Sports Insight

P ain from tariffs has already been inflicted on the sporting goods and footwear industries. Where do we go from here? As vendors and retailers alike work ag- gressively to mitigate impacts on holiday sales and beyond, container imports from China continue to rise ahead of the impo- sition of December tariffs on some types of footwear, apparel and big-ticket items such as iPhones. e trade situation between the two global powerhouses remained tenuous and fluid weeks ahead of their next round of negotiations in Washington, D.C., in early October. There are some, including Alibaba Co-Founder Jack Maa and White House economic advisor Larry Kudlow, who already feel the trade relationship between the U.S. and China has forever been altered, with tensions likely to persist for years. Despite the steady lobbying work of trade organizations such as the Footwear Distributors and Retailers of America (FDRA) and the American Apparel and Footwear Association (AAFA), 15 percent tariffs on $112 billion worth of merchandise imported from China took effect Sep. 1. And footwear took a big hit. e FDRA says the new duties will add approximately $4 bil- lion in additional, annual retail costs to the shoe-buying consumers as 70 percent of all footwear sold in the U.S. is manufactured in China. ese new duties will likely drive up the price for performance running shoes and hunting boots by as much as $40 a pair. Both the Snowsports Industries America (SIA) and Sports & Fitness Industry Association (SFIA) hosted webinars with members to discuss the tariff impact and how exemptions for certain products might be obtained. What It Means For the Industry While there will likely be some consumer sticker-shock during the holiday season and beyond, analysts expect retailers will be "more surgical" in the price-hike approach. Instead of simply displaying point-of-pur- chase signs reading, "Higher Price Due to Tariff," the cost of higher tariffs could be spread across multiple styles/categories. That method would mirror what many appliance retailers did aer higher duties were slapped on washing machines imported from China. ey embedded the cost of a tariff into the retail price of both washers and dryers, which weren't subjected to any additional duty. Retailers and vendors alike are discussing other measures before passing the full cost of additional tariffs onto consumers. ere are ongoing talks about how any higher tariffs might be absorbed or split between supplier and vendor; how to wring material and production costs out of certain items and what other actions might be taken to avoid any higher duties, including relocation of product sourcing hubs. "Retailers are still trying to minimize the impact of the trade war on consumers by bringing in as much merchandise as they can before each new round of tariffs takes effect and drives up prices," said Jonathan Gold, VP for Supply Chain and Customs Policy for the National Retail Federation. According to the Peterson Institute for International Economics, 99 percent of consumer goods will have tariffs attached once the final tranche is imposed by the U.S. on Dec. 15, up from 29 percent before Sept. 1. n B Y B O B M C G E E Retailers and vendors strategize for the future. Tariff Trouble: What's Next? sportsinsightmag.com 10 • Sports Insight September/October 2019 IN THE MARKET Outdoor businesses have shelled out an extra $1.8B in tariffs as a result of the U.S.- China trade war, according to the Outdoor Industry Association. Tariffs impact a variety of outdoor equipment categories, including backpacks, camp chairs, leather ski gloves, kayaks and bicycles, which are saddled with the 25 percent punitive tariffs. The average tariff rate on outdoor equipment has more than doubled compared to the previous year. According to the OIA, since the start of the trade war with China last year, outdoor industry companies have paid nearly three times the number of tariffs on outdoor products hit with Section 301 China tariffs for a total of $2.8 billion. Tariffs Take a Toll on Outdoor Industry

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