Sonos Warns of Trump-China Trade War Risks in IPO Filing

(Bloomberg) -- Sonos Inc. warned that an escalation of the trade war between the U.S. and China could significantly damage its connected-speaker business, according to its IPO filing on Friday.

Sonos operates offices and development labs in China, the U.S. and the Netherlands. Its speakers and components are made in China by contract manufacturer Inventec Corp., which then ships most of the products to warehouses in California, Pennsylvania and the Netherlands.

"If significant tariffs or other restrictions are placed on Chinese imports or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed," Sonos said in the filing Friday.

Here’s the rest of the warning from the Santa Barbara, California-based company:

"The Trump Administration has signaled that it may alter trade agreements and terms between China and the United States, including limiting trade with China and/or imposing a tariff on imports from China. In March 2018, President Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports and announced additional tariffs on goods imported from China specifically, as well as certain other countries. The materials subject to these tariffs to date do not impact our raw material costs. However, if further tariffs are imposed on a broader range of imports, or if further retaliatory trade measures are taken by China or other countries in response to additional tariffs, we may be required to raise our prices, which may result in the loss of customers and harm our reputation and operating performance."

To contact the reporter on this story: Alistair Barr in San Francisco at abarr18@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Andrew Pollack

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