How Tariffs Will Impact the Sneaker Industry

A coalition of 170 sneaker and footwear brands have banded together against the recent tariffs on Chinese imports, stating that the impact of these tariffs could be devastating to the industry.

In a particularly volatile time for the United States economy, these tariffs could ultimately lead to the closure of many of the smaller brands, as well as cut backs for the larger brands.

In a letter posted on the Footwear Distributors and Retailers of America website, numerous retailers outlined why the tariffs would be so harmful. Presently, the industry already pays $3 billion in duty taxes while importing products. The projected tariffs would add another $7 billion, driving up the costs for the American consumer.

When it comes to staples such as shoes — products that are nearly unavoidable to purchase — cost increases can impact the economy significantly. As the letter pointed out, these tariffs would disproportionately injure lower income and working class individuals.

In the wake of these many tariffs, the American public has questioned why industries haven’t switched to cheaper labor and manufacturing. However, the letter from the FDRA does address this situation.

The FDRA acknowledges that while manufacturing in another country would be ideal, it’s impossible to move manufacturing over so quickly. The letter closes by mentioning the hundreds of thousands of employees currently employed by the shoe industry in America.

Manufacturing in America itself is unlikely for nearly every industry. Even with China out of the picture, other countries such as Mexico and Malaysia are always going to be more affordable.

The White House is considering tariffs of up to 25% on $300 billion of products from China. The footwear-related tariffs include more than just sneakers: it also includes work boots, rain boots, and more. According to the FDRA, a regular canvas sneaker that currently costs $49.99 would cost $65.57 under the new tariffs. Running shoes that now cost $150 could exceed $200.

Footwear, as an industry, is already more heavily taxed than many other consumer goods, and many footwear brands are concerned about the consequences of these tariffs. However, no comment has been made by the White House as of yet, and it remains uncertain as to whether these tariffs are going to move forward.

The newest wave of tariffs aren’t expected to be initiated until another month has passed. Presently, the White House is looking into whether the tariffs would unduly tax the regular American consumer. At the same time, this is political as well: an admission that the taxes would hurt the American consumer would hurt America’s bargaining power with China.

As for now, tariffs remain at 10%, and a boost to 25% would impact quite a few industries beyond footwear. Automobile manufacturing and tech manufacturing have already been harmed, as they rely upon imports from China. On the other side, agriculture and farming industries have been impacted without China as a major purchaser.

Meanwhile, the trade war itself shows no significant sign of slowing, with both China and the United States presently mired in a war of attrition. Both of the countries are moving forward, in a bid to determine which country is more reliant upon the other.

China has stated that it’s rethinking its economic ties to the US, indicating that it may attempt to reinforce its trade with other countries. Yet, that’s just the public statement from China: China does do a lot of trade with the United States, and it is being adversely impacted by the trade war. Unfortunately, it may not be as significantly impacted by the trade war as the United States is.

Unlike the US, China doesn’t have to worry as much about the concerns of its consumers. Due to a rigid social infrastructure, China is able to make decisions more readily against the general interests of its population, if it believes it will yield long-term results. This makes China a formidable economic foe.

If these tariffs are initiated, it isn’t just bad news for the sneaker industry: it’s bad news for essentially every industry that does business in China. Individual citizens will see their products become more expensive, and retailers and business owners will also likely see an increase in the cost of their products and supplies. Still, there’s a month of breathing room left.

Regards,

Ethan Warrick
Editor
Wealth Authority

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