By Suzanne Kapner

Lululemon leggings won't cost more, but Canada Goose parkas might.

The 25% tariff imposed by the U.S. Tuesday on imports from Canada won't hit all Canadian companies equally. Lululemon Athletica and Canada Goose are both based in Canada. One makes most of its products in Canada. The other makes them elsewhere.

Lululemon, whose headquarters are in Vancouver, produces nearly 90% of its athletic gear in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh, according to securities filings. Those countries so far haven't been hit by trade actions in President Trump's second term, but that could change.

Toronto-based Canada Goose makes 70% of its products in Canada, including nearly all of its down-filled coats. The company operates seven Canadian manufacturing facilities in Ontario, Manitoba and Quebec, employing roughly a fifth of the country's cut-and-sew industry. The company has no plans to move production out of the country because it values the expertise and craftsmanship of its workforce, a Canada Goose spokeswoman said.

The latest round of tariffs, which includes a 25% duty on goods from Mexico and an additional 10% on imports from China, could raise prices for U.S. consumers on items ranging from cars to tequila, analysts say. The different approaches of Lululemon and Canada Goose show that the end result for consumers depends less on where a brand is based than where its products are made.

Canada Goose grew out of a Toronto company called Metro Sportswear. Founded in 1957, it made outerwear for other companies, a practice known as private label. The founder's son-in-law, David Reiss, invented a machine that sped up the process for filling down jackets while improving quality. It paved the way for larger-scale production. Reiss introduced the brand Snow Goose, which later became Canada Goose.

His son Dani Reiss is now the company's chief executive officer. Dani Reiss had recently taken over the small family business in 2001 when he committed to always making Canada Goose's signature parkas in Canada.

He had been reading about American manufacturers moving production overseas because of the high cost of domestic labor. He disagreed with the strategy, even though it boosted profits, and instead bet that customers would care about where their coats were made.

"After all," he wrote in a 2019 issue of the Harvard Business Review, "who knows cold better than Canadians?"

Having its factories close to its design team allowed Canada Goose to exercise more control over its manufacturing processes. Designers would routinely visit the factory on the ground floor of its Toronto headquarters, ensuring that the garments were meeting their specifications, according to former and current employees.

Canada Goose moved its headquarters in 2023 to another location in Toronto. But the company still operates its factory in the old headquarters space, where designers and other creative staff spend a lot of time, the company said.

Under Dani Reiss's leadership, the brand became a luxury status symbol. That has allowed it to raise prices. A men's Expedition parka costs $1,675 today, compared with $1,050 in 2018. A women's Shelburne parka now sells for $1,475, up from $950 in 2018, according to Jonathan Komp, a senior research analyst at the investment bank Baird.

Komp said that premium items with larger margins are better able to absorb the tariffs without passing those costs onto consumers.

Lululemon, by contrast, doesn't source anything from Canada, and has limited production in Mexico and China, finance chief Meghan Frank told analysts in December. About 3% of the company's goods are made in China, and less than half a percent come from Mexico.

Lululemon doesn't own or operate any manufacturing facilities. It works with 49 vendors to make its goods. In 2023, 42% of its products were manufactured in Vietnam, 16% in Cambodia, 11% in Sri Lanka, 10% in Indonesia, 8% in Bangladesh and the remainder in other regions, according to securities filings.

Write to Suzanne Kapner at suzanne.kapner@wsj.com

(END) Dow Jones Newswires

March 06, 2025 10:00 ET (15:00 GMT)

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