Calvin Klein and Tommy Hilfiger are at the center of rising trade tensions between the U.S. and China. Their parent company, PVH, has been placed on China’s “unreliable entities list”, a blacklist targeting foreign firms. The move comes in retaliation for President Donald Trump’s new 10% tariffs on Chinese imports.
Why China Targeted PVH
The Chinese Ministry of Finance accused PVH of interfering with Chinese businesses but did not provide specific details. The decision was part of a broader package of economic countermeasures against the U.S., which also included blacklisting biotech firm Illumina.
Being on China’s blacklist could mean:
- Restricted business operations in China
- Fines or regulatory penalties
- Increased trade barriers for PVH brands
“Going after PVH is notable because it’s the first time a consumer brand was targeted,” said Sam Ide, a vice president at the Asia Group. Previously, China had only placed U.S. defense companies on the list.
Xinjiang Cotton Ban and Possible Retaliation
PVH, like other U.S. retailers, has banned direct or indirect sourcing from China’s Xinjiang region due to forced labor concerns. The U.S. has blocked all imports from Xinjiang since President Joe Biden’s administration, citing human rights abuses against Uyghur Muslims.
In September, China launched an investigation into PVH for allegedly violating “normal market transaction principles” by refusing to source cotton from the region. Analysts believe China’s latest action may be retaliation for PVH’s refusal to engage in Xinjiang cotton sourcing.
China has repeatedly denied human rights violations in Xinjiang, claiming the facilities in the region were vocational training centers that have since closed.
Impact on PVH’s Business
China is an important market for PVH, but the financial hit may be limited. In 2023, China accounted for:
- 6% of PVH’s total revenue
- 16% of its total profit
“China is an important growth engine,” PVH CEO Stefan Larsson said in April. “We continue to focus on driving overall brand awareness, especially in China, where both Calvin and Tommy are under-penetrated.”
However, analysts note that PVH is smaller than brands like Nike in China, meaning its blacklisting is a less disruptive move for China’s domestic economy.
Conclusion
PVH’s placement on China’s unreliable entities list marks an escalation in U.S.-China trade tensions, with fashion brands now caught in the crossfire. While the financial impact may be limited in the short term, the move raises concerns about how future trade restrictions could impact American companies operating in China.
