Footwear Insight

6 • Footwear Insight ~ September/October 2018 THE FOOTWEAR EYE T hose hoping for a speedy res- olution to a U.S.-China trade dispute may be disappointed. There is optimism in a few circles that the situation could resolve itself before year-end, perhaps at the G20 Summit of world leaders in Buenos Aires Nov. 30-Dec. 1, but the more likely outcome is an ongoing, shifting trade dynamic. Vendors will have to consider raising prices on China-sourced merchandise or absorb higher tariffs in the short-term. Retailers will also face new considerations after the holiday season, which seems protected from any new tariffs due to early receipt of goods throughout the summer. Macy's CEO Jeffrey Genette, speaking at a September conference, said new duties will start to affect retailers more significantly than other businesses. With economists suggesting the longer new tariffs stay in place, the bigger the impact on the U.S. economy, other pundits have opined that the Trump Administration has leverage in the 'tit-for-tat' trade war that may eventually include levies on all China imports, includ- ing footwear, apparel and sporting goods. Despite this standoff environment, Chinese officials were continuing to engage U.S. repre- sentatives in mid-September due to mounting worries that any escalating trade battle would further damage China's slowing economy and growth prospects. After the U.S. administration announced new tariffs on $200 billion worth of Chinese- made goods at 10 percent starting Sept. 24 and increasing to 25 percent on Jan. 1, 2019, China pledged to retaliate with tariffs on $60 billion in U.S. exports that will include an extra 5 percent duty on textiles. The Sports & Fitness Industry Association, expressing disappointment about the duties, said eight of its 71 exemption petitions were accepted, effectively excluding several catego- ries of sports protective headwear from the new action. But the new round of tariffs will impact several outdoor product categories, including backpacks, ski gloves, bikes, camping equip- ment and headwear, some of which already face import tariffs as high as 20 percent. In a recent member webinar, the Outdoor Industry Association affirmed pricing and sourcing challenges for its members heading into the Fall 2019 and Winter 2020 seasons and confirmed some vendors have already decided to raise prices ahead of expected increased tariffs while others have decided to absorb any new duty increases. "These additional tariffs will hamper the [out- door] industry and put some products out of reach to some customers," said Rich Harper, OIA's Manager of International Trade, pointing to higher tariffs on backpacks and sports bags. On the trade side, the OIA said additional tariffs will make it significantly more difficult for small and mid-size outdoor companies to compete. Additionally, the U.S. was fast approaching its self-imposed Sept. 30 deadline to bring Canada into a new North American Free Trade agree- ment. The U.S. wants its new trade pact with Mexico finalized before President-Elect André Obrador takes office on Dec. 1. — Bob McGee footwearinsight.com Effects of Trade War May Linger Into 2019 ANALYSIS B ody Glove is getting casual this Spring with a collection of surf-inspired lifestyle looks to complement its offering of performance water styles. After a soft launch this year at select Macy's, the 10-style collection made by longtime Body Glove licensee Surf9 will roll out more broadly to self- serve, family channel and better-grade department stores. (The Bonita Springs, FL-based firm has made Body Glove's performance line of water shoes, hybrid styles and sandals since 2005.) The men's and women's casual styles are focused on clean lines that draw inspiration from the California surf lifestyle and include high-tops, low-tops and slip-ons, with colorful printed canvas uppers being a major push. Prices for the line range from $40 to $80, and styles will deliver in late winter. l Like a Glove NEW COLLECTION At press time, here are the latest reports on trade from Bob McGee, editor of Formula 4 Media's weekly digital newsletter Sports Insight Extra. Read more and subscribe online at SportsInsightExtra.com

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