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Over 200 US footwear companies urge Trump to scrap proposed tariff hike

Key Points
  • More than 200 U.S. footwear companies on Wednesday urged U.S. President Donald Trump to cancel proposed higher tariffs on Chinese imports that take effect beginning next month, calling them hidden taxes that will jack up consumer prices.
  • While tariffs on some Chinese imports will be delayed until Dec. 15, the majority of footwear lines face an added 15% tariff on Sept. 1, the letter said. That comes on top of tariffs that already average 11% and reach 67% on some shoes, it added.
  • The letter, signed by companies including Adidas and Foot Locker, warned that the new tariffs would exacerbate economic uncertainty and could drive up prices in other countries that produce footwear, given limited production capacities.
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More than 200 U.S. footwear companies on Wednesday urged U.S. President Donald Trump to cancel proposed higher tariffs on Chinese imports that take effect beginning next month, calling them hidden taxes that will jack up consumer prices.

"Imposing tariffs in September on the majority of all footwear products from China — including nearly every type of leather shoe — will make it impossible for hardworking American individuals and families to escape the harm that comes from these tax increases," the companies wrote in a letter to Trump.

While tariffs on some Chinese imports will be delayed until Dec. 15, the majority of footwear lines face an added 15% tariff on Sept. 1, the letter said. That comes on top of tariffs that already average 11% and reach 67% on some shoes, it added.

"This added 15% tax will cost U.S. footwear consumers an additional $4 billion every year," the letter said, citing an estimate by the Footwear Distributors & Retailers of America (FDRA) trade group, which spearheaded the letter.

The letter, signed by companies including Adidas and Foot Locker, warned that the new tariffs would exacerbate economic uncertainty and could drive up prices in other countries that produce footwear, given limited production capacities.

The U.S. Trade Representative's Office (USTR) on Wednesday reaffirmed Trump's plans to impose an additional 5% tariff on a $300 billion list of Chinese imports starting Sept. 1 and Dec. 15. The Trump administration had previously planned to impose a 10% tariff on these imports.

FDRA Chief Executive Matt Priest warned that the higher tariffs would result in job losses across the industry.

"Brands have already said tariffs will dent job growth and shoe stores are saying it's a job killer," Priest said in a statement. "We hope the president listens to Americans across the country ... and stops this unnecessary trade war."

The letter also rejected comments from U.S. officials who say China can simply devalue its currency to cover the added costs.

"This is simply not true when it comes to our industry, because import prices are almost always quoted and negotiated in U.S. dollars not RMB (Chinese yuan)," it said. "For RMB devaluation alone to offset the 15 percent tariff increase for some shoes, the currency would have to drop by more than 40 percent."

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Markets

Here's what new tariffs will cost the average American household

Key Points
  • J.P. Morgan estimates the average American household will be down $1,000 per year thanks to the newest round of tariffs on Chinese goods.
  • The firm's chief U.S. equity strategist Dubravko Lakos-Bujas says unlike the agriculture sector, which is receiving subsidies from the government to offset some of the tariffs, "there is no simple way to compensate consumer."
  • Given the larger impact on the wallet of the U.S. consumer going in the 2020 election, Lakos-Bujas says the administration will likely roll back tariffs or compromise on a trade agreement.