Why China is blacklisting Calvin Klein and Tommy Hilfiger after Trump's tariffs
Calvin Klein and Tommy Hilfiger are caught in the middle of a budding US-China trade war.
China's Ministry of Finance placed PVH, the parent company of the two American clothing brands, on its 'unreliable entities list,' essentially a blacklist of companies. It was part of a broad package of economic measures the Chinese government announced targeting the United States following President Donald Trump's implementation of 10% tariffs on all Chinese imports.
A Chinese Ministry of Commerce spokesperson said Tuesday that it found PVH discriminated against and interfered with the operations of Chinese companies, though the spokesperson failed to provide specifics. China also added US biotech company Illumina to the blacklist.
Being added to the 'unreliable entities' list could bar PVH from doing business in China or lead to fines or other penalties, experts say.
'Going after PVH is notable because it's the first time a consumer brand was targeted' with the 'unreliable entity' designation, said Sam Ide, a vice president who specializes in China at the Asia Group, a business consulting firm. Previously, the Chinese government had added US defense companies to the list.
PVH criticized the decision and said it would work with Chinese authorities to resolve the situation.
PVH, like all US retailers, prohibits direct or indirect sourcing from China's far western Xinjiang province. The US began banning all goods produced in the region during President Joe Biden's administration over forced labor concerns. Human rights groups say Uyghurs and other predominantly Muslim minorities have faced a raft of human rights abuses in the region, including being placed in mass internment camps.
The Chinese government may be retaliating against the company for its refusal to source cotton from Xinjiang, which has been linked to forced labor of Uyghur minorities. In September, Beijing said it was investigating PVH for 'violating normal market transaction principles' by boycotting cotton sourced from Xinjiang.
China has described the facilities as 'vocational training centers' and claimed in 2019 that such centers had been closed. Officials have consistently denied all allegations of human rights abuses in Xinjiang.
PVH has a 'significant enough China presence, but it also wasn't going to have big economic ramifications,' Ide said.
It's not clear why the Chinese government targeted PVH specifically, but Ide noted PVH 'checks a few boxes' and the company isn't as big as Nike or other popular US brands in China, so there would be fewer job losses and less of a fallout if PVH shut down in the country.
Restrictions on PVH's business in China would be a blow to the company.
In 2023, China contributed 6% of PVH's revenue and 16% of its profit. Calvin Klein has a physical presence in virtually every Chinese province.
'China is an important growth engine,' PVH CEO Stefan Larsson said on an earnings call in April. 'We continue to focus on driving overall brand awareness, especially in China, where both Calvin and Tommy are under-penetrated.'
CNN's Juliana Liu and Simone McCarthy contributed to this article.
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