1>a year and increased costs, with some estimating the poor

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<v Speaker 1>household costs could be around twenty six hundred a year.

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<v Speaker 1>But we said targeted tariffs are likely under Harris too,

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<v Speaker 1>and we think that because of the following so. When

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<v Speaker 1>Trump was in office, he imposed tariffs on hundreds of

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<v Speaker 1>billions of dollars worth of goods from China, including many

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<v Speaker 1>on steel and aluminum. The Biden administration kept many of

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<v Speaker 1>those tariffs and even increased some, and recently the Biden

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<v Speaker 1>administration pleaded pledged terariffs ranging from seven point five to

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<v Speaker 1>one hundred percent on solar sales, evs, syringes, steel, and

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<v Speaker 1>other goods from China. We doubt Harris is going to

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<v Speaker 1>depart from the Biden administration's tariffs, so we see tariffs

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<v Speaker 1>continuing under either president. The other thing Biden has said

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<v Speaker 1>he intends to do is eliminate a deminimus exemption for

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<v Speaker 1>goods that cost under age hundred dollars if anyone is

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<v Speaker 1>wondering what that dominimus exemption is. By statute, the Treasury

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<v Speaker 1>Secretary can prescribe an exemption from terrorists for goods that

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<v Speaker 1>cost less than eight hundred dollars. Packages under the limit

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<v Speaker 1>enter terror free if they're addressed to individual residences. According

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<v Speaker 1>to Reuters, about one billion goods qualified for this exemption

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<v Speaker 1>last year. Excuse me n Reuters reported in September that

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<v Speaker 1>the Biden administration is trying to tackle this loophole that's

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<v Speaker 1>been created and used by online Chinese companies that ship

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<v Speaker 1>direct to consumer. I've been asked whether Biden has the

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<v Speaker 1>power to eliminate the diminist exemption, and I think he does,

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<v Speaker 1>and then a judicial challenge would fail. And that's because

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<v Speaker 1>under the same law that grants the Treasury Secretary the

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<v Speaker 1>right to exempt a DIMINISHNUS good from the terrorists, the

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<v Speaker 1>Treasury Secretary also was given the power to make an

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<v Speaker 1>exception to the exemption when needed to protect revenue or

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<v Speaker 1>to protect against unlawful imports. The statute is pretty clear,

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<v Speaker 1>and for that reason, we don't think a legal challenge

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<v Speaker 1>of pose would succeed. And though the terraffs that Trump

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<v Speaker 1>proposes are probably broader than any other president before him,

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<v Speaker 1>I think his terrorists would also survive potential judicial challenges.

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<v Speaker 1>The reason why I think so is because Congress has

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<v Speaker 1>delegated substantial authority to the President to impose harris via

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<v Speaker 1>various statutes, and courts that have presided over challenges generally

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<v Speaker 1>have sided with the President and read the statutes very broadly. So.

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<v Speaker 1>For example, Section three oh one of the Trade Act,

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<v Speaker 1>also known as Relief from Unfair Trade Practices Act, allows

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<v Speaker 1>the US to impose trade sanctions on foreign countries that

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<v Speaker 1>violate US trade agreements or unreasonably burning US commerce. Basically,

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<v Speaker 1>the lawgerans the Office of the US Trade Representative power

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<v Speaker 1>to investigate and take actions to enforce US rights under

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<v Speaker 1>trade agreements. During his administration twenty eighteen, Trump used that

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<v Speaker 1>section to justify terraffs on Chinese goods after the Trade

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<v Speaker 1>Representative concluded that China was engaging in unfair trade practices

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<v Speaker 1>with respect to in US intellectual property. Similarly, Section two

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<v Speaker 1>thirty two of the Trade Expansion Act, another law, gives

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<v Speaker 1>the President discussion to investigate and then impose trade restrictions

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<v Speaker 1>on certain products found to threaten national security. This one

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<v Speaker 1>has been used to justify tariffs on steel and aluminum,

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<v Speaker 1>for example. Also of the International Emergency Economic Powers Act

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<v Speaker 1>gives the president power to restrict international trade on national

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<v Speaker 1>securities grounds to advance US economic interests. To use this power,

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<v Speaker 1>the president has to declare a national emergency, but the

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<v Speaker 1>president has brought authority to do that. So, for example,

