Footwear Insight

2025 Outlook By Tom Ryan T w o days after the U.S. presidential election in November, Steve Madden revealed plans to slash imports from China to the U.S. by 40 percent to 45 percent over the next year. e drastic shi represented a forewarning of the potential chaos the footwear industry may face should President-elect Donald Trump follow through on his campaign pledge to slap steep and sweeping tariffs on imports from other countries. On the campaign trail, Trump pledged a 60 percent tariff on goods imported from China and a 10 percent to 20 percent tariff on goods from all other countries on the belief that tariffs on foreign goods will help benefit U.S. manu- facturing and create jobs. "Tariffs are the greatest thing ever invented,'' Trump said at a campaign stop in Flint, MI in September. Since election day, he has indicated he could also impose 25 percent duties on all imports from Mexico and Canada and an additional 10 percent duty on Chinese imports. He has further threatened 100 percent tariffs on the BRICS group - comprising of nine emerging market countries including Brazil, Russia, India and China. Some have suggested Trump's tariff threats may be campaign bluster, or an opening salvo in future trade negotiations as they may run counter to his other vow to bring down consumer prices. However, Trump has advocated tariffs for decades, and in his time in the White House, he did not shrink from taxing other countries, including imposing tariffs that targeted imported solar panels, steel, aluminum as well as pretty much everything from China. In 2019, Trump's new tariffs added a 15 percent duty on about half of the footwear imports from China. He later lowered the rate to 7.5 percent in 2020, where it remains. Trade Associations Weigh in on Potential Tariffs Retail trade groups have come out strongly against Trump's proposed plans to escalate tariffs. National Retail Federation (NRF) president and CEO Matthew Shay said that while new trade policies could stand to "increase America's competitive advantages" in innovation and infrastructure, "the adoption of across-the- board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families." "It will drive inflation and price increases and will result in job losses," he asserted. Just before the election, NRF issued a study showing Trump's pre-election tariff proposals could cause American consumers to lose be- tween $46 billion and $78 billion in spending power annually. Specifically in footwear, NRF's study found with already high tariff rates on U.S. footwear imports climbing from four to six times under Trump's proposals, prices of footwear would increase by 18 percent to 29 percent. NRF wrote in the study, "e price of a $90 pair of athletic shoes would jump to $106-$116, a $48 pair of women's slippers would cost $57-$62, and a $30 pair of girls' 'Mary Jane' shoes would cost $35-$39." NRF did find that U.S. production would increase as China imports decline but consumers would pay $32 for every additional dollar earned by U.S. footwear producers. The American Apparel & Footwear Association (AAFA) notes that the Tariff Act of 1930 helped create the Great Depression and the Section 301 tariffs in 2018 under Trump's first term that have remained in place under the Biden administration have played a part in driving 40-year high inflation for clothes and shoes. "Imposing levies is not a path to real lever- age," AAFA president and CEO Steve Lamar, told Footwear Insight. "Foreign countries aren't going to change behavior just be- cause it is more expensive for Americans to get dressed every day. But those countries will likely impose their own tariffs (which could trigger more tit for tat tariff actions). Consumers and U.S.-based brands are in for FOOTWEAR INDUSTRY REVISITS LOOMING TARIFF THREATS 16 • Footwear Insight ~ November/December 2024 footwearinsight.com TRADE GROUPS AND VENDORS WEIGH IN ON POTENTIAL BUSINESS IMPACTS.

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