China has officially blacklisted PVH Corp., the owner of popular brands like Calvin Klein and Tommy Hilfiger, marking an early consequence of President Donald Trump’s trade war.
The Chinese government added PVH to its “unreliable entities” list, a designation that allows China to impose severe penalties on the company, including fines, restrictions on imports and exports, revoking work permits, and blocking employees from entering the country.
This move comes after months of tension, as China had been investigating PVH for allegedly refusing to source cotton from the Xinjiang region, which has been at the center of global scrutiny due to human rights concerns regarding Uyghur detention camps.
In retaliation for Trump’s recent decision to impose a 10% tariff on Chinese imports, Beijing responded with a series of measures, including blacklisting major U.S. companies and taking a harder stance against the US in trade relations.
PVH in ‘unreliable entities’ list
Being added to the unreliable entities list could severely disrupt PVH’s operations in China, where the company runs dozens of stores.
If China moves forward with enforcement, PVH may be forced to close these stores, halt online sales in the region, and even see its staff members deported.
Additionally, the company’s production, which relies heavily on Chinese factories, might be jeopardized, pushing the company to relocate its manufacturing to other countries to meet demand.
The company’s sales in China represented 6% of PVH’s total revenue and 16% of its earnings before interest and taxes in 2023, with China being a critical hub for manufacturing.
PVH sources about 18% of its total production from China, which poses a major risk to its business operations.
PVH expresses surprise
PVH Corp. expressed its surprise and disappointment over the blacklisting in a statement, reaffirming its commitment to complying with all relevant laws and regulations.
The company also stated its intent to continue working with authorities to resolve the situation positively.
While the full extent of China’s actions remains uncertain, this development underscores the ongoing challenges for US companies navigating the trade conflict between the US and China.
The trade war has already had far-reaching consequences, and now, businesses like PVH may find themselves caught in the crossfire.
The post China blacklists Calvin Klein and Tommy Hilfiger owner PVH Corp—here’s why appeared first on Invezz