U.S. Footwear Firms Warn Trump About ‘Negative Impact’ of Tariffs on Chinese Imports

For an already injured industry, more tariffs and the retaliations sure to come with them could pose sizable setbacks.

That’s the case U.S. retailers are trying to make in their collective effort to urge President Donald Trump against imposing sweeping tariffs on imports from China, which they say will serve to increase consumer prices.

In a letter to the president Monday, retailers including Walmart, Macy’s, Levi’s and 22 others said while they support holding our trade partners accountable for their respective practices, the looming remedy will likely pose undue harm.

“We are concerned about the negative impact as you consider remedial actions under Section 301 of the Trade Act could have on America’s working families. Investigating technology and intellectual property policies and practices is critically important to our innovative economy. Yet were this investigation to result in a broadly applied tariff remedy on imports from China, it would hurt American households with higher prices and exacerbate a U.S. tariff system that is already stacked against working families,” the letter said.

Coming on the heels of steel and aluminum tariffs imposed last week and aimed at China, the Trump administration is said to be preparing to levy tariffs on China for its intellectual property infringements.

Trump is considering imposing tariffs on Chinese imports using the authority provided under Section 301 of the Trade Act, which would allow for the tariffs to move forward without approval from Congress provided the U.S. Trade Representative determines that China’s actions related to intellectual property and technology transfer have been a burden on U.S. commerce.

But the move could prove detrimental to a consumer who’s already more discerning about his or her discretionary spending on clothing and footwear.

“In the U.S., those who can afford less pay more because the U.S. levies the highest tariffs on basic consumer goods. For example, families shopping in our stores pay higher prices because America already levies import taxes as much as 32 and 67 percent on basic clothes and shoes. Applying any additional broad-based tariff as part of a Section 301 action would worsen this inequity and punish American working families with higher prices on household basics like clothing, shoes, electronics and home goods,” the letter continued.

In a separate letter sent Monday, 82 footwear retailers, including Nike, Wolverine Worldwide and Clarks, expressed “strong concern” about the tariff reports, rejecting the idea that intellectual property problems can be fixed by what will essentially amount to “new hidden taxes on every American who buys and sells shoes.”

The U.S. footwear industry stands to suffer substantially, since more than 71 percent of the shoes the U.S. imports are coming from China—more than four times what it takes in from the second-largest supplier, which is Vietnam.

“U.S. footwear imports already face astronomically high tariff rates that fall disproportionately on working-class individuals and families. While U.S. tariffs on all consumer goods average just 1.3 percent, they average 11 percent for footwear and reach rates as high as 67.5 percent. In 2017 alone, U.S. footwear companies and U.S. consumers paid nearly $3 billion in these hidden taxes. This amounts to billions upon billions of dollars paid since these tariffs were first enacted in the 1930s. U.S. footwear tariffs stifle innovation and job creation and raise the cost of shoes for every American,” the letter read.

Trump has not held back about his desire for tariffs. During a meeting in the Oval Office in August, he reportedly said, “I want tariffs. And I want someone to bring me some tariffs.”

But adding tariffs in this manner, according to U.S. retailers, will mean higher costs and fewer jobs, which seems to run counter to what the president has claimed his aim is.

“Given the price sensitive of our products, any additional increases in our costs would strike right at the heart of our ability to keep product competitively priced for our consumers,” the letter went on. “In addition, 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.”

The Trump administration hasn’t responded to the letter or addressed the impending Chinese tariffs, but events are expected to continue unfolding throughout the week.

For now, U.S. retailers have asked the president to “carefully consider the impact on consumer prices” as he makes a decision on the tariffs.

And those focused on the footwear sector, in particular, have their own suggestions.

“The U.S. government should be searching for ways in which to lessen the heavy burden import taxes place on American families, not working hard to increase that burden,” Matt Priest, president and CEO of the Footwear Distributors & Retailers of America, said, adding: “Taxing our consumers and the companies that are providing them with innovative and affordable products should not be a remedy to address intellectual property concerns in China. Why should our families and their American footwear companies be the ones who pay? There has got to be a better way.”

Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit sourcingjournal.com.

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