ASOS.com: Strategies for Overcoming Tariff Barriers in Expansion

This report examines the challenges posed by tariff barriers to ASOS.com, a UK-based online fashion retailer, as it expands internationally. It discusses the nature of tariff and non-tariff barriers, particularly in the USA and Europe, and their potential impact on ASOS.com's business model. The report highlights issues such as increased costs, reduced competitiveness, and the need for strategic adjustments in light of changing trade policies and regulations. It also touches upon the implications of digital sales tax and the importance of effective global delivery systems and e-commerce localization. The analysis considers ASOS.com's recent sales growth and investment strategies, emphasizing the need for the company to understand and respond to custom-related barriers and market standards to ensure successful international expansion. Desklib offers a range of resources, including similar reports and solved assignments, to aid students in their studies.

Running Head: TARIFF BARRIERS FOR ASOS.com (A UK COMPANY) IN
INTERNATIONAL EXPANSION OF BUSINESS
Tariff barriers for ASOS.com (A UK Company) in the international expansion of business
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TARIFF BARRIERS FOR ASOS.COM 1
Table of Contents
Executive Summary...........................................................................................2
Introduction.....................................................................................................3
Outline of Issues...............................................................................................4
Response........................................................................................................6
Impact...........................................................................................................9
Conclusion and Recommendations......................................................................11
References....................................................................................................14

TARIFF BARRIERS FOR ASOS.COM 2
Executive Summary
The change in the economic conditions across the world have increased the range of trade
tariff towards its products, the considered case of ASOS.com determines that the firm
following an e-commerce model to increase its sales and profits in the markets they are
working towards balancing their business. The company is working in the USA, UK, and
Europe, however, after the implementation of trade tariff by USA’s Trump Administration,
the global economy is on the verge of global war, thus it requires the firm to plan its
strategies following the trade tariffs in the international market as it will help the
organization to expand its business successfully and accomplish its targets successfully.

TARIFF BARRIERS FOR ASOS.COM 3
Introduction
International trade is carried out in collaboration with businesses and government by
putting aside the trade barriers because these barriers create obstacles to sell their products
and services in a foreign market. The key challenges for companies include natural barriers,
tariff barriers, and non-tariff barriers. Natural barriers are physical or cultural for the firm, for
example, marketing lingerie brand in public advertisement medium in UAE or Saudi Arabia
(Ding, Huo, & Campos, 2017). This might create issues for the company on a national level.
It is important for organisations to work to develop an understanding of the market approach
in forming perspective. Language is considered another barrier which is required to be taken
into consideration while planning strategic management (Keck, Hancock, & Nee, 2018).
Tariff Barrier is another element which is imposed by the government of nation on imported
goods; they are charged per unit, which makes the goods more costly for a firm. For many
companies, tariff barriers is a key reason that refrains their management from international
business expansion (Xue, Li, & Pei, 2016).
Non-Tariff barriers include government using other tactics to restrict trade between
the two countries. For example, the government is keen to set quotas for import in a specific
amount of any product. Other barriers include embargoes, buy-national regulations, and
exchange control. However, it is important to discuss different types of tariffs in relation to
the business expansion of ASOS.com in the international market (Zhang, Xia, & Shu, 2016).
ASOS.com is a UK based online fashion and cosmetic retailer founded in 2000 in London,
targeting young adults (ASOS, n.d.). The company is associated with more than 850 brands;
it also has a range of clothing and accessories which is offered to customers across 200
countries using its e-commerce business model from its fulfilment centres in the UK, USA,
and Europe (Ogbor & Eromafuru, 2018). It has been working in the industry since the last
two decades, and it has managed to build a strong brand position among its rivals. The key
operations of the firm are managed by Brain McBride, Nick Beighton, and Anders Holch
Povlsen (which hold 27% stakes of the firm) (Ruiz, 2018).
Currently, the revenue of ASOS.com is £2.4 billion as calculated in 2018, 4386
employees are working with the company to manage its operations. The work domain of the
company is www.asos.com and www.asosplc.com. Since 2013, the company is working
towards expanding its business in Russia and China. In 2014, ASOS.com sponsored McLaren
Formula One team as a marketing tactic. In 2015, the company was declared as the largest

