Footwear Insight

22 • Footwear Insight ~ July/August 2018 THE FOOTWEAR EYE footwearinsight.com companies to hand over valuable tech- nology and making its markets more accessible to U.S. companies. "We strongly urge the (Trump) administration to abandon its plans for tariffs on another $200 billion in Chinese imports, which would destroy thousands of American jobs and raise prices on virtually everything sold in our stores," National Retail Federation President and CEO Matthew Shay said. "Reining in China's abusive trade poli- cies is a goal shared by many countries, but a strategy based on unilateral tariffs is the wrong approach and it has to stop." But with no immediate signs that either nation was on the verge of blink- ing in the standoff, the biggest concern to U.S. companies already selling their branded products in China, beyond any additional tariffs, is the possibility the Chinese government will employ a strategy to stoke anti-American senti- ment among its consumers in coming months to hamper sales of U.S. brands in the market. Nike, which realized an 18 percent currency-neutral sales increase in China during its FY ended May 31, sees "extraordinary long-term growth potential" coming from Greater China, citing favorable economics, the rise of sport and fitness in the market, the scale and impact of digital and the strength of its brand. On the manufacturing side, smaller footwear and apparel brands who don't generate the same volume as their larger competitors may be particularly vulner- able in any prolonged U.S.-China trade tiff. Larger firms, which have diversified their supply chains in recent years, are more protected. Jefferies retail analyst Randy Konick recently told CNBC that the apparel and footwear industries are most exposed in China right now since the country manufactures an estimated 80 of their unit volume while golf equip- ment firms and boat makers are "less exposed" in China. The American Apparel & Footwear Association scored an important victory for the trade when the administration opted to remove most of the equipment and machinery used in domestic textile, apparel and footwear manufacturing from the initial 25-percent additional tariff placed on imports from China. But, AAFA president and CEO Rick Helfenbein remains concerned about the current trade environment. "Any new tariffs present an immense burden for the American people. Further, China has already made clear that it will retaliate swiftly," commented the trade group executive. "China previ- ously identified almost $1 billion worth of American cotton exports to China as a target, which will hurt American farmers and U.S. textile manufacturers, and add costs to our supply chains." Closer to home, a new North American Free Trade Agreement (NAFTA) was unlikely to be signed until after the mid-term elections in November. But the recent election of leftist leader Andrés Manuel López Obrador as president of Mexico is expected to delay the finalization of any new NAFTA pact further. The other NAFTA partner, Canada, in response to new U.S.-imposed tariffs, slapped new duties on $12.6 billion of U.S. products on July 1. — Bob McGee. A Trade War 'Halo Effect' Could Be Damning (cont.) On the manufacturing side, smaller footwear and apparel brands who don't generate the same volume as their larger competitors may be particularly vulnerable. THE NEXT GENERATION SORBOTHANE ® INSOLE Ultra PLUS SORBOTHANE ® PERFORMANCE INSOLES EXCLUSIVE N E insoles-sorbothane.com sorbothane.com 800.838.3906 Who knew a stability insole could be comfortable? We did.

• Cover