70% of shoes sold in the US comes from China. With new tariffs, the industry braces for a hit

70% of shoes sold in the US comes from China. With new tariffs, the industry braces for a hit - CNBC

70% of shoes sold in the US comes from China. With new tariffs, the industry braces for a hit - CNBC
Nike to release Coming to America-inspired shoes with NBA star Giannis Antetokounmpo - Entertainment Weekly News
Choose Your Running Shoes Carefully | Health News - U.S. News & World Report

70% of shoes sold in the US comes from China. With new tariffs, the industry braces for a hit - CNBC

Posted: 02 Aug 2019 07:35 AM PDT

The U.S. footwear industry is one of the biggest victims in an escalating trade war with China.

President Donald Trump on Thursday announced another round of tariffs on the roughly $300 billion of Chinese goods that hadn't already been targeted by American levies. The 10% duties will take effect on Sept. 1, impacting consumer goods such as apparel, home textiles like bedding and shoes.

Shoe manufacturers in particular are bracing to take a major hit, with reality setting in that after months of on-and-off talks between these U.S. and China, these tariffs are set to take effect. A whopping 70% of shoes sold in the U.S. comes from China, according to the Footwear Distributors & Retailers of America, an industry organization with more than 500 members, including Walmart, Nike, Crocs and Steven Madden. Footwear imported from China is already being hit with upwards of 67% duties, the group said.

"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."

In May, more than 170 shoe retailers and brands — including Under Armour, Ugg and Foot Locker — sent a letter to Trump asking him to not raise tariffs on footwear, saying: "These tariffs would mean some working American families could pay a nearly 100% duty on their shoes." (Trump in May was considering a 25% tariff hike.)

FDRA has calculated that a popular type of canvas "skate" sneaker could increase in price to $58.69 from $49.99 with an additional 10% tariff. The price of a typical hunting boot could jump to $222.27 from $190. And a popular performance running shoe could rise to $187.50 from $150.

Companies like Nike, Under Armour and Puma have steadily been decreasing their reliance on China, shifting resources to places like Vietnam. Still, the U.S. imported $11.4 billion worth of footwear from China last year, according to data from the U.S. Census Bureau, making it an industry incredibly reliant on the country for its cheap, skilled labor.

Nike, for example, made 47% of its shoes in Vietnam in fiscal 2018, according to its latest annual report. It made 26% in China and 21% in Indonesia.

Adidas says Vietnam is its largest sourcing country, with 42% of volume coming from there. In 2018, it did about 18% of volume in China, down 1% from 2017 levels, according to SEC filings.

Under Armour says 87% of its footwear products in 2018 were manufactured by five main contract manufacturers, operating mostly in China, Vietnam and Indonesia.

According to Priest, it's discount retailers like Walmart that remain particularly dependent on China for footwear production. "Ten percent [tariffs are] going to create a lot of pain, particularly for companies that serve low-cost customers."

A company like Walmart, he said, will have a more difficult time absorbing the tariffs along its supply chain, thus shoppers will have to bear more of that burden. Walmart declined to comment.

Meanwhile, another impact of the new tariffs could be more footwear businesses going under. The sector has already been having a rough ride.

Payless ShoeSource was a popular wholesale channel for many shoe brands, but it filed for bankruptcy in February and shut all of its 2,500 stores. Brands like Nine West, Rockport and The Walking Co. filed for bankruptcy in 2018. The industry hasn't been immune to more shoppers buying footwear online and from places like Zappos. And with shoppers tastes' evolving so quickly, like with clothing, there's a revolving door of shoe brands coming and going out of fashion.

"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."

Nike to release Coming to America-inspired shoes with NBA star Giannis Antetokounmpo - Entertainment Weekly News

Posted: 02 Aug 2019 12:54 PM PDT

Nike to release Coming to America shoes with NBA star Giannis Antetokounmpo | EW.com

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Choose Your Running Shoes Carefully | Health News - U.S. News & World Report

Posted: 03 Aug 2019 06:00 AM PDT

[unable to retrieve full-text content]Choose Your Running Shoes Carefully | Health News U.S. News & World Report

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