Fitbit will move manufacturing outside of China to avoid US tariffs (FIT)

FILE PHOTO: Visitors walk past an advertising billboard for Fitbit Ionic watches at the IFA Electronics Show in Berlin, Germany, September 1, 2017. REUTERS/Fabrizio Bensch/File Photo Reuters

  • Fitbit announced on Wednesday that its in the process of moving all of the company's manufacturing operations out of China amid the ongoing threat of US tariffs. 
  • The company said it started looking for other locations to manufacture its trackers and smartwatches after the US-China trade war began in 2018.
  • According to Fitbit's statement, the company will provide more details on the financial impact of the transition during its third-quarter earnings call. 
  • Shares of Fitbit tumbled as much as 3% on the news. 
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Fitbit said on Wednesday that it's shifting effectively all of the company's manufacturing operations for its smartwatches and trackers out of China to avoid the impact of US tariffs. Shares of Fitbit slid as much as 3% on the news. 

"In 2018, in response to the ongoing threat of tariffs, we began exploring potential alternatives to China. As a result of these explorations, we have made changes to our supply chain and manufacturing operations and have additional changes underway," chief financial officer Ron Kisling said in a statement

Kisling continued: "Based on these changes, we expect that effectively all trackers and smartwatches starting in January 2020 will not be of Chinese origin."

The company said it plans to provide more details on the financial impact of the transition during its third-quarter earnings call. 

The move comes as the US and China prepare to resume trade negotiations in Washington, D.C. later this week.

Tensions escalated earlier this week after the US banned 28 Chinese firms from buying American-made products due to the companies' role in the mistreatment of ethnic Muslim minorities in northwestern China. In addition, the US is reportedly exploring restrictions on US investments into China through government pension funds.

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Bloomberg reported on Wednesday that China is still open to a partial trade deal with the US but Chinese negotiators aren't optimistic about reaching a broad deal that would end the conflict. 

Shares of Fitbit are down more than 27% year-to-date.

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