On Monday, the Office of the U.S. Trade Representative released a list of Chinese imports that could receive a proposed 25% hike in duties, and for the first time, footwear is among the target products. The Trump administration has suggested imposing this increase to pressure China to negotiate on issues of technology transfer, intellectual property and innovation.
However, footwear executives and industry leaders have strongly opposed the move, arguing that it will hurt businesses and the consumer.
“The ramifications will be significant on the American consumer. Every dollar we pay in duties on imports is passed on in the form of higher prices to the consumer,” said Mike Jeppesen, president of global operations at Wolverine World Wide Inc., the parent company of Merrell, Keds and Saucony.
Ed Rosenfeld, CEO of Steve Madden, told FN, “The proposed tariff on footwear would be devastating for the industry. It would result in big increases in shoe prices for U.S. consumers as well as significant job losses and potentially bankruptcies for U.S. footwear companies. I’m hopeful cooler heads will prevail and an agreement will be reached soon that averts this potential disaster.”
Cliff Sifford, CEO of Shoe Carnival, noted that American footwear companies are already burdened with higher duties than other product categories.
“The shoe industry in the U.S. pays over $3 billion in tariffs on all imported shoes. No other category of apparel comes close to this amount. If shoes are added [to the Trump administration’s list], it will increase these tariffs by $3.5 billion,” he told FN.
The children’s market and family channel are particularly vulnerable to increased duties. According to the Footwear Distributors & Retailers of America, about 76% of all kids’ shoes sold in America come from China (compared with 70.6% of total shoes sold here). And the organization estimates that prices for basic children’s shoes would rise from $10 to $15 a pair.
Explained Sifford, “Shoes are not a luxury item for anyone, especially children. Shoe Carnival’s core customer is a Middle America working-class consumer living on a tight budget, and this additional tax will definitely be a terrible burden on them.”
Evan Cagner is president and CEO of Synclaire Brands, which produces kids’ shoes for brands like Frye, Sam Edelman and Kenneth Cole. He told FN, “There are definitely certain industries that the United States can be very competitive with compared to other nations. However, footwear today is not one of them, and tariffs just end up being punitive on the American consumer and the entire supply chain. I hope for everyone involved that there is compromise that can be found to avoid this tariff crisis for footwear.”
And Bob Campbell, founder and managing member of children’s shoe company BBC International, said, “We are very much against this and are concerned about the dramatic impact it can have on the business. BBC is taking action to ensure we identify how to move business to reduce the impact.”
Currently, Trump’s new tariffs are still under review and would not take effect until late June. The administration is accepting comments regarding exemptions until June 10, and public hearings are to be held on June 17. Organizations like FDRA, the American Apparel & Footwear Association and the Sports & Fitness Industry Association have said they will help to negotiate the process in the coming weeks.
“We still hope the Chinese and American governments can come to an agreement before the tariffs go into effect, as these new tariffs will be potentially destructive to many industry companies who cannot move manufacturing processes out of China in such a short period of time,” said Tom Cove, president and CEO of SFIA.
Indeed, in the past few years — and especially since the U.S.-China trade war ramped up — footwear companies have been working to diversify their sourcing and manufacturing beyond the Asian hub to avoid any market disruptions.
“We started diversifying out of China about five to six years ago and have moved nearly half of our production to others, namely Vietnam, Cambodia, Bangladesh and Indonesia,” said Jeppesen of Wolverine’s operations. “We’re now looking to find out if we have options to move more production out of China. The issue we’re running into is that we’re not alone anymore. Where we’ve had a relatively quiet time to move production over the last five years, right now, everyone is scrambling to get out of China and move into other sourcing countries.”
Cagner also predicted a shift in production to other countries — except for one in particular. “In the end, if the tariffs do take hold, then I think footwear will be pushed into other countries for manufacturing, but not back into the United States,” he said.