H&M Shifts Supply Chain to Morocco Amid US Tariff Concerns

H&M is preparing for possible US customs duties on imports. "For many reasons, we need to create a more regionalized supply chain, both for geopolitical reasons, learning through Covid-19 that we need to create more resilience in our supply chain, and also to support responsiveness and customer offering," said Adam Karlsson, H&M’s chief financial officer, in an interview with Reuters after the retailer’s quarterly results. He added that the potential US tariffs on imports are also pushing H&M to look for suppliers closer to its US market.

According to him, the company had developed scenarios for such trade barriers, but this remains a "concern". "Of course, it’s a factor, and some countries are under closer scrutiny due to trade barriers, and we’re monitoring that as we move forward," Karlsson said, adding that the fact that H&M sources from a wide range of countries was an advantage. He also said the company is looking at the possibility of sourcing more in Central America to serve markets such as the US and Brazil. For Europe, "the group is sourcing more in Turkey and looking to develop its supplier base in Morocco and Egypt," the same source said.

After Mexico, Canada and China, whose tariffs on trade with the United States have jumped from 10 to 25%, US President Donald Trump is preparing his offensive on Europe. "If tariffs go up for everyone, we’ll have to take a relative position (on prices)," Karlsson said. We should position our offering the same way, whether there are tariffs or not.