Some retailers resist price increases on tariff-impacted goods, founder of housewares company says

Key Points
  • Retailers are resistant to price hikes out of fear it will hurt sales, but that may hurt businesses, Casabella's Bruce Kaminstein says.
  • The founder of the housewares company says it is "impossible" for it to eat the 15% tariffs on Chinese imports.
  • "It's a giant squeeze play," he says.
Trade strategy needs to be thought out, says housewares' Casabella founder

Some retailers are resisting price increases on tariff-impacted goods out of concerns it could hurt sales, and it's creating a stressful situation for businesses, the founder of housewares company Casabella said Tuesday on CNBC.

"It's a giant squeeze play," Casebella's Bruce Kaminstein said on "The Exchange."

Kaminstein said it would be "impossible" for his company, which designs housewares and cleaning products such as mops and dish brushes, to absorb the 15% tariffs that went into effect Sunday without an offsetting price increase.

"We base our business on these margins," he said.

The company explains its need for price hikes to retailers, Kaminstein said, "but it's not always easy."

"They want to hold the line on prices. Their fear is that if we increase prices, the sales will go down, the volume will go down," he added. "It's a war. ... It's difficult conversations."

Kaminstein's comments shed further light on the increasingly complicated nature of the U.S.-China trade war. While President Donald Trump has said China pays for the tariffs, some business executives like Kaminstein whose imports face the duties tell a different story.

In August, after Trump announced tariffs on goods such as apparel, footwear and toys, Macy's CEO Jeff Gennette said consumers will have "no appetite" for price increases.

Macy's attempted to raise prices on products such as luggage and furniture earlier in 2019, after those items faced tariffs. But shoppers didn't respond kindly, forcing Macy's to adjust its strategy, Gennette previously said.

The American consumer has, for the most part, continued to show strength amid a global economic slowdown, despite the long-running trade war between the world's two largest economies.

But that strength showed signs of weakness Friday, when U.S. consumer sentiment showed its largest monthly decline since 2012.

If retailers don't accept price increases out of fear of hurting consumers, Kaminstein said another response is to try negotiating down costs with suppliers in China.

But if neither happen, Kaiminstein said Casebella, which employs around 500 people, will "have to make some tough decisions," he said.

"It puts us in a very stressful situation," he said.

A second round of tariffs — in addition to Sunday's 15% duties —is scheduled to go into place Dec. 15 on goods such as smartphones and laptops. They would collectively impact about $300 billion worth of Chinese imports.

Trump also has threatened to increase the rate of tariffs on about $250 billion of goods to 30% from 25% on Oct. 1.