How increased Footwear Tariffs will affect the economy

How are the tariffs affecting American business?  More than 170 shoe companies who manufacturer their shoes in China have sent a collaborative letter to Trump to drop footwear from the tariff list:

  • Foot locker
  • Nike
  • Adidas
  • Reebok
  • DSW
  • Aldo USA
  • Deckers brands
  • Wolverine Worldwide
  • JC Penny
  • Sam Edelman
  • Ugg

This is the largest number of shoe companies to unite around a common issue.   The tariffs are a blunt force to hurt American business and working class consumers.

“I am so proud of how our industry has unified and is working together to fight the presidents 25% additional import tax on shoes.” Said Matt Priest, CEO, Footwear Distributors & Retailers of America (FDRA).   

Ten days ago, Washington imposed increases in levies from 10% to 25% on $200 billion worth of Chinese products.  Leading Beijing to retaliate with new tariffs of 5% to 25% on $60 billion of US goods.  Trump also ordered US Trade Representative Robert Lighthizer to begin the process of raising duties on nearly all remaining imports from China, valued at approximately $300 billion. 

Footwear is one of the major continuing expenses for all consumers’ most onerously American families.  If the tariffs go into effect a US family would have to spend an extra $132 on footwear annually.  

Additional Tariffs

The additional tariffs would be on top of already existing duties, which range from 11% and go up to 67%.   Most of the future cost of buying shoes will be duties and tariffs. 

The consumers are going to pay for the extra tariffs, as it will be added to the cost price.   American business will suffer because of significantly reduced revenues and profits. 

Last year, Footwear companies paid over $3 billion in duties on imports with $1.5 billion on Chinese goods.   Duties and tariffs have been a part of the world economy since the early 1930’s.  

The additional tariff would mean Footwear importers would have to shell out an additional $3.5 billion on Chinese Footwear alone.   That is a $5 billion duty bill just with Chinese footwear.  

Matt Priest, FDRA would like to set an alarm that this will be a catastrophic event if the president proceeds with tariffs. 

Shoes from China

  • 72% of imported sneakers originate from China 
  • $11.4 Billion of footwear was imported from China in 2018  
  • Nike, 21% of their contract factories are in China
  • Adidas, 18% of their footwear volume is produced in China 
  • Under Armour, 15% of the total global volume is from China 

Conclusion

Footwear tariffs are not a solution to the ongoing trade war, as it will affect American businesses and consumers.  If we look at history from the great depression onwards we see how tariff wars have been disastrous. 

What does the Trump administration see as the benefit of enforcing these new tariffs on Chinese products? 

What does the Chinese administration see as the benefit of retaliating to American tariffs?  Only time will tell how this will affect both countries.  

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