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<v Speaker 1>in May twenty and eighteen, Trump announced his intention to

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<v Speaker 1>use the statue to impose a five percent tariff on

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<v Speaker 1>all goods from Mexico to take effect the next month

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<v Speaker 1>until quote the illegal migration crisis is alleviated. And finally,

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<v Speaker 1>under section three thirty nine of the Teriff Act, the

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<v Speaker 1>President can impost terraces of up to fifty percent and

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<v Speaker 1>imports from countries discriminating against US commerce. So, as I said,

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<v Speaker 1>courts have given presidents a lot of difference when it

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<v Speaker 1>comes to trade actions, and challenges for the most part,

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<v Speaker 1>have failed. So for example, the Federal Circuit, which is

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<v Speaker 1>the appeals court that handles appeals from the International Trade Court,

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<v Speaker 1>upheld the Trump administration Section two thirty two terroriffs on

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<v Speaker 1>steel imports and then affirm the International Trade Court's determination

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<v Speaker 1>that that section did not violate the constitution separation of powers.

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<v Speaker 1>The Appellate court explicitly said that courts have a very

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<v Speaker 1>limited role in reviewing the president's trade actions that are discretionary.

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<v Speaker 1>It will only find conduct umlawful if it involves a

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<v Speaker 1>clear misconstruction the statute or significant procedural violation. So the

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<v Speaker 1>delegation of power from Congress is very broad, So can

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<v Speaker 1>Congress limit that terrort authority. Congress can try to limit

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<v Speaker 1>these statutes by enacting another law, but they need a

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<v Speaker 1>two thirds majority to overrule a presidential veto which neither

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<v Speaker 1>party is likely to get in the next election. So

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<v Speaker 1>for that reason, we think terrists are likely in our

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<v Speaker 1>both administrations. They are unlikely to be curved by either

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<v Speaker 1>the judicial or legislative branch. Turning now to price gouging.

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<v Speaker 1>Vice President Kamala Harris has made reducing grocery prices a

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<v Speaker 1>focal point of her campaign. She mentioned it in her

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<v Speaker 1>Economic Address in August and during the presidential debate in September.

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<v Speaker 1>So currently there's no federal price gouging laws. States have them,

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<v Speaker 1>which have been successful to varying degrees. But we think

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<v Speaker 1>Harris may propose federal legislation that lifts from a senateville

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<v Speaker 1>Massachusetts Senator Elizabeth Warren proposed in twenty twenty four, so

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<v Speaker 1>what a Senator learned bill due The bill would make

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<v Speaker 1>it unlawful to charge a quote grossly excessive price for

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<v Speaker 1>products apart from certain exceptions, including the seller's increased costs,

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<v Speaker 1>or were the seller's annual gross income is less than

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<v Speaker 1>one hundred million dollars. The bill declares a presumptive violation

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<v Speaker 1>during a market shock like a global health emergency, where

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<v Speaker 1>there's unfair market leverage, or would the seller increase the

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<v Speaker 1>price over the average price for which sold the good

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<v Speaker 1>one hundred and twenty days preceding the market shock. If

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<v Speaker 1>there's a violation, the bill imposes penalties of as much

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<v Speaker 1>as five percent of annual revenue if the seller that

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<v Speaker 1>committed the violation has quote unfair leverage. An unfair leverage

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<v Speaker 1>may be found where the seller earned at least one

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<v Speaker 1>billion dollars in gross revenue in the US during the

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<v Speaker 1>twelve month period preceding the sale, or aware, for example,

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<v Speaker 1>the seller discriminies between equal trading partners, engages in unfair

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<v Speaker 1>deceptive practices, or has a dominant position in commerce. If

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<v Speaker 1>a similar bill is reintroduced during a Harris presidency in past,

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<v Speaker 1>we think grocery retailers could be impacted. Albertson Kroger by

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<v Speaker 1>way of example, Currently I have profit margins of one

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<v Speaker 1>point four to two point one percent. For example, selling

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<v Speaker 1>prices fall short of the rise in their costs by

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<v Speaker 1>three percent according to the Bureau of Economic Analysis, so

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<v Speaker 1>that legislation could be very impactful if the violation is found.

