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Shoe Retailers Warn Trump That Proposed Tariffs Would Have 'Catastrophic' Effect

By Alina Selyukh | NPR
Tuesday, May 21, 2019

Copyright 2019 NPR. To see more, visit https://www.npr.org.

Nike, Adidas and other shoe brands told President Trump that proposed tariffs China imports would have a "catastrophic" effect on Americans. This is the latest in the escalating trade war with China.

Transcript

AUDIE CORNISH, HOST:

The trade war with China has brought together competitors from one industry. More than 170 shoe companies have united against President Trump's threat to expand higher tariffs to nearly everything imported from China. The brands, including Nike, Adidas and Under Armour, say the new costs would be, quote, "catastrophic" not only for them but for shoppers and the U.S. economy. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: If you're obsessed about shoes or have a sneaker habit, you might want to start saving now. Shoemakers and sellers like Nike, Adidas, Puma, Skechers, Ugg, Footlocker, Converse - they're all warning that a new 25% tariff on Chinese imports would have an immediate and long-lasting impact on American shoe buyers.

ED ROSENFELD: Prices to consumers, certainly on some products, could be going up anywhere from 10 to 20%.

SELYUKH: Ed Rosenfeld is the chairman and CEO of Steve Madden, which has already faced a new 10% tariff on handbags imported from China. That's now going up to 25%. Next, the White House has proposed the same 25% tax on virtually all Chinese imports, including toys, clothes and shoes. There are ways companies can mitigate this new cost. One, move production out of China. Two, negotiate discounts from Chinese vendors or, three, raise prices.

ROSENFELD: We're going to have to do all three of those things. And we're still going to feel pain at our company. And hopefully, we'll be able to avoid letting people go because that's another potential impact here.

SELYUKH: The cost hits American companies because it's the importer that pays the tariff. And almost all shoes sold in America are made overseas.

CLIFF SIFFORD: Today the shoe business already pays the highest tariffs in the apparel business.

SELYUKH: Cliff Sifford is the president and CEO of Shoe Carnival, a footwear retail chain that imports almost 98% of its non-athletic shoes from China. His athletic footwear comes mainly from Vietnam - the rest, again, from China. Like Steve Madden, many shoe makers have already been shifting some manufacturing out of China, but it's an expensive process. Few of them can afford to move it to the U.S. because of the costs of materials, factories and labor.

SIFFORD: And then you have to ask yourself - and I'd have to ask you. The sneakers you pay today - say you pay $80 today. Are you willing, next year, to pay 120?

SELYUKH: That assessment is on the high side. But the trade group Footwear Distributors and retailers of America estimates that if the new tariff kicks in, the average price of a typical canvas skate sneaker would go up by $15, a popular basketball sneaker by $48, a performance running shoe or a hunting boot by more than 50 bucks.

SIFFORD: Somebody's going to lose. Either consumer's going to lose, the vendor community's going to lose or I'm going to have to lower my margin. Somebody's going to lose in this scenario.

SELYUKH: This is the calculation currently happening in all retail boardrooms across the country. In today's earnings calls, Kohl's and J.C. Penney warned of higher costs from the trade dispute. Home Depot said increases earlier this month would add another billion dollars in costs, which was, quote, "manageable." They did not offer estimates on the pending tariff expansion. Last week, Walmart executives warned that higher tariffs would lead to higher prices. Macy's CEO Jeff Gennette made a similar comment to analysts.

JEFF GENNETTE: It is hard to do the math to find a path that gets you to a place where you don't have a customer impact.

SELYUKH: Meaning it's hard to imagine a scenario where prices would not go up.

Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.

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