TARIFF BARRIERS FOR ASOS.COM 4
independent online and fashion beauty retailer (Yang & Shen, 2015). Recently, the company
is upgraded its return policies with an easy return process. Currently, ASOS.com is
encouraging social media and digital marketing tactics to promote their products and services
meeting the demands of the company’s stock. In 2018, the management of the Company
declared 58% of its sales happened using mobile delivered (Ogbor & Eromafuru, 2018). The
report aims to discuss the tariff barriers towards the business of ASOS.com in the
international business market. It aims to discuss the trade tariffs in detail to highlight the issue
in detail with an appropriate response to identifying the impact of tariffs towards the business
of the undertaken company.
Outline of Issues
Tariff barriers are a tax imposed by the government of a nation over imported goods;
they are charged per unit or commodity, which increases the value of good over a certain
percentage. Hence, it is sold in the market at high prices; it is the reason that imported
products are considered expansion in comparison to local products (Parboteeah & Cullen,
2017). It is another reason which makes local products more appealing for local customers in
compare to imported products. Furthermore, protective tariffs make imported products less
attractive to buyers in comparison to domestic product (Yousefi, 2015). For example, in the
USA, the protective tariff is imposed on poultry, textiles, sugar, and other imported products.
In Trump Administration, the tariff was imposed on steel and aluminium from other countries
(Keck, Hancock, & Nee, 2018). However, a number of criticism has been given by political
parties such as Congress since 1789, the key arguments include,
- The tariff protect infant industry, it is because it gives the new struggle for the
domestic industry to become global competitors
- Tariffs protect the USA jobs, with the union and other tariffs to keep foreign labour
from the region.
- The tariffs aim in military preparedness and protect the industries and technology in
peacetime important for militants in war event (Yang & Shen, 2015).
However, the issues unfavourable for ASOS.com in trade barriers include,
- It discourages free trade leading towards less competitive advantage to design their
work more efficiently.

TARIFF BARRIERS FOR ASOS.COM 5
- Tariff prices increase the prices of good, which male them less favourable among the
customers. For example, in 2017, the government of the USA imposed a tariff of
approximately 63.86% to 190.71% on Chinese Steel products. The idea behind the
tariff was to offer a fair share to the USA steel manufacturers to conclude
antidumping and ant subsidy probes (Colpan & Cuervo-Cazurra, 2018;).
- In return, the Chinese companies are more likely to impose tariffs on USA products
and services to build negotiation on intellectual property rights and piracy to bog
down (Ding, Huo, & Campos, 2017).
Besides, non-tariff include governments of different companies to use other tools
other than imposing tariffs to restrict their trade (Pedersen & Stucchi, 2014). One such barrier
is import quota which limits the control of imports; this has been done to protect the domestic
market of the region, for example, the USA government has protected its textile industry
using import quotas. In the case of ASOS.com, it is found that the company is working in the
USA, UK, and Europe market to export its products using the e-commerce model (Yang &
Shen, 2015). In Europe, the business of ASOS.com has an open platform to offer their
products and services. However, when it comes to the USA market, it is important for the
company to consider trade barriers under import quotas and tariffs imposed on its products
and services. Working in the European market seems a good option for ASOS.com because it
supports free trade across the members of the European Union (Zhang, Xia, & Shu, 2016). In
regards to the UK, it is found that ASOS.com will also find issues to plan the distribution of
its products and services from the UK to Europe (Colpan & Cuervo-Cazurra, 2018;).
After the regulations and legislation with the EU has been finalised between the UK
and EU, the situation will be cleared for ASOS.com, as it will help the organisation to plan its
supply chain successfully (Zhang, Zuo & Zheng, 2016). Besides, the competition for
ASOS.com in its target market will be high; it is because the government regulations give
domestic manufactures special privilege under the buy-national regulations (Keck, Hancock,
& Nee, 2018). It has been discussed above that the government in the USA has imposed ban
over foreign steel to support its domestic market. It is the reason that ASOS.com has both its
own product line and a support product portfolio of famous clothing retailers around the
world to support its sales and profits successfully (Yousefi, 2015). Recently, ASOS.com has
increased 35% of its sales with approximately £1.9billion and the profits are expected to
grow up to 24% in the USA and Europe. The figures have played an important role in