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<v Speaker 1>But we give Senator Warren's bill a thirty percent chance

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<v Speaker 1>of passing this year because it hasn't made it out

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<v Speaker 1>of Senate committees, and we give the bill the same

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<v Speaker 1>chance of passing if Harris wins the presidency because Democrats

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<v Speaker 1>are unlikely to secure a filibus recruit majority in the Senate. Also,

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<v Speaker 1>if it is passed in its current form, we think

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<v Speaker 1>of potential judicial challenge on grounds as void for vagueness

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<v Speaker 1>would be successful because the bill allows the Federal Trade

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<v Speaker 1>Commission to define quote grossly excessive price using any metric

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<v Speaker 1>it deems appropriate. So arguably the statue gives inadequate notice

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<v Speaker 1>to potential violators. But unless such a pricing price gouging

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<v Speaker 1>bill is passed, the USFDC lacks power to address product

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<v Speaker 1>pricing unless deceptive marketing or unfair competition exists, so we

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<v Speaker 1>don't think a bill is likely to pass, though the

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<v Speaker 1>companies still continue to face this risk. So with that

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<v Speaker 1>I'll turn over to my colleague Puno to talk more

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<v Speaker 1>on tariffs.

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<v Speaker 2>Thank you Holly. Good morning everyone. So, as we know,

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<v Speaker 2>the tariffs are being proposed by either party, but clearly

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<v Speaker 2>more severe from the Trump administration. So what does this mean.

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<v Speaker 2>It's definitely not good news for retail. Retail sales and

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<v Speaker 2>margins will both be pressured regardless of the magnitude of

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<v Speaker 2>tariff increases that could come up over the next year. Now,

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<v Speaker 2>the interesting thing is that right now tariffs are largely

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<v Speaker 2>placed on Chinese imports, and over the last five years

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<v Speaker 2>or longer, there has been an intent to diversify exposure

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<v Speaker 2>to Chinese manufacturing by retailers and brands where they've actually

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<v Speaker 2>started to shift their production into other Asian countries. So

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<v Speaker 2>that's good news, which means that the exposure is less

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<v Speaker 2>than it was the last time when Trump had administered tariffs.

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<v Speaker 2>But the bad news is under the Trump administration, as

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<v Speaker 2>Holly mentioned earlier, he is also proposing that other countries

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<v Speaker 2>are too similarly tariffed as they were in the last

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<v Speaker 2>round ten to twenty percent. So in that case, regardless

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<v Speaker 2>if that was to happen, regardless of where you have migrated,

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<v Speaker 2>the exposure, the impact is still very similar to what

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<v Speaker 2>it was the last round. So while it's nice to

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<v Speaker 2>see that, you know manufacturing has diversified. If in fact

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<v Speaker 2>all Asian countries or most Asian countries are taxed and

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<v Speaker 2>tariff such as India, Indonesia, Bangladesh, Vietnam, you know these

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<v Speaker 2>are becoming to be large manufacturing hubs. Today we will

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<v Speaker 2>have negative impact. Under our Harrison administration, the impact could

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<v Speaker 2>be less because the magnitude of the increase is clearly lower.

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<v Speaker 2>But that said, there is still a headwind in place. Now.

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<v Speaker 2>The biggest question is who's exposed. And Holly mentioned a

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<v Speaker 2>few of the names, but just to put one thing

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<v Speaker 2>into perspective, the US largely does not produce its own

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<v Speaker 2>apparel and footwear, so the apparel and footwear industries do

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<v Speaker 2>have a large exposure to manufacturing outside of the US.

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<v Speaker 2>Could we bring manufacturing back to the US, Yes, but

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<v Speaker 2>it would take decades. We no longer have the scaled labor,

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<v Speaker 2>we no longer have the manufacturing plans, and we just

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<v Speaker 2>don't have the infrastructure to support manufacturing of apparel and

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<v Speaker 2>footwear at the scale that it has moved abroad. So

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<v Speaker 2>how much do we consume from China clearly a lot.

0:12:28.760 --> 0:12:32.600
<v Speaker 2>We consume twenty four percent of apparel and thirty four

0:12:32.720 --> 0:12:37.640
<v Speaker 2>percent of footwear from China alone. Now that has moderated

0:12:38.760 --> 0:12:43.400
<v Speaker 2>from thirty one percent of footwear before and fifteen percent.

