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Trumps’ China Tariff To Hit US Footwear Industry As 70% Of Shoes Comes From China


08/04/2019


Trumps’ China Tariff To Hit US Footwear Industry As 70% Of Shoes Comes From China
The escalating trade war between the United States and China has hit the American footwear industry very hard.
 
A host of consumer goods such as apparel, home textiles like bedding and shoes would be impacted by the most recently announced tariffs by US president Donald Trump of 10 per cent on Chinese imports worth $300 billion. Following this latest round of tariff, that is to be implemented from September 1, virtually all Chinese imports now have come under the Trump tariff regimen.
 
The latest tariff has made shoe manufacturers fearful that it would hit them hard. According to the Footwear Distributors & Retailers of America, about 70 per cent of the shoes sold in the US is imported from China. This association has about 500 members from the shoe industry with names such as Walmart, Nike, Crocs and Steven Madden. The group said that import tax of more than 67 per cent is already applicable for footwear imported from China.
 
 “The consumer won’t be able to hide,” FDRA President and CEO Matt Priest said. “Even if it’s 10%, it’s death by a thousand cuts.”
 
A total of 170 shoe retailers and brands of the US, including names such as s Under Armour, Ugg and Foot Locker, wrote a letter to Trump in May urging him not to increase tariffs on footwear. The companies said: “These tariffs would mean some working American families could pay a nearly 100% duty on their shoes.” Back in May, import tariff of 25 per cent was being contemplated by Trump in May.
 
An additional 10 per cent import tariff would increase the price of a popular type of canvas “skate” sneaker from $49.99 to $58.69, according to a calculation by the FDRA. The body also said that the final price of a typical hunting boot could increase from $190 top about $222.27 because of the tariffs while the final price of a popular performance running shoe might increase from $150 to $187.50.
 
Their reliance on suppliers from China has been steadily reduced by shoe makers such as Nike, Under Armour and Puma already and have shifted business to countries like Vietnam. According to data from the US Census Bureau, despite the American companies seeking alternatives to China, last year, the US companies imported $11.4 billion worth of footwear from China. This makes an American shoe industry very reliant on China for its footwear because of the cheap but skilled labor. 
 
For example, the latest annual report of Nike shows that it in fiscal 2018, that it made 47 per cent of its shoes in Vietnam in fiscal 2018 while 26 per cent was made n China and the rest 21 per cent in Indonesia. For Adidas, one of its largest sourcing country is Vietnam with 42 per cent of shoes being made there by the company, according to SEC filings. About 18 per cent by volume of its shoes were made in China in 2018 which was 1 per cent lower than that of 2017. According to documents of Armour, five main contract manufacturers, operating mostly in China, Vietnam and Indonesia accounted for about 87 per cent of its footwear products in 2018.
 
“The short term is going to be retail ugly,” Rick Helfenbein, CEO of the American Apparel and Footwear Association, told CNBC’s “Closing Bell” on Thursday. “We don’t have a place to go. You can’t move this mountain of merchandise so quickly.” “The message from the [Trump] administration is, ‘Get out of China.’ The problem is we can’t do it as fast as they would like us to do it. So we are going to stay there ... and fight it out.”
 
(Source:www.cnbc.com)