Why Trump’s Trade Policies Have Spooked American-Made Brands

President Donald Trump swept into the White House with grandiose promises of making America great again — among them, revitalizing the manufacturing sector and shining the spotlight on U.S.-made products. “We will follow two simple rules: Buy American and hire American,” he declared during his 2017 inauguration speech.

But are the president’s pro-America policies and rhetoric having any real impact? In the footwear industry, where domestic production reached roughly 25 million pairs in 2017, according to FDRA (compared with imports of 2.39 billion pairs), experts say Trump’s efforts have so far fallen flat. “President Trump is definitely drawing more attention to Made in the USA, and there is certainly an argument that his actions on tax reform and reducing regulations will create an environment more conducive to business in general and domestic manufacturing specifically,” said Steve Lamar, EVP of the American Apparel and Footwear Association. “But on the other side, the tremendous uncertainty that’s being caused by his trade policies is taking away from that. We’re seeing a diminishing of key opportunities that would have led to more U.S. production, and that’s concerning.”

Indeed, immediately following his inauguration in January 2017, Trump wasted no time tackling some of his key campaign promises — beginning by withdrawing the U.S. from the 12-nation Trans-Pacific Partnership, a doubling-down on his aggressive stance against foreign competitors as part of his America-first approach. “I think you’re going to have a lot of companies come back to our country,” Trump said at the time. (More recently, he signaled that he might look into rejoining TPP but last week reversed his stance again.)

The flagship trade deal, brokered by former President Barack Obama, was expected to save the shoe industry $6 billion in taxes over a 10-year period. “That’s money that could have been used for investments in things like manufacturing, adding workers, innovation and design,” noted Matt Priest, president and CEO of the Footwear Distributors and Retailers of America.

Another of Trump’s early, much-touted moves to boost U.S. manufacturing turned out to be a public relations blunder. Looking to further his mission of creating American jobs, Trump formed the American Manufacturing Council, made up of 28 prominent business leaders — including Under Armour CEO Kevin Plank — tasked with advising the president on domestic manufacturing issues. Just eight months later, however, when a succession of members resigned in protest of Trump’s response to the deadly white supremacist rally in Charlottesville, Va., the council was abruptly disbanded.

Trump also missed the mark when he staged a Made in America week at the White House last summer. The administration billed the theme week as an opportunity to “honor the amazing workers and companies who have products that are made in America.” But the event drew criticism, with opponents labeling the president a hypocrite, considering his own line of branded products is manufactured overseas. “One of the inevitable conversations I have with people when talking about Made in America and the president is that he doesn’t make his own stuff here. That, to me, is a little troubling,” said Scott Paul, president of the Alliance for American Manufacturing. “He could certainly find a way to make it work, and it would give his administration a lot more credibility on this issue.”

Now Trump is taking on China in an increasingly contentious trade war, slapping new tariffs on more than 1,300 imported goods, as well as aluminum and steel — a step he believes will bolster America’s ailing manufacturing industries while punishing the country for its intellectual property abuses. (Imported footwear, about 71 percent of which comes from China, was rumored to be on the list of products but ultimately was spared. However, certain machinery and equipment used to manufacture shoes did make the list.) The Asian nation has already responded with threats of retaliatory tariffs of its own, putting the footwear community on edge.

President Donald Trump
President Donald Trump speaks with steel and aluminum executives at the White House.
CREDIT: Rex Shutterstock

But FDRA’s Priest said the shoe industry is a case study in why tariffs don’t work. Despite paying steep duties since the 1930s that tallied nearly $3 billion last year alone, the U.S. imports 99 percent of its footwear. Protectionist trade policies such as this have done little to keep shoe manufacturing stateside. “Production shifted away in spite of the tariffs, which just shows you that not everything is destined to be produced here in vast quantities to serve our consumer base,” Priest said. “The rhetoric [coming from the president] is interesting because it’s both reactionary and nationalistic but not necessarily wedded with economic theory or lessons learned.”

Added AAFA’s Lamar: “The administration has a pretty strong view that these tariff s are an important way to increase leverage and force the Chinese to the table, but tariffs are a terrible approach when it comes to that. You’re taking away all of this money from consumers and businesses, and channeling it back into the government. It becomes a constraint on the expansion of the economy.”

For companies producing in the States, new tariffs — whether on footwear, other consumer goods or raw materials — ultimately will drive up the cost of making shoes. At Merrill, Wis.-based Weinbrenner Shoe Co., which manufactures nearly 65 percent of its workboot line in the U.S., president Pat Miner said he’s watching the China situation closely. “I’m hopeful the issue will resolve itself — Trump is already hearing the backlash,” he said. “You would think I would be the first person to believe strongly in tariffs for protectionist reasons, but I don’t like them. Ultimately, they raise the cost of living for our workers, and that means we need to raise our wages, which makes it more expensive for us to make shoes here. And if you’re talking about tariffs on machinery, then it absolutely impacts our business.”

In another worrying development, AAM’s Paul said the president’s vocal support of the Made in America movement is proving to be a double-edged sword. While Trump is bringing welcome publicity to the cause, his unpopularity as president — a recent Quinnipiac poll pegged his approval rating at 41 percent — may actually be turning some consumers off to the buy-American message. “Americans have always been united in their desire to have more American-made products, but I do see that becoming more partisan now,” Paul said. “When you see something related to Made in America or Make America Great Again, there is now this immediate association with support of the president. It hurts the movement, and it’s a mistake. There are lots of reasons to want to buy American that go far afield from Trump’s politics and what he wants to do.”

Still, despite the new challenges and dynamics unfolding under Trump, brands remain committed to manufacturing onshore. At Keen, which opened its Portland, Ore., factory in 2010, strong customer demand for American-made styles is driving a healthy uptick in the brand’s U.S. production output. “We started [making workboots domestically] about four years ago, and it was very small. Since then, it’s really taken off, and we expect it to reach 25 percent of our volume by year’s end,” said Chris Heffernan, GM of Keen Utility, the brand’s safety footwear business. “Trump is tapping into something that’s always been there — American-made footwear really resonates, especially with our target consumer, the blue-collar worker.”

New Balance just boosted its Made in the USA business in a big way. Last month, the Boston firm landed a $17.3 million contract with the Department of Defense to supply
American-made athletic shoes to U.S. military personnel entering basic training. President and CEO Rob DeMartini called the development “a great win for the preservation and growth of American manufacturing jobs” and a confirmation of “New Balance’s long-standing commitment to making shoes in this country.”

According to Brad Miller, GM of New Balance’s Enduring Purpose division (which oversees its Made in the USA projects), the brand devoted more than five years to securing the DOD contract and made a significant investment in new injection-molding machinery. “We also partnered with more than 21 American subcontractors whose materials are 100 percent made in America, which greatly expands the importance of American jobs,” Miller noted. “We’re very proud to be the only athletic footwear brand to make shoes [here] for more than 75 years.”

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