Investment Rating - The industry investment rating is "Positive" and maintained [5] Core Insights - Deckers reported revenue of $1.43 billion for FY2026Q2, a year-on-year increase of 9%, aligning with market expectations [3][4] - Gross margin improved by 0.3 percentage points to 56.2%, driven by product price increases, improved product mix, favorable currency fluctuations, and cost-sharing on tariffs [3][4] - Net profit margin increased by 0.3 percentage points to 18.7%, supported by a decrease in the effective tax rate [3][4] Revenue Breakdown - By brand, UGG and HOKA revenues grew by 10.1% and 11.1% respectively, while other brands saw a decline of 26.5% [4] - Direct-to-Consumer (DTC) and wholesale channel revenues were $3.9 billion and $10.4 billion respectively, with DTC showing a slight decline of 0.8% [4] - Revenue from the U.S. decreased by 1.7%, while international markets saw a growth of 29.3% [4] Inventory and Guidance - Inventory increased by 7% year-on-year to $840 million, attributed to proactive stockpiling before tariff hikes [4] - The company expects FY2026 revenue to reach $5.35 billion, a 7% increase year-on-year, with a gross margin of approximately 56% [4]

Core Insights - Goldman Sachs economists report that by the end of this year, U.S. consumers will bear more than half of the costs associated with President Trump's tariff actions, specifically 55% of the tariff costs [1] - The report indicates that U.S. businesses will absorb 22% of the tariff costs, while foreign exporters will take on 18% through price reductions, and 5% will be avoided [1] - The economists note that due to the time required for price adjustments, U.S. businesses may currently be shouldering a larger share of the costs [1] Economic Impact - Tariffs have already caused a 0.44% increase in core personal consumption expenditure prices in the U.S. this year, with potential inflation rates rising to 3% by December, significantly above the Federal Reserve's 2% target [1] - Goldman Sachs has revised its expectations regarding the impact of tariffs, previously estimating that U.S. consumers would bear about 22% of the costs as of June, but now projecting this figure to rise to 67% [2] Political Response - The White House spokesperson stated that while U.S. consumers may face a transitional period due to tariffs, the ultimate cost will be borne by foreign exporters [1] - In response to the tariffs, businesses are diversifying and relocating supply chains, including moving production back to the U.S. [1] - President Trump has criticized Goldman Sachs for their previous predictions regarding market reactions and tariffs, asserting that they have been wrong in their assessments [3]

Core Viewpoint - Chinese exporters appear to have strong bargaining power in trade with the U.S., bearing only 9% of the cost burden from tariffs imposed by President Trump earlier this year, contrary to U.S. officials' claims of a victorious stance in the global tariff situation [1][3]. Group 1: Cost Distribution Analysis - U.S. importers are caught in the middle of the supply chain, unable to fully pass on costs to the end market or exporters, leading them to compress profit margins as a response [3]. - A regression analysis comparing shipping volumes, tariff rates, and changes in U.S. import prices indicates that from April to July, the average price of goods imported from China decreased by 2.4%, while actual tariffs increased by 27 percentage points [3][6]. - The estimated cost burden on Chinese exporters is significantly lower than the global average of 40%, with U.S. importers expected to bear half of the costs and U.S. consumers covering the remaining 8% to 10% [5]. Group 2: Comparative Tariff Burden - ASEAN, Japan, and the EU are expected to bear a much larger share of tariff costs, with ASEAN and Japan estimated to shoulder 20% and 37% respectively [6]. - The 9% tariff rate on Chinese goods is considerably lower than the 66% rate reported by some U.S. retail giants to their Chinese suppliers, indicating that Chinese firms have managed to limit their share of the tariff burden [6]. Group 3: Future Implications - The tariff costs are projected to gradually impact U.S. consumer inflation as measured by the Consumer Price Index (CPI), with estimates suggesting a potential CPI increase of about 1 percentage point and a core CPI increase of approximately 1.1 percentage points if actual tax rates remain between 16% and 17% [6]. - The main factors influencing future cost distribution will be whether exporters can further reduce prices and whether importers can continue to absorb cost pressures [6].

