Fitbit Inc. said it’s shifting manufacturing operations out of China for all of its health trackers and smartwatches to avoid U.S. tariffs on imports from the country.
Starting in January, the company expects those products won’t be of Chinese origin and therefore not subject to import duties, Fitbit said in a statement Wednesday. Fitbit said it will give more details on the financial implications of the move during its third-quarter earnings conference call.
“This is a great example of companies making proactive decisions to mitigate tariff related-risk by, in this case, taking their entire supply chain out of China,” said Tom Forte, an analyst at D.A. Davidson. Others “may choose to follow suit as this trade war gets long and diffuse, and potentially escalates.”
Davidson, who has a buy rating on Fitbit, said the stock market isn’t giving companies enough credit for their efforts to mitigate tariff-related risks. “I expect that as earnings season comes we’ll be hearing a lot more about this from companies.”
Trade negotiators are heading to Washington for talks starting Thursday and China is open to reaching a partial trade deal with the U.S., an official with direct knowledge of the discussions said. The trade talks have failed to make serious headway since negotiations collapsed in early May.