Shoe manufacturers, including Nike and over 70 others in the U.S., seek to be released from shared responsibilities.
Footwear Brands, Including Nike, Adidas, Against Tariffs: "Existential Threat"
Last month, a whopping 76 footwear brands, including household names like Nike, Adidas, Crocs, Puma, and more, signed a document dated April 29th. These industry giants spoke up against the looming tariffs, arguing that they pose a severe existential threat to their industry. The letter to the U.S. President stated that hundreds of businesses are facing closure prospects, with the potential loss of tens of thousands of jobs. Many orders have already been halted, and U.S. consumer shoe supplies may soon run out.
The footwear industry has already been hit hard from earlier tariffs. While the brands urged a more targeted approach focused on strategic goods rather than basic consumer goods, the tariffs imposed on them are causing distress. Adidas, for instance, voiced concerns of a price increase in their company's products in the U.S., failing to specify the exact percentage hike.
Skechers had to abandon its forecasts due to the imposed tariffs, with Bank of America reporting that 38% of its U.S. sales come from products manufactured in China. All this comes in the backdrop of the U.S. imposing "reciprocal" tariffs for several countries on April 9th.
Just a few hours later, President Trump announced a 90-day suspension of tariffs for more than 75 countries that didn't retaliate against the U.S., setting a base rate of 10% for them. However, China wasn't included in this exemption, with the White House clarifying that the country's effective rate now stands at 145%. Beijing, in turn, raised tariffs for the U.S. to 125% on April 12th.
On April 22nd, Donald Trump hinted at the possibility of reaching a trade deal with China. Despite the temporary relief provided by the tariff suspension, the long-term uncertainty remains due to the baseline tariffs and China-specific duties.
Deep Dive: The Impact of U.S. Tariffs on the Footwear Industry
- Price Hikes and Consumer Impact
- Cost escalation: New tariffs could potentially hike apparel and footwear prices by up to 54%, compounded with existing duties that range from 20-37% depending on materials.
- Retailer strain: Total rates for some footwear products could exceed 100%, drastically raising consumer prices, leading to shrinking margins, order reductions, or price hikes to offset costs.
- Supply Chain Disruptions
- Manufacturing Reliance: Over 97% of U.S. footwear is imported, with China and Vietnam as major producers, making the industry vulnerable to these tariff-driven disruptions.
- Logistics Challenges: Reciprocal tariffs (e.g., China's response) and retaliatory measures from other nations (EU, Canada) complicate global shipping and cross-border e-commerce.
- Domestic Production Limitations: U.S. manufacturers like COMUNITYmade remain niche players, unable to offset the $19.1 billion athletic footwear market's dependency on imports.
- Job Losses and Market Shifts
- Downstream effects: Reduced orders from retailers could lead to manufacturing job cuts in exporting countries and retail layoffs in the U.S. if demand wanes.
- Stock Volatility: Major brands like Nike and Foot Locker saw shares plunge and rebound amid uncertainty, reflecting investor anxiety over sustained trade tensions.
- Tariff Suspensions and Geopolitical Dynamics
- 90-day pause: President Trump's temporary suspension of certain tariffs provided short-term relief but left long-term uncertainty, as baseline tariffs (10%) and China-specific duties remain.
- Global Retaliation: The EU, Canada, and Mexico have imposed counter-tariffs, escalating costs for U.S. exporters and further straining supply chains.
- Existential Threats
- Small-business vulnerability: Independent brands face margin collapse under tariff stacking, potentially forcing closures or market exit.
- Cultural shifts: Affordable imported gear's reliance within the running community may see reduced participation due to inflated costs, altering the economics of amateur athletics.
The footwear industry's dependence on globalized production and high import exposure makes it exceptionally susceptible to these tariff-driven pressures, with long-term implications for affordability and market stability. Stay tuned for updates on this evolving situation.
- The footwear industry giants, such as Nike, Adidas, and others, expressed grave concerns about tariffs, warning they pose an existential threat to their businesses.
- Hundreds of businesses in the footwear industry are facing the possibility of closure due to the looming tariffs, with tens of thousands of jobs potentially at risk.
- Orders for footwear have already been halted, and US consumer shoe supplies may soon run out as a result of the tariffs.
- The finance and business sectors have been warned to prepare for potential economic impacts stemming from the tariffs on footwear.