Core Viewpoint - The article discusses the unexpected resilience of the US stock market and inflation despite concerns over tariffs and the Federal Reserve's interest rate decisions, suggesting that the market's fears may be misplaced [2][5]. Group 1: Tariff Impact on Inflation - The impact of tariffs on inflation has been underestimated due to a focus on the end effects rather than the transmission process, which allows for a gradual adjustment [3][9]. - The actual tariff rate is currently at 10.6%, significantly lower than the theoretical rate of 16-17%, indicating that the immediate impact on consumer prices has been limited [7][9]. - Tariff costs are primarily absorbed by exporters and importers, with consumers only bearing 8-10% of the costs, which further dilutes the immediate inflationary impact [16][18]. Group 2: Transmission Delays and Cost Sharing - The transmission of tariff costs to consumer prices is slow, with delays of 2-3 months due to logistics and customs processes [11][12]. - The share of taxable imports has increased, but the overall impact on inflation remains controlled due to trade agreements and exemptions [12][19]. - Inventory accumulation has provided a buffer against immediate price increases, allowing businesses to manage costs more effectively [12][19]. Group 3: Market Reactions and Future Outlook - The market's concerns about tariffs and inflation have created a divergence between expectations and reality, presenting potential investment opportunities [5][6]. - The Federal Reserve's interest rate decisions will be influenced by how much of the tariff burden is passed on to consumers, affecting corporate profit margins and inflation metrics [5][19]. - The article emphasizes the importance of understanding the distribution of tariff costs among exporters, importers, and consumers to gauge future market conditions [19][22].

Core Viewpoint - The burden of tariffs will directly determine the pressure on the U.S. economy, with the average profit margin of sampled companies being dragged down by 1.2% due to tariff costs, placing greater pressure on producers [1][18]. Tariff Impact on Inflation - The actual effective tariff rate in the U.S. has risen to 10.6%, with theoretical effective rates potentially reaching 16-17% [2][6]. - Concerns about inflation due to increasing tariffs have not materialized as expected, with the Consumer Price Index (CPI) remaining below investor expectations for the past four months [4][6]. Corporate Responses to Tariff Pressures - Companies are adopting two main strategies to mitigate tariff pressures: price adjustments on products and supply chain negotiations [11][12]. - Price increases are more common for optional and high-end products, while essential goods see more cautious price adjustments due to lower price elasticity [13][14]. Supply Chain Adjustments - Companies are negotiating with suppliers and adjusting supply chains to reduce reliance on imports from China, with many shifting production to other countries [15][16]. - The import share from China has significantly decreased, from 13.4% in 2024 to 7.1% by June 2025, while imports from Taiwan and Vietnam have increased [17]. Sector-Specific Insights - In the automotive sector, manufacturers like General Motors and Tesla are absorbing significant tariff costs, with GM's tariff cost as a percentage of revenue reaching 2.3% [19]. - Retailers, particularly those focused on essential goods, are more cautious in passing on tariff costs due to their already low profit margins [20]. Demand Trends - There is a noted downward pressure on demand, particularly for durable goods, with some consumers making preemptive purchases to avoid future price increases due to tariffs [21].

Group 1 - Goldman Sachs analysis indicates that as of June, 64% of tariff costs are absorbed by U.S. companies, 22% by U.S. consumers, and 14% by foreign exporters [1] - Tariffs have caused the core Personal Consumption Expenditures (PCE) price index to rise by 0.2 percentage points as of June, with an expected additional increase of 0.66 percentage points for the remainder of the year [1] - The core PCE inflation rate is projected to reach 3.2% year-on-year, but would moderate to 2.4% when excluding tariff impacts [1] Group 2 - Early earnings reports convey mixed signals regarding profit margin outlook, with companies announcing only slight price increases so far [2] - Companies facing significant tariff impacts are raising prices more substantially, while those unable to pass on costs may experience pressure on profit margins [2] - Some companies are leveraging accumulated inventory to mitigate the impact of tariffs on their profit margins, with the inventory-to-sales ratio for S&P 500 constituents remaining stable [2]