0:12:43.920 --> 0:12:46.600
<v Speaker 2>So I would say that, you know, when I think

0:12:46.600 --> 0:12:49.439
<v Speaker 2>about the space, I think there is clearly a headwind

0:12:49.440 --> 0:12:52.319
<v Speaker 2>and a bigger headwind in place from the Trump administration

0:12:52.559 --> 0:12:56.680
<v Speaker 2>going into effect versus the Harris But nonetheless, retailers will

0:12:56.720 --> 0:12:59.840
<v Speaker 2>be forced to take up prices. They will see a

0:13:00.040 --> 0:13:03.880
<v Speaker 2>margin hit to the bottom line because there's it's unlikely

0:13:03.920 --> 0:13:05.800
<v Speaker 2>that they could do a one to one increase passing

0:13:05.880 --> 0:13:09.360
<v Speaker 2>along the entire cost to the consumer. So when we

0:13:09.480 --> 0:13:11.800
<v Speaker 2>think about this and we think about who's exposed, I'm

0:13:11.800 --> 0:13:14.440
<v Speaker 2>going to go sector vice sector. At BI, we have

0:13:14.760 --> 0:13:18.880
<v Speaker 2>various senior analysts that cover the consumer space, and many

0:13:18.920 --> 0:13:21.240
<v Speaker 2>of us have written to the impact it has on

0:13:21.360 --> 0:13:23.840
<v Speaker 2>each of the companies that we cover. You can find

0:13:23.880 --> 0:13:27.079
<v Speaker 2>all this research on BI. But just to start with

0:13:27.480 --> 0:13:30.240
<v Speaker 2>the apparel and footwear space. You know, when we think

0:13:30.240 --> 0:13:34.160
<v Speaker 2>about the largest footwear manufacturer retailer, Nike comes to mind,

0:13:34.600 --> 0:13:37.360
<v Speaker 2>and the company itself gets twenty nine percent of its

0:13:37.400 --> 0:13:41.400
<v Speaker 2>footwear and twenty six percent of its apparel came from

0:13:41.480 --> 0:13:45.439
<v Speaker 2>China in twenty sixteen. Now they have moderated that exposure.

0:13:45.760 --> 0:13:49.000
<v Speaker 2>It now gets eighteen percent of its footworth, so more

0:13:49.040 --> 0:13:53.040
<v Speaker 2>than a ten percentage point decrease from before, and sixteen

0:13:53.120 --> 0:13:58.560
<v Speaker 2>percent from apparel, and that's also about a ten percentage

0:13:58.559 --> 0:14:03.479
<v Speaker 2>point decrease making strides, but nonetheless they're going to be exposed.

0:14:03.880 --> 0:14:07.439
<v Speaker 2>When you think about Adidas, the second largest footwear manufacturer,

0:14:08.000 --> 0:14:13.680
<v Speaker 2>Adida sources from China alone in twenty twenty three fifteen

0:14:13.720 --> 0:14:16.600
<v Speaker 2>percent of its apparel and fourteen percent of its footwear.

0:14:16.960 --> 0:14:21.360
<v Speaker 2>That's also down. It was twenty nine percent for apparel

0:14:21.400 --> 0:14:24.320
<v Speaker 2>in twenty fifteen and twenty three percent of footwear in

0:14:24.400 --> 0:14:28.160
<v Speaker 2>twenty fifteen, So you know Adidas. The one nice thing

0:14:28.200 --> 0:14:30.880
<v Speaker 2>that we see in Adidas is that they are now

0:14:31.040 --> 0:14:34.080
<v Speaker 2>using and many of the footwear companies, they are using

0:14:34.160 --> 0:14:38.320
<v Speaker 2>what's produced in China for China. So companies have the ability,

0:14:38.800 --> 0:14:42.320
<v Speaker 2>if additional tariffs were to be imposed, to take what's

0:14:42.360 --> 0:14:46.080
<v Speaker 2>manufactured in China and distribute it to regions outside of

0:14:46.120 --> 0:14:48.920
<v Speaker 2>the US. That way, they don't have to have terraffs

0:14:49.000 --> 0:14:51.800
<v Speaker 2>and utilize the other regions to fulfill a lot of

0:14:51.800 --> 0:14:55.320
<v Speaker 2>the demand for the US. A company that has not

0:14:55.440 --> 0:14:58.360
<v Speaker 2>reduced tariffs in the footwear space, but rather sorry not

0:14:58.400 --> 0:15:03.560
<v Speaker 2>tariff's exposure has increased it is Puma. So Puma's exposure

0:15:03.640 --> 0:15:07.280
<v Speaker 2>to China has gone from twenty six percent to thirty percent,

0:15:07.600 --> 0:15:10.680
<v Speaker 2>and that's intentional because they want to fill local demand.