TARIFF BARRIERS FOR ASOS.COM 6
diverting the attention of ASOS.com towards the international market (Colpan & Cuervo-
Cazurra, 2018;).
In July 2018, ASOS.com booked about 38% and 41% increase in its sales in Europe
and the USA respectively; it might be because of the week position of pounds in the
international market. The international sales of the company are expected to see a
predominant growth in the international market because of its stronghold of management.
The company is considering 2018 as a year of investment to expand its business
internationally with the end goal to improve its market position and achieve its targets
successfully (RAVENDER SEMBHY, 2017). There have been speculations over the policies
required to be taken into consideration by the government on following fixed business rates
and corporation tax, and it is a threat to the stable business of ASOS.com especially
associated with its digital sales tax. Approximately, 56% of the company’s business is
conducted via an online platform. The company understand their responsibility to pay the
taxes under the jurisdiction of government set under the UK legislation (Ogbor & Eromafuru,
2018). However, at this point, the company is required to adjust its business rates to take their
business practices under the corporate structure so that they can make recognisable profits in
the international market which are not subjected to taxes in the region (Sarah Butler, 2018).
The firm is working towards an effective global delivery system aligned with e-
commerce localisation to compete in international e-commerce. However, other common
issues for the management of ASOS.com is required to be planned with complete information
about the market standards because lack of adequate information to lead towards the violation
of laws, regulations, processes, and methods important for the foreign market (Parboteeah &
Cullen, 2017). The custom related barriers for ASOS.com are complicated, overly
burdensome, and involved with other issues such as corruption, and others. Therefore, it is
important for the company to consider these issues while looking forward to planning its
resources following the understanding of trade tariffs for the firm. An adequate response has
been highlighted for the firm in the next section to formulate perspective (Ruiz, 2018).
Response
A considerable lot of the hindrances avoiding the acknowledgement of the Internet as
a driver of worldwide exchange can be tended to utilising fittingly structured universal
exchange standards and standards. As the review in the past section illustrates, exchange law
and arrangement alone cannot deliver every one of the blocks to understanding the maximum

TARIFF BARRIERS FOR ASOS.COM 7
capacity of the Internet to drive global exchange (Keck, Hancock, & Nee, 2018).
Accordingly, participation is required between the global exchange network and those
working advancement—where help to framework advancement can improve exchange
coordination’s and U.N. endeavours to advance vitality access for poor people (Parboteeah &
Cullen, 2017). For ASOS.com, exchange strategy and law can make a significant
commitment by decreasing the expense of Internet get to, changing the development of
merchandise and enterprises, improving traditions procedures and access to expedited service
administrations, lessening dangers from various ways to deal with buyer insurance and
protection, and access to debate settlement. The World Trade Organization is the key
multilateral foundation administering universal exchange for the considered company (Ruiz,
2018).
Its guidelines are key to supporting a wide range of universal exchange, including on
the web exchange. There have been late advancement at the WTO on growing new guidelines
to additionally advance Internet-empowered worldwide exchange. In particular, in December
2013, WTO individuals consented to another exchange assistance result that will streamline
traditions techniques, increment straightforwardness, and lessen costs, all of which will profit
online exchange products (Xue, Li, & Pei, 2016). Nevertheless, the rest of the WTO rules
have not been refreshed since the foundation of the association in 1995. They do not consider
the fast progressions on the Internet and the expansion of new Internet administrations, for
example, distributed computing. In this way, these improvements have made existing WTO
runs in extraordinary need of business process upgrades (Sarah Butler, 2018). At the WTO
ecclesiastical gathering in Bali a year ago, a work program on web-based business was settled
upon, and it educates the WTO to keep taking a shot at this issue. This incorporates analysing
the connection between web-based business and advancement (Colpan & Cuervo-Cazurra,
2018;).
While concession to the requirement for further work on this issue in the WTO
features the significance of growing new standards for Internet-empowered universal
exchange, arranging new multilateral exchange rules remains a prisoner to the moderate
moving WTO Doha Round of exchange dealings (Yang & Shen, 2015). In parallel, new
standards for Internet-empowered exchange are additionally being created in respective and
provincial Foreign Trade Agreements. Either these are the U.S. base or EU are gathering to
incorporate online business chapters. Current FTA in Trade in Services Agreement (TISA),

