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Companies sign an open letter to Donald Trump saying hundreds of millions of footwear consumers will foot the bill.
Companies sign an open letter to Donald Trump saying hundreds of millions of footwear consumers will foot the bill.

Nike and Adidas join 173 US shoe retailers in call to avoid ‘catastrophic’ tariffs

INTERNATIONAL NEWS

By Eben Novy-Williams - May 21st, 12:23

Nike, Adidas, and other footwear giants urged President Donald Trump to reconsider his tariffs on shoes made in China, saying the policy would be “catastrophic for our consumers, our companies and the American economy as a whole”. 

In all, 173 companies signed an open letter to the president, dated Monday and posted on the industry trade association’s website. It was also sent to treasury secretary Steve Mnuchin, commerce secretary Wilbur Ross and national economic council director Larry Kudlow.

“On behalf of our hundreds of millions of footwear consumers and hundreds of thousands of employees, we ask that you immediately stop this action to increase their tax burden,” the group said. “Your proposal to add tariffs on all imports from China is asking the American consumer to foot the bill. It is time to bring this trade war to an end.”

The ongoing trade tension between the US and China has escalated as Trump threatens to impose tariffs as high as 25% on Chinese goods. Last week, the US trade representative’s office released a list of about $300bn worth of products that could see higher import duties, including all types of footwear, from sneakers to sandals. Trump will discuss the tariffs with Chinese President Xi Jinping in June.

‘Both sides’

Trump has repeatedly stated that China would pay the tariffs — something his critics say is misleading or wrong. Earlier this month, Kudlow said that “both sides” will pay.

“As an industry that faces a $3bn duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer,” according to the letter.

That sentiment has been echoed around the industry. “We don’t make enough to absorb that,” said Michael Jeppesen, president of global operations for Wolverine World Wide, which also signed the letter. “The only way it can is to be passed onto the consumer.”

The shoe industry’s trade association, the Footwear Distributors & Retailers of America, estimates that the tariffs would cost US customers an additional $7bn per year. The companies said in their letter that those costs would disproportionately affect working class individuals.

Touchy topic

Tariffs are an especially touchy subject within the footwear world because shoe companies are already some of the highest payers of duties in the US, thanks to longstanding tariffs that in some cases surpass 30%. The industry shifted a lot of production to Vietnam in anticipation of the Trans-Pacific Partnership — which would have allowed duty-free exporting to the US — but Trump exited those negotiations.

Still, the companies in the letter vary in their reliance on China. Nike, for example, made 26% of its apparel and 26% of its footwear in China in fiscal 2018. Skechers USA makes around 65% of its goods in China, but not all of those products are imported to the US.

Under Armour, which also signed the letter, gets about 18% of its products from China — down from 46% in 2013. The company’s goal is to lower that number to just 7% by 2023.Business Live 

Read more about: trade | retail | nike | footwear | donald trump | adidas

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