0:15:11.040 --> 0:15:13.760
<v Speaker 2>They are making a much bigger push in the Asian countries,

0:15:13.840 --> 0:15:16.760
<v Speaker 2>notably China, and they want to use inventory meat in

0:15:16.800 --> 0:15:20.880
<v Speaker 2>the region for the region. Now, companies in the at

0:15:21.000 --> 0:15:23.680
<v Speaker 2>leisure space that don't have as big of an exposure

0:15:23.800 --> 0:15:27.960
<v Speaker 2>are companies like lul Lemon, All Birds, and VF Corp.

0:15:28.640 --> 0:15:31.960
<v Speaker 2>They don't have exposure to China, are very little exposure,

0:15:32.400 --> 0:15:35.200
<v Speaker 2>and it's interesting to see the companies that don't because

0:15:35.240 --> 0:15:37.920
<v Speaker 2>you know, as you're looking at who gets elected, you

0:15:37.960 --> 0:15:40.680
<v Speaker 2>can kind of segregate the ones with more exposure versus

0:15:40.680 --> 0:15:44.640
<v Speaker 2>the ones with little to no exposure. And they don't

0:15:44.680 --> 0:15:47.120
<v Speaker 2>have exposure to China, but they do have exposure to

0:15:47.160 --> 0:15:49.360
<v Speaker 2>the other Asian countries. So we still have to remember

0:15:49.440 --> 0:15:52.040
<v Speaker 2>that there is a possibility that they too would still

0:15:52.080 --> 0:15:57.240
<v Speaker 2>be impacted should tariffs extend beyond China. Additional teriffs. Now,

0:15:57.280 --> 0:16:00.840
<v Speaker 2>when you move over to the apparel space. The companies

0:16:00.840 --> 0:16:05.160
<v Speaker 2>that are largely exposed to China manufacturing are companies like

0:16:05.240 --> 0:16:09.440
<v Speaker 2>Oxford Industries, as my colleague highlights, forty one percent of

0:16:09.480 --> 0:16:13.440
<v Speaker 2>its merchandise is from China in twenty twenty three. Aritzia,

0:16:13.480 --> 0:16:17.440
<v Speaker 2>another company, source thirty to thirty five percent. So both

0:16:17.440 --> 0:16:20.920
<v Speaker 2>of these retailers are clearly more exposed should tariffs be

0:16:21.040 --> 0:16:25.600
<v Speaker 2>increased next year. And now when we look at, you know,

0:16:25.640 --> 0:16:29.920
<v Speaker 2>within apparel brands, who's less exposed. The companies that were

0:16:30.000 --> 0:16:35.600
<v Speaker 2>highlighted include Gap, Levi's, Victoria's Secret, and Abercrombie. They too

0:16:35.760 --> 0:16:39.200
<v Speaker 2>have been shifting away from China since twenty eighteen, and Gap,

0:16:39.280 --> 0:16:43.840
<v Speaker 2>for example, we estimate ATBI imported about ten percent or

0:16:43.960 --> 0:16:49.240
<v Speaker 2>less from China, and that was also ten percentage points

0:16:49.280 --> 0:16:51.680
<v Speaker 2>below what it did in twenty eighteen of about twenty

0:16:51.720 --> 0:16:57.640
<v Speaker 2>one percent. Levi's, interestingly, just imports under one percent, and

0:16:57.720 --> 0:17:00.760
<v Speaker 2>that's down from eight percent five years ago. So you're

0:17:00.800 --> 0:17:04.159
<v Speaker 2>starting to see the theme that companies have diversified, they

0:17:04.320 --> 0:17:07.720
<v Speaker 2>are moving away from China. But I still want to

0:17:07.760 --> 0:17:10.720
<v Speaker 2>remind everyone that if tariffs are imposed on other countries

0:17:10.720 --> 0:17:14.720
<v Speaker 2>outside of China, the impact this round could be more

0:17:14.800 --> 0:17:17.760
<v Speaker 2>pronounced than it was the last round, because not only

0:17:17.800 --> 0:17:21.240
<v Speaker 2>do you have increasing tariffs from China, but you also

0:17:21.400 --> 0:17:25.000
<v Speaker 2>have tariffs being added to other Asian countries. So the

0:17:25.119 --> 0:17:28.399
<v Speaker 2>combined impact is actually going to be bigger than it

0:17:28.480 --> 0:17:31.120
<v Speaker 2>was the last round should both of those scenarios play

0:17:31.119 --> 0:17:36.199
<v Speaker 2>out under the Trump administration. Ralph Lauren also said that

0:17:36.240 --> 0:17:39.399
<v Speaker 2>they've brought down their exposure to a high single digit

0:17:39.400 --> 0:17:42.320
<v Speaker 2>percentage point coming into the US from China, and that's

0:17:42.320 --> 0:17:46.760
<v Speaker 2>stands substantially from thirty three percent in twenty eighteen. Now

0:17:46.760 --> 0:17:50.040
<v Speaker 2>when we move over into the hardline space or analyst

0:17:50.080 --> 0:17:54.640
<v Speaker 2>highlights that ELF Beauty is probably the most exposed when

0:17:54.760 --> 0:17:59.760
<v Speaker 2>I think across retail to China because eighty percent comes

0:18:00.280 --> 0:18:03.840
<v Speaker 2>China alone. They beat Hasbro and Mattel, which is now

0:18:03.920 --> 0:18:08.359
<v Speaker 2>fifty percent down from sixty to seventy percent prior. On

0:18:08.440 --> 0:18:11.359
<v Speaker 2>the home hardline section, William Sinoma and our Ah are

0:18:11.400 --> 0:18:14.879
<v Speaker 2>also exposed at twenty to twenty five percent, down also

0:18:14.960 --> 0:18:19.200
<v Speaker 2>about from thirty five to fifty percent prior. So you know,

0:18:19.240 --> 0:18:22.879
<v Speaker 2>when you think about the space collectively, I would say

0:18:22.960 --> 0:18:27.760
<v Speaker 2>the headwind is there under any situation, clearly greater under

0:18:28.119 --> 0:18:32.760
<v Speaker 2>Trump presidency and even greater should tariffs be imposed to

0:18:32.840 --> 0:18:36.679
<v Speaker 2>countries outside of China, because you know, we have this

0:18:36.840 --> 0:18:39.920
<v Speaker 2>notion that many companies have diverse fight out of China,

0:18:40.040 --> 0:18:43.520
<v Speaker 2>so the exposure is less and therefore the impact should

0:18:43.520 --> 0:18:47.159
<v Speaker 2>be less. But if Vietnam is going to be tariff,

0:18:47.200 --> 0:18:52.280
<v Speaker 2>even if it's at ten percent, it's going to magnify.

0:18:52.440 --> 0:18:55.440
<v Speaker 2>It's going to magnify the impact that retailers are going

0:18:55.440 --> 0:18:58.600
<v Speaker 2>to face and margins will be hit greater. Our parel

0:18:58.640 --> 0:19:03.160
<v Speaker 2>analyst estimates the basis to fifty basis point impact from

0:19:03.160 --> 0:19:05.840
<v Speaker 2>additional terroriffs, but I think you know the impact could

0:19:05.880 --> 0:19:10.080
<v Speaker 2>be much much higher should both situations play out where

0:19:10.080 --> 0:19:13.320
<v Speaker 2>other countries are also text with that, I'll pass it

0:19:13.359 --> 0:19:15.280
<v Speaker 2>back to Holly and thank you.

0:19:16.160 --> 0:19:18.960
<v Speaker 1>I don't see any open questions, so again, if if

0:19:19.000 --> 0:19:21.520
<v Speaker 1>any if any of you have questions after the call,

0:19:21.600 --> 0:19:25.520
<v Speaker 1>you can I be either of us and we'll be

0:19:25.520 --> 0:19:26.200
<v Speaker 1>happy to chat