FINANCE

Footwear retailers say proposed new tariffs would be ‘catastrophic’

BY Marianne Wilson

U.S. shoppers will end up paying more — a lot more— for footwear if the Trump Administration goes through with its latest tariff proposal.

That’s according to trade group the Footwear Distributors & Retailers of America (FDRA). On Monday, the group released a letter signed by some of the industry’s most prominent footwear retailers and brands — including Nike, Foot Locker, DSW, Under Armour, Wolverine World Wide, Aldo, Converse and Puma — to President Trump asking him to abandon plans to implement a proposed 25% tariff on an additional $300 million in Chinese goods. The list of goods that would be impacted by the new tariffs includes every type of shop, from sneakers and sandals to rain boots and golf shoes.

The letter was signed by 173 companies. In it, the firms said the increased tariffs could have a “catastrophic” impact “for our consumers, our companies, and the American economy as a whole.” The companies noted that the FDRA ran the numbers and the results are “staggering.”

“FDRA estimates your proposed actions will add $7 billion in additional costs for our customers, every single year,” the letter stated.

The companies also noted that while U.S. tariffs on all consumer goods average just 1.9%, they average 11.3% for footwear and can reach rates as high as 67.5%.

“Adding a 25% tax increase on top of these tariffs would mean some working American families could pay a nearly 100% duty on their shoes,” the letter stated. “This is unfathomable.”

Here is the full letter:

Dear Mr. President:

As leading American footwear companies, brands and retailers, with hundreds of thousands of employees across the U.S., we write to ask that you immediately remove footwear from the most recent Section 301 list published by the United States Trade Representative on May 13, 2019. The proposed additional tariff of 25 percent on footwear would be catastrophic for our consumers, our companies, and the American economy as a whole.

There should be no misunderstanding that U.S. consumers pay for tariffs on products that are imported. As an industry that faces a $3 billion duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer. It is an unavoidable fact that as prices go up at the border due to transportation costs, labor rate increases, or additional duties, the consumer pays more for the product.

This significant tax increase, in the form of tariffs, would impact every type of shoe and every single segment of our society. In fact, our industry’s trade association, the Footwear Distributors & Retailers of America (FDRA), ran the numbers and the results are staggering. FDRA estimates your proposed actions will add $7 billion in additional costs for our customers, every single year. This dramatic increase would be on top of the billions Americans already pay as a result of the current tariff burden on footwear imports that was started in 1930.

High footwear tariff rates fall disproportionately on working class individuals and families. While U.S. tariffs on all consumer goods average just 1.9 percent, they average 11.3 percent for footwear and reach rates as high as 67.5 percent. Adding a 25 percent tax increase on top of these tariffs would mean some working American families could pay a nearly 100 percent duty on their shoes. This is unfathomable.

There have been suggestions that industries should quickly shift sourcing to countries other than China in the wake of these additional tariff threats. While our industry has been moving away from China for some time now, footwear is a very capital-intensive industry, with years of planning required to make sourcing decisions, and companies cannot simply move factories to adjust to these changes. Any action taken to increase duties on Chinese footwear will have an immediate and long-lasting effect on American individuals and families. It will also threaten the very economic viability of many companies in our industry.

On behalf of our hundreds of millions of footwear consumers and hundreds of thousands of employees, we ask that you immediately stop this action to increase their tax burden. Your proposal to add tariffs on all imports from China is asking the American consumer to foot the bill. It is time to bring this trade war to an end.

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