TARIFF BARRIERS FOR ASOS.COM 8
Trans-Pacific Partnership (TPP) and US-EU Transatlantic Trade and Investment Partnership
(TTIP) exchanges (Yousefi, 2015).
Research shows that after the USA has placed 200% trade tariffs on Chinese goods
and steel, and it's trading partners around the world, EU, Canada, China, and Mexico has
implemented retaliatory tariffs of American products (Craik, 2015). These are focused on
agriculture and good products which the USA do not export. In case of the European Union,
25% tariff of approximately $3.4 billion on American Goods include Harley Davidson
Motorcycles. As a response, the company decided to move its manufacturing products to
European Union countries outside the USA to control the damage towards its resources
(Dunford, Dunford, Barbu, & Liu, 2016). EU has target other products such as denim, orange
juice, tobacco, whiskey, and peanut butter. However, the response is yet to be determined. In
other words, the EU has imposed a tariff on most products which are not purchased online
from the US retailers and suppliers. Therefore, it is more likely to have a small impact on US
e-commerce (DALY & HASNI, 2017). In case of Asos.com, it is important for the firm to
have a defined policy over trade tariffs, it is an online company, the tariff imposed by the
USA and EU government are more likely to impact the firm’s business directly (Aziz,
Salloum, & Alexandre-Leclair, 2019).
Hence, it is important for the firm to plan its trading policies following the
government structure around the world to control the damage towards its business. The tariffs
to date increment the expense of crude materials and now and again disturb the production
network. China is the main wellspring of certain merchandise. A deficiency of crude
materials will probably result in the United States (Giuffrida, Mangiaracina, Perego, &
Tumino, 2016). Increments in costs will be passed on to purchasers. In the U.S., this implies a
cost-focused approach on local traders because of tariffs on B2B crude materials and
segments, just as tariffs on completed purchaser products. In China, Mexico, Canada and
others from the EU, the product cost nourishment and drink will increment (Brennan, 2018).
Most American vendors that sell solid products (not for prompt utilisation) will be unaffected
except if they are purchasing and selling merchandise made with crude materials and parts,
for example, steel, that has been slapped with tariffs. Online traders who sell merchandise
made with steel or aluminium should raise their costs or endure marked down benefit in the
event that they keep up current evaluating (Guedes & Buest, 2018).

TARIFF BARRIERS FOR ASOS.COM 9
The trade strategies and policies of Trump are more likely to harm the US economy
and undermine the world's trade framework. This will support a trade war between the two
superpowers of the east and the west part of the world and will increase the tension between
region and companies, for example, ASOS.com will face issues in expanding its supply chain
management in China after the international expansion (Choi & Choi, 2018). IMF expects the
trading contest to have minor monetary results - abating GDP by a small amount of a rating
point. The circumstance is basic and progressively hard to factor in right now as it will affect
the local financial circumstance (DALY & HASNI, 2017). IMF has likewise taken steps to
pull back from the North American Free Trade Agreement (NAFTA), was reacting to rising
worries about the symptoms of organised commerce.
These measures, however, are probably going to move the globe further far from an
open, reasonable, and rules-based trade framework, with unfriendly impacts for both the US
economy and for exchanging accomplices (Deschamps, Carnie, & Mao, 2017). Following
this whole situation, it is important for ASOS.com to assess the situation while trading in the
USA or China, there seem to be profitable markets after Europe. Therefore, it should
penetrate the market dynamics more in order to seek benefits. In another scenario with
America, it is important for the management of ASOS.com to calculate its assets following its
export to seek benefits from its resources (RAVENDER SEMBHY, 2017).
Impact
The quantity of Harmonised Tariff Standards (HTS) that are currently under
investigation keeps on ascending, as there are presently extra 284 codes, worth $16 billion,
that the organisation is proposing to incorporate into the equivalent 25% tariff. Currently, of
assembling, the vast majority of the products web-based business stores and retailers sell can
be created much more adequately in different pieces of Asia like Vietnam, India, or the
Philippines. In spite of the fact that the framework in China is exceptionally solid, in the
event that you see work rates in a portion of these nations, work is increasingly moderate
outside China these days (Ardley, 2018).
Since finding out about the capability of these international tariffs a year ago, the
company is required to understand the tariff existence following worldwide inventory
network crosswise over India, Bangladesh, Vietnam, Thailand, Pakistan, Philippines, and
Mexico. It is significant for ASOS.com to pursue the examination with the given queries to

TARIFF BARRIERS FOR ASOS.COM 10
plan viewpoint and diminish the harm towards its economy (Parboteeah & Cullen, 2017).
These are,
1) Reviewing the rundown for HTS ASOS.com need to import, this will bolster the
organisation to consider its very own rundown of HTS code to perceive how much
volume is really brought into the US, and possibly spot different nations that send out
similar merchandise (Yang & Shen, 2015).
2) It is essential to appraise the budgetary effect towards the matter of ASOS.com before
working forward in the market.
It is believed by many economies that the United States has abused World Trade
Organization leads and lighted the biggest trade war in monetary history. Such tariffs are
commonplace trade harassing, and this activity compromises worldwide supply chains and
esteem chains, slows down the worldwide monetary recuperation, triggers worldwide market
strife, and will sting progressively blameless global companies, endeavours and customary
shoppers. It will hurt, not support American firms (Ruiz, 2018).
Form a focused perspective, these tariffs sum the amount of $478.8 billion worth of
merchandise and enterprises from China in 2017, so the tariff target is genuinely little in
respect to the all-out trade among America and China. It is likewise completely small with
respect to the extent of the general American economy, which is required to aggregate about
$20 trillion out of 2018. Taken a gander at another way, there were $150 billion of tax breaks
that Congress passed on tariffs in 2017. These new forced tariffs of $34 billion are little in
examination (Yousefi, 2015).
Therefore, the immediate effect on individual people can at present be huge on the off
chance that you work in enterprises with new tariffs. For instance, burdening imported
clothes washers is a major ordeal for the clothes washer industry and for individuals who
happen to be in the market for a clothes washer. The Washington Post made a summary from
Trump's trade plan and noticed that clothes washer costs have risen 16 per cent since March
and that the burden of tariffs in January was trailed by two of "the biggest month to month
cost increments since the Bureau of Labour Statistics started gathering such information in
1977 (Knox, 2018). The cost of real apparatuses has been relentlessly succumbing to years,
and these tariffs have driven them back up a smidgen. Clearly, a 16 per cent value climb is
yet a major ordeal if an individual's clothes washer simply broke, and you have to purchase
another one (Ruiz, 2018). Many people do not purchase clothes washers that as often as

TARIFF BARRIERS FOR ASOS.COM 11
possible and the present costs are low by recorded benchmarks. The key effect on the dealer
of ASOS.com will incorporate,
1) In the first place, the vendors of imported products dependably have motivating forces
to ingest some portion of the tariffs to clutch their clients. It is never a benefit
expanding technique for a vendor of imported merchandise to pass 100% of tariff
increments to shoppers if customers are to some degree value flexible that determine
that the customers purchasing power will reduce significantly (Xue, Li, & Pei, 2016).
2) Second, shoppers can generally substitute far from the imported products influenced
by higher tariffs to buy less expensive choices if such options exist. They can likewise
postpone buys.
3) Third, tariffs will invigorate residential import-contending businesses, and there will
be some salary impact for specialists in those enterprises and past. "At the end of the
day, if your salary is higher, cost increments don't feel so difficult (Aziz, Salloum, &
Alexandre-Leclair, 2019).
Conclusion and Recommendations
To conclude, trade tariffs influence exporters and shippers in the apparel, footwear
and design part in the grown-up and youngsters' business sectors. Guidelines, charges, or
different limitations may apply to apparel, footwear, and style trades as they leave the UK
when they confer at their goal nation. It is significant that you look into the two sides of the
exchange. American attire retail organisations and shoppers are planning to feel the torment
of Trump's most recent round of tariffs. The most recent round of U.S. tariffs incorporates a
10% and destined to be 25% toll on things including silk, fleece, cotton, and different
materials just as purses, gloves, caps, and some garments classifications, for example,
calfskin or hide apparel. China's tariffs are corrective and will fall into a scope of 5-10% on
$60 billion worth of merchandise. On the off chance that the tariffs proceed, extra clothing
and materials will be set significantly more unequivocally in the focus.
It could be a vital turning point for ASOS.com to remain above water in the midst of
expanding rivalry from web-based apparel retailers and rebate dress stores. ASOS.com have
communicated extraordinary worry over the way that tariffs will push up their expenses.
These organisations are hoping to move supply chains from China to develop rundown of
Trump's tariffs, yet this is a difficult task: recognising, checking, and contracting with another
provider takes around two to five years. A few organisations are swinging to nations like