`

Lids, other baseball cap sellers about to feel impact of tariffs

October 24, 2018

President Donald Trump’s trade war with China appears set to increase the price of yet another all-American icon—the baseball cap.

As the World Series gets under way this week with a coastal battle between the Boston Red Sox and the Los Angeles Dodgers, new tariffs imposed by the Trump administration mean many baseball fans could soon be paying as much as 25 percent more for their favorite team’s caps.

According to the American Headwear Alliance, which represents producers such Zionsville-based Lids and Massachusetts-based ’47 Brand, the vast majority of caps sold in the U.S. are imported from overseas. Of those, 89 percent came from China last year, said Jim Day, a spokesman for the alliance.

A 10 percent tariff on headwear was included in a list of new import taxes that went into effect last month on thousands of product categories worth some $200 billion in annual trade. The administration has said those tariffs will increase to 25 percent come Jan. 1.

The Trump administration is imposing tariffs in part to encourage American manufacturers to come home as well as gain leverage in trade negotiations with Beijing that remain largely stalled.

“Billions of dollars are, and will be, coming into United States coffers because of Tariffs,” Trump tweeted on Tuesday. “If a country won’t give us a fair Trade Deal, we will institute Tariffs on them. Used or not, jobs and businesses will be created. U.S. respected again!”

Quick move

Day says that the reality for baseball cap makers is not that simple. Like much of the garment industry, the production of baseball hats is something that “left the United States decades ago.” And moving production away from suppliers with which American companies have had relationships for years is not easy.

“This is not a manufacturing supply chain that you can move on a dime,” he said.

The only real way to deal with the tariffs is to let them eat into profits or raise prices. “Collectively between the manufacturers and the consumers we are going to have to share increased costs,” Day said. “Prices will increase, volumes will decrease and as a result jobs are at risk.”

Those jobs, he said, include the finishing and customized decorating that now happens in the United States. It’s the kind of work needed to celebrate a team that has won the playoffs or, soon, the World Series.

Like many other industries, ball cap makers are seeking an exclusion from the new tariffs, something the administration has already said will not be forthcoming for any product.

Kershaw, Betts

There are at least some highly-prized baseball caps that won’t be subject to the tariffs: Those on the heads of stars like Dodgers pitcher Clayton Kershaw or Red Sox right-fielder and American League MVP favorite Mookie Betts.

New Era Cap, which is the official supplier of headwear to Major League Baseball, said in a statement that all caps worn by Major League players on the field during games are manufactured in the U.S.

But the company does expect to be impacted by the tariffs more broadly, and that might involve shifting production rather than raising prices.

“Like many other U.S. companies, New Era Cap is continuing to evaluate the impact that the tariffs, which went into effect on Sept. 24, are going to have on its headwear products, some of which are manufactured in China,” it said. “New Era maintains a robust global supply chain and sources product from a number of countries in addition to China.”

ADVERTISEMENT

Recent Articles by Bloomberg News

Comments powered